The story began in 1843 when Welsh scientist William Grove invented the ‘gas voltaic battery’ – what we today call the ‘fuel cell’. A major leap forward came in the 1960s when NASA began developing the fuel cell to power space shuttles. Today, the potential of fuel cells to provide clean, quiet and efficient energy is ever more apparent, with applications ranging from portable electronics to transport, homes and buildings.
Fuel cells have many advantages over other conventional prime movers. They boast near-zero emissions, with pure water as the primary by-product in most cases and, because they do not involve combustion, there are negligible nitrogen oxide (NOx) or sulphur oxide (SOx) emissions. The fuel is flexible and, depending on the source, can even be renewable. Fuel cells have no vibrating parts and are thus very quiet, with the only noise coming from the exhaust fan.
At a chlorate manufacturing site in Italy, the hydrogen by-product of the chemical process is fed into a fuel cell plant which provides the site’s electricity needs (Nuvera Fuel Cells).
The fuel cell is remarkably efficient; high-temperature models can have 40%-45% net electrical efficiency and, in combined heat and power (CHP) mode, the overall efficiency can be as high as 90%.
Although the fuel cell holds immense promise in providing clean energy solutions, most current technologies are not yet ready for commercial use. Commercial readiness means that a system must be durable and have an operational lifetime that at least matches other power generation devices in the same power range. For stationary applications, the commercial lifetime requirement is generally 40,000 hours or about 10 years. In addition, the purchasing cost needs to be brought down by sourcing alternative manufacturing materials (e.g. for platinum used as catalyst on the electrodes’ surface), streamlining the production process, and volume production. For large stationary fuel cell applications, an economically attractive price for fuel cells would be €1200-1500/kW.
Fuel cell businesses are becoming more international. Strategic partnerships are being formed across borders; for example, components may be manufactured in one country and shipped to another continent for integration and installation. Though it is difficult to identify firm geographical designations, this article highlights some general trends in the large baseload and residential markets in the US, Japan and Europe.
Large stationary units take off in the US
In the 1960s the US seriously considered fuel cells as a way of helping to achieve energy independence. The federal government has since poured substantial sums into research to develop the technology. Today, the US has advanced furthest in terms of commercial adoption of large stationary units.
The Verizon telecommunications centre in Garden City, New York, calls on fuel cells for clean, reliable power (UTC Power)
Robert Rose, Executive Director of the US Fuel Cell Council (USFCC), says that units are moving forward from the R&D phase to being commercialized. FuelCell Energy and UTC Power have produced commercial units for the large-scale stationary sector (see ‘Major developers’ below); the performance and durability of their systems is good and approaches that of other cogeneration prime movers. Manufacturing volumes have increased and both companies have made interesting technology advances.
Federal and state incentives boost US market
Many commercial units have been bought with the help of federal and state incentives that either explicitly promote fuel cell technology, or provide support for distributed generation and clean energy in general.
A significant recent piece of federal legislation is the US Energy Policy Act 2005. One of its provisions is the investment tax credit (ITC), which offers new incentives for the purchase of fuel cells – something seen by the USFCC as a ‘key step in the commercialization of fuel cell technology’. Effective from January 2006 to the end of 2007, this provision entitles new fuel cell owners to claim back a tax credit of up to 30% of the total system cost, capped at $1000/kW (among other criteria). A bill introduced in Congress in January 2007 proposes a two-year credit extension that would offset 30% (up to $1000/kW) of the cost of a fuel cell unit purchased by businesses and property owners. This credit would expire at the end of 2008; in April 2007, fuel cell developers and industry requested a longer-term eight-year extension.
Another provision in the Act promotes the leasing or purchase of fuel cells by federal agencies seeking energy savings; money was allocated in two stages – $20 million in 2006 and $100 million in 2009/2010. This market transition programme would allow federal agencies to become an early adopter of fuel cells by providing funds to cover incremental costs. It is viewed as a key initiative by the industry, which views large-volume federal purchases as a way of upping manufacturing levels and bringing prices down.
