Fuel cell technology has long held great promise for the on-site power industry. While fuel cell cars and domestic boiler replacements are still a few years away from the market, 200 kW to 2.4 MW stationary generation systems are already demonstrating their commercial and environmental worth around the world. James Wortley reports.

The greatest challenge facing the energy sector today is how to achieve the transition to a sustainable low carbon energy economy that can cope with current energy requirements and provide scope for growth in the future while minimizing environmental impacts. Our current energy system is inherently wasteful and does not encourage sustainable or efficient use of energy. Fuel cells are a technology that provides:

  • a means to use existing fossils more efficiently
  • the versatility to use more sustainable fuels (e.g. anaerobic digester gas) and help reduce all emissions – particulates, carbon dioxide (CO2), nitrogen oxides (NOx) and sulphur oxides (SOx).

      The environmental benefits of fuel cells are universal, but how these factors affect the economics very much depends upon where exactly you are in the world. The economic drivers that provide an attractive environment for fuel cells include:

      • increased power demand
      • high cost of electricity and gas
      • grid connection restrictions and insecurity
      • an environmentally driven political climate.

      In the next section I will discuss some of the regions of the world where political, environmental and economic factors combine to produce a receptive climate to past, current and future fuel cell installations.




      The political climate in California has led to the state becoming somewhat of a hub for fuel cell activities. In March 2001, the California Public Utilities Commission (CPUC) created the Self-Generation Incentive Program (SGIP) as a result of Assembly Bill 970. The Bill was designed to encourage more energy supply and demand programmes and, as a response, the SGIP provides incentives for customers to meet some or all of their energy needs with certain types of distributed energy technologies.

      SGIP is designed with business and industry in mind. The power generation must be in parallel to the grid (not back-up power) and, in January 2008, was updated to apply only to fuel cells and wind energy. Internal combustion engines, microturbines, and small and large gas turbines are no longer offered incentives through the programme.

      In late 2006 the programme was extended through to 2011 by Assembly Bill 2778 and, as of April this year, the 1 MW incentive cap was extended to 3 MW. The incentives for fuel cells are US$4.50 per watt for projects over 30 kW using renewable fuels and $2.50 per watt (with no power limit) providing the systems utilize waste heat recovery meeting the Public Utilities Code 216.6. Fuel cells are also eligible to participate in Renewable Energy Credit (REC) trading programmes in California.

      New York

      Fuel cells have gained significant traction in New York through the New York State Energy Research and Development Authority (NYSERDA). NYSERDA is a public benefit corporation created in 1975 under Article 8, Title 9 of the State Public Authorities Law through the reconstitution of the New York State Atomic and Space Development Authority. NYSERDA offers a number of incentives are applicable to fuel cells including:

      • Fuel Cell Rebate and Performance Incentive. New York’s Renewable Portfolio Standard (RPS) obligates utilities to generate a proportion of their energy from renewable sources and within this there is a CST (customer sited tier) component designed to encourage distributed generation of power. Customers pay a surcharge on their bills which is incorporated into the fund managed by NYSERDA. Customers who pay this surcharge are eligible for incentives to use fuel cells on-site to generate electricity up to a maximum of their own electrical demand. The scheme provides a maximum incentive of $1 million for project of 25 kW and over.
      • Peak Load Reduction Program. The goal of this programme, which expired on 30 June 2008, was to improve the reliability of the New York power grid, particularly in summer months when it is most stressed. Companies with large electrical loads on summer afternoons were eligible for incentives to offset costs up to 65% or $650 per kW – whichever was less.
      • Anaerobic Digester Gas-to-