Complementing federal legislation favouring distributed generation are a host of state-level incentives supporting fuel cells, notable ones being from Connecticut and California. Via its On-site Renewable DG Program, the Connecticut Clean Energy Fund (CCEF) has provided grants to commercial, industrial and institutional customers towards the capital cost of new fuel cells since December 2005. The California Public Utilities Commission’s (CPUC) Self-Generation Incentive Program (SGIP) has a system that allows eligible fuel cell self-generators to feed excess electricity into the grid; the rates are based on a net metering schedule. Major utilities such as PG&E, Edison and SoCalGas are participants. For a full list of federal and state incentives, see a report by Breakthrough Technologies on the USFCC website (www.usfcc.com).
R&D – SECA programme focuses on SOFC
Among the many R&D programmes funded by federal and state governments, the Solid State Energy Conversion Alliance (SECA) has attracted much attention from the fuel cell community. Administered by the National Energy Technology Laboratory (NETL), SECA is an alliance between government, the scientific community and industry groups to accelerate the commercial readiness of 3-10 kW SOFCs for various applications. Industry teams individually research and test a SOFC design targeting a particular market, working to a 10-year, three-phrase timeframe. All have the ultimate goal of reducing cost to $400/kW (competitive with reciprocating gas engines). By the end of the first phase in May 2007, prototypes had surpassed the test targets. Teams working on stationary non-backup applications are led by Cummins Power Generation, FuelCellEnergy, Siemens Power Generation and also GE Power Systems.
The emergence of individual adopters is positive news for the US fuel cell industry. Yet on balance, the attitude of commercial adopters has not changed that much or, as Robert Rose points out, at least not yet. While there is consensus that fuel cells offer attractive benefits, support from utilities (a conventional and price-sensitive industry) has been relatively small.
According to Robert Rose, progress in the US has so far been ‘largely due to voluntary action by individual companies or organizations to move towards carbon neutrality’. He also says: ‘Purchasing decisions have not yet been driven by carbon emissions requirements – but these will make a difference in future. In the short term, fuel cell adoption will continue to be a voluntary measure.’
On the commercial side, the outlook is upbeat. Manufacturers are expected to announce encouraging prices in the next few years and Robert Rose considers that the latter half of 2007 will be the ‘watershed years’.
However, the US market for residential fuel cells remains challenging, mainly because buildings tend to use force-air furnaces for heating instead of boilers as in Europe and Japan.
Japan – where small is beautiful
With few primary energy resources of its own, Japan has historically placed considerable emphasis on energy efficiency and renewable energy. The Japanese government has recognized fuel cells as a key technology to help the country meet its climate change obligations and improve energy independence. Significantly, it has set a target to put 2100 MW of stationary fuel cells in commercial and residential use by 2010. The Government invests heavily in R&D, where companies and academia work in concert.
A number of Japanese companies are working on large stationary fuel cell research, development and demonstration (RD&D). Developers include Ishikawajima-Harima Heavy Industries (MCFCs), Toshiba International Fuel Cells Corporation (PAFCs) and Mitsubishi Heavy Industries (SOFCs).
International partnerships will be important for the growth of activities in Japan. For example, Marubeni has a distribution agreement with FuelCell Energy (USA) and CFC Solutions GmbH (Germany) to bring MCFC units to market.
It is in the residential market where Japan is making its mark. In 2005, the Government set a target to put 1.2 million fuel cell cogeneration units in households by 2010. This is part of its drive for domestic micro CHP – seen as a way of reducing both the dependence of households on the grid and home energy bills (Japan has some of the highest electricity prices in the world). Adopting a micro CHP fuel cell could allow a household to save about $600/year in energy costs.
To prepare the Japanese household market for this wide-scale roll-out, the Ministry of Economy, Trade and Industry (METI) is sponsoring the three-year Large-Scale Monitoring Programme to field-test systems. Since 2005, METI has offered subsidies to energy companies towards the purchase of fuel cell units from manufacturers. The gas companies then lease the units to households on 10-year contracts.
In the financial year (FY) 2005, 480 units were delivered with subsidies of about $55,000 per unit; FY2006 saw 777 units delivered at $40,000 each. The aim is 930 systems for FY2007, with the subsidy coming down to about $29,000/system. These are all 1 kW PEM units running on readily available household fuels such as natural gas (called ‘city gas’ in Japan), kerosene and liquefied petroleum gas (LPG), which are reformed by the fuel cell system to create hydrogen.
Major energy providers involved in the scheme include Tokyo Gas, Nippon Oil, Toho Gas, Saibu Gas and Hokkaido Gas; fuel cell providers include Ebara Ballard, Matsushita (more widely known by its Panasonic brand), Sanyo, Toshiba and Toyota.
Homes like this one in the Tokyo area get 1 kW of electricity and all of the heat needed from a fuel cell residential cogeneration system (Ballard Power Systems).
The Japanese government expects to reach two goals by the end of 2008. One is for the system operation lifetimes of residential units to improve to 40,000 hours or 10 years (the typical requirement for most Japanese household appliances). The other is to progress towards the target commercial price of $10,900 (or less) per system, based on planned unit volume forecast. This will be made possible by the large manufacturing volumes anticipated.
Once these durability and cost targets are met, fuel cell developers expect to offer units on a commercially subsidized basis in 2009. From then on, subsidies will be provided directly to the end-user rather than the manufacturer. All current participating manufacturers are expected to be able to meet the 40,000-hour/10-year lifetime target. The Government has set an ultimate cost target of $6000 per system by 2012/2013, at which point no subsidies will be needed.
In the meantime, there are signs that system performance is improving. For instance, Ebara Ballard delivered the first of its prototypes in 2007 of a ‘third generation, long life’ fuel cell that meets the 40,000 hour operation lifetime target. Other participating leaders such as Matsushita/Panasonic, Sanyo and Toshiba are also aligned to meet these lifetime targets.
While all the residential fuel cells installed so far are PEM units, SOFCs may make an entrance soon. Kyocera is developing 1 kW SOFC units in collaboration with Osaka Gas; the company expects to bring these units to the market by 2007.
Given Japan’s strong push to adopt micro CHP and fuel cell technologies and the 46 million homes eligible for conversion there, the potential for wide-scale deployment of residential fuel cells is enormous.
Cogeneration activities in Europe centre on only a few countries, though others are looking to increase the amount of cogeneration. The EU Cogeneration Directive acts as a strong driver, with fuel cells mentioned as one of the enabling technologies. The European Commission is being advised by The European Hydrogen and Fuel Cell Technology Platform on a deployment strategy for fuel cells.
However, unlike the US and Japan, the EU does not provide tax or financial incentives for the adoption of particular technologies. Thus technology adoption will depend heavily on market forces, incentives or regulatory actions by Member States.
Large units near commercialization
No products are yet commercially viable for the European residential or large stationary markets. Patrick Trezona, Secretary General of Fuel Cell Europe, explains this is because there is still ‘no technology at a price low enough to penetrate the larger power generation market’. But efforts continue to improve lifetime and durability, and to bring down cost.
CFC Solutions, by far the biggest developer in Europe, has advanced to near commercialization; its MCFC technology is proving its market readiness and the cell stack has achieved 30,000 hours of operation lifetime. Italy’s Ansaldo Fuel Cells is also developing MCFC technology. Nuvera Fuel Cells, which operates out of both Italy and the US, started the commercial operation of a plant running on ‘waste’ hydrogen from a chlorate production site in Italy in 2006. Other industry players include Rolls-Royce, Siemens and Wärtsilä – all developing large stationary SOFC technologies, with some investigating hybridization with gas turbines.
Although the EU does not subsidize technology adoption, it does fund RD&D projects. A new consortium of research centres and companies is developing large SOFC-based power plants in a project focusing on materials, components and systems required for CHP and power-only plants from 20-50 kW to 250 kW, and up to 1 MW. Commercialization is expected in the middle of the next decade.
In a recent report, market consultants Frost & Sullivan (F&S) concluded that stationary fuel cells ‘should reach commercialization in Europe by 2010’. F&S expects CHP-based fuel cell systems to ‘lead the stationary fuel cells market during the initial years of its commercialization’. Among many other forecasts on timelines and technologies, F&S points out that ‘large-scale utilities are showing increasing interest in fuel cell technology’. This interest from utilities is beginning to emerge, for example, in the residential fuel cell sector.
The increasingly favourable regulatory environment for microgeneration and technology developments suggests exciting things in store in the next few years for the residential market. In countries where most houses are heated by boilers rather than district heating (e.g. UK, Netherlands, France and Germany), micro CHP technologies (including fuel cells) could replace conventional boilers. The most promising market is the UK, where over 1.5 million boilers are sold each year and where 12-13 million homes are suitable for boiler replacement.
Micro CHP is a relatively new concept. Products are being developed, but none has yet reached the market and fuel cells are no exception. As with any new technology, the barriers to market entry include the technological challenge to achieve similar (or better) lifetime, reliability and price with conventional boilers, and the lack of public awareness or confidence in the new product. As many micro CHP fuel cell units run on gas, the co-operation of utilities would significantly boost deployment in households.
Two developers of 1 kW SOFCs have formed strategic partnerships with utilities. In March 2006, Ceres Power announced a partnership with Centrica (British Gas) to develop a residential programme for the UK. Ceramic Fuel Cells formed two partnerships recently – one with Gaz de France in December 2006 and another with Germany’s EWE in March 2007.
Technology is continually improving. By using lower operational temperatures than conventional solid oxide fuel cells, this SOFC achieves material cost reduction and various operation benefits (Ceres Power).
Other developers of domestic fuel cells include the British group Baxi (now the owner of European Fuel Cells GmbH), heating technology manufacturers Viessmann and Vaillant (both in Germany), and SOFC developer Hexis Ltd (formerly known as Sulzer Hexis).
Progress by some of the major developers
Large stationary units
FuelCellEnergy’s (FCE) signature product is the DirectFuelCell – a high-temperature MCFC available in 300 kW, 1.5 MW and 3 MW units. The company has supplied over 60 installations worldwide, generating over 150 million kWh. FCE upped its manufacturing volume from 6 MW in 2005 to 9 MW in 2006, and its annual output is now 10 MW with the potential to reach up to 50 MW.
The power unit is designed to last 20 years; the fuel cell stack currently runs for three years before power output and efficiency decline by 10%. FCE has refined its cell design to extend lifetime to five years and is modifying its manufacturing processes accordingly. Manufacturing roll-out of this five-year stack is expected by the end of 2007.
Product costs are $4800/kW, $4300/kW and $3250/kW for the 300 kW, 1.5 MW and 3 MW models respectively; by 2006 the cost for the largest unit had fallen from $5300/kW within a year. The company claims design and procurement changes should further reduce costs by about 20% in 2008 and additional reductions may be possible because of higher volume demand from the US (Connecticut and California) and Korean markets. In early 2007, FCE signed a 10-year manufacturing and distribution agreement with POSCO Power, Korea’s largest independent energy producer. POSCO has since bought two units totalling 2.4 MW and has sold 5.1 MW of units to two Korean energy producers.
UTC Power develops PAFCs. Its PureCell unit provides up to 200 kW plus 870,000 Btu/hour of heat for cogeneration use. It has a power plant life of 10 years, with a stack overhaul required at the end of five years or 40,000 hours of operation. A next-generation PAFC stack delivering a 20-year operating life with an overhaul at the end of 10 years, up to 400 kW of power and more than 1.6 million Btu/hr of thermal output is in the final stages of development. To be introduced in spring 2009, the unit is expected to be competitive with grid electricity not only for its performance in terms of part-load and full-load electrical efficiency, overall CHP efficiency and superior load-following capability, but also for its lower first cost and life-cycle cost. Current units cost around $4500/kW and UTC Power expects the unit to be competitive within five years of its introduction at a price of $2000-2500/kW.
CFC Solutions GmbH (formerly MTU CFC Solutions), Europe’s fleet leader, markets the high-temperature MCFC HotModule. This unit is characterized by a cylindrical steel container with a horizontally arranged fuel cell stack using FCE’s technology. Units typically have 245 kWe and 180 kWh capacities, nearly 50% electrical efficiency and up to 90% overall efficiency in CHP mode, and an operational lifetime of 30,000 hours. The company has installed 17 units in Europe, mostly in Germany. Its assembly line manufacturing cell stack components is ready for volume production. CFC plans to cover the 250-1000 kW range, and make larger cell stacks with extended lifetime. HotModule units cost four times more than engine-based CHP units with similar capacities, but the company says it is targeting a cost of €1500/kW.
Nuvera Fuel Cells based in Italy and the US, provides PEMFCs and fuel-processing products. In the stationary market, the 120 kW Forza system was designed in partnership with worldwide electrochemical plant developer Uhdenora SpA. Units can be scaled up to produce power at 500 kW to several MW, and each has an operation lifetime of about 17,500 hours before overhaul. The first market-ready product began operating in July 2006 at a chlorate production plant in Italy – said to be the world’s first commercial, large-scale fuel cell system in the electrochemical industry. The unit runs solely on hydrogen produced as a by-product of the chlorate manufacturing process and the electricity output is fed directly to the chlorate cells.
This system is also suitable for use in mercury plants. According to Nuvera, it proves the ‘industrial validity’ of fuel cell technology and ‘will contribute to a quick commercialization process’. An expansion of the Forza family of fuel cell products is planned for 2007.
Ballard Power Systems is a Canadian PEM developer with significant interests in the Japanese residential market. It provides cells to Ebara Ballard Corporation (its joint venture with Japan’s Ebara Corporation), which distributes natural gas and kerosene-based units to several Japanese gas companies and Nippon Oil. In 2006, Ebara Ballard delivered the first prototypes of a ‘third generation’ fuel cell meeting the Japanese government’s 40,000 operation lifetime target. Because the cell is 40% lighter and 26% smaller than the previous model, it uses less platinum and materials, enabling cost reduction. Ebara Ballard’s cells are currently manufactured in Canada using some components from Japan. A high-volume, high-speed manufacturing plant will be commissioned in Japan by the end of 2007; eliminating shipping and logistics costs will reduce prices, says company spokesman John Harris.
Ceramic Fuel Cells, from Australia, is working to make its high-temperature 1 kW SOFC units commercial in Europe by 2010. It has formed strategic partnerships in Germany with utility EWE and boiler manufacturer Bruns, and in France with gas company Gaz de France and boiler manufacturer DeDietrich. The units are fuel-flexible (running on propane or butane) and can operate 24 hours per day. The company is also working to reduce the physical size of the system. The Alpha prototype will be ready in spring 2008 and the Beta unit later the same year. Ceramic Fuel Cells is using over £37 million raised on the Alternative Investments Market (AIM) to scale up manufacturing, build demand and develop the supply chain. Construction of a large-scale volume-manufacturing facility began in Germany in January 2007. A production line with an annual capacity of 50,000 1 kW cell stacks is scheduled to be completed in 2009; three fully automated production lines designed to make up to 150,000 units per year will then be added.
Ceres Power is also looking to introduce production facilities in the next few years. This SOFC developer has partnered with Centrica in the UK to provide units for the residential market and is currently evaluating options with original equipment manufacturers (OEMs), including boiler manufacturers. The company is using £25 million raised through private equities and an AIM listing to invest in manufacturing capacity. A pilot-scale manufacturing plant and a demonstration unit are due to start operating in summer 2007, with commissioning of a full-scale manufacturing facility expected in 2008. This would be followed by a phased product development period and a ‘mother’ plant start-up in 2009.
Unlike conventional SOFC technology, the Ceres technology uses totally ceramic cells made from a new generation of materials known as CGO (cerium gadolinium oxide) instead of the industry standard YSZ (yttria-stabilized zirconia). CGO’s lower operation temperatures (500°C-600°C) mean that conventional stainless steel can be used for the cell substrate and other parts of the fuel cell, reducing the stack material costs. The lower temperature also allows the electrochemical layers to be made extremely thin and to be optimized, according to Ceres, to reach ‘world-beating’ power density levels. This enables very high efficiency and a heat-power ratio of nearly one-to-one – ideal for CHP applications. Because the cells are metal-supported, they can be easily sealed, are mechanically robust and are highly resistant to thermal shock – all factors that allow rapid start-up times and frequent on/off cycles for daily use.
The horizon and beyond
It is without question that fuel cell performance must improve before units can enter the power generation mainstream market Even so, the long-awaited, market-ready technologies are finally in the pipeline, with their market emergence expected by the end of the decade.
In the residential market, Japan’s drive is truly phenomenal. The government is pushing fuel cell developers to improve their units technically so they can be deployed commercially by 2009 and to lower costs eventually to a level where, by 2012, no subsidies are needed. In Europe, signs of utility interest in micro CHP bode well for fuel cells. Strategic partnerships with gas companies and major investments by companies in manufacturing capacity ready for 2009 are all signs that the European market is gearing up for commercial launch.
In the large-scale stationary sector, major companies are working on increasing product durability, reducing costs and developing units with a bigger power output. For example, FCE’s manufacturing roll-out of its five-year stack by the end of 2007 and UTC’s expected introduction of its 80,000-hour lifetime 200 kW unit by 2009 are something to watch out for.
Geographically, stationary fuel cells are extending their reach. A notable development is in South Korea, where POSCO Power’s distribution arrangement with FuelCell Energy may mark the beginnings of a commercial stationary market there. This is, in part, because of new policies favouring clean energy: all plant purchases in Korea now benefit from government subsidies of $0.23-0.28/kW and self-producers are encouraged to export their electricity to the grid. Across the Pacific, Canadian companies are researching and developing fuel cells; the activities of Ballard Power Systems in the residential sector illustrate the highly international interactions of the fuel cell industry.
Today’s most common stationary fuel cell technologies are MCFCs for large-scale units and PEMFCs for residential units. However, R&D activities suggest that SOFC technology may be the next rising star. Research by various US and European companies, as well as the US SECA programme, is examining the SOFC fuel cell/gas turbine hybrid. SECA is also developing SOFCs that can be cost-competitive with reciprocating gas engines, with companies announcing positive interim results. In the residential market, it will be interesting to see how the SOFCs being developed by Kyocera, Ceres Power and Ceramic Fuel Cells change the ‘balance of power’.
These snapshots of product improvements, company business plans and technology trends show that the road is being paved for the launch of a good number of market-ready products by 2010. They suggest that full commercialization is indeed on the horizon.
And the story does not end there. Beyond the horizon, the question will be: when will fuel cells move from a subsidized industry to a cost-competitive one?
Monique Tsang is on the COSPP editorial team.
The technology at a glance
The fuel cell is essentially an electrochemical device that converts fuel energy directly into heat and electricity without the use of combustion. Oxidization of the energy carrier (hydrogen or a carbon-based material) at the anode frees up electrons which flow to the cathode (where oxygen is reduced), producing an electrical current and releasing heat and water. Most fuel cells use ambient air as the oxygen source. Hydrogen is chemically extracted from compounds or created as a by-product of the chemicals industry; carbon-based ‘fuels’ commonly come from desulphurized natural gas, although ‘waste’ biogases such as landfill gas, coal gas and anaerobic digestion gas are increasingly being used.
A fuel cell unit typically consists of a fuel processor (which prepares the gas for reaction), a cell stack (where the electrochemical reaction takes place) and a power conditioner (which adjusts the electrical output to user specifications). The electrolyte determines the operation temperature. The various types of fuel cell are named after their electrolytes. The four main types for stationary cogeneration applications are:
- Molten carbonate fuel cells (MCFCs) use carbonate salts as electrolytes. They operate at high temperatures (600°C-700°C) and, as such, are suitable for baseload electricity and cogeneration applications. Factors that limit their lifetimes include corrosion of the carbonate salts and, to a greater extent, dissolution of nickel from the electrodes.
- Solid oxide fuel cells (SOFCs) use ceramic substances as electrolytes. The very high operational temperature (600°C-1000°C) make SOFCs suitable not only for large-scale baseload applications, but also hybridization with a gas turbine (the turbine uses exhaust heat from the fuel cell, allowing electrical efficiencies of 60% or higher. SOFC advantages include their solid state design and no water management problem. However, their high operational temperature can cause material problems.
- Phosphoric acid fuel cells (PAFCs) operate at 150°C-220°C and are suitable for cogeneration at residential and commercial sites. Unfortunately, the PAFC suffers from performance degradation due to the highly corrosive nature of the reaction environment.
- Proton exchange membrane fuel cells (PEMFCs) operate at low temperatures (80-100°C) and have high power densities. The low temperatures allow the system to be easily switched on and off. The PEMFC is suitable for automotive, portable and small-scale stationary use. The wide range of applications mean that PEMFC costs have fallen faster than those of other types of fuel cell.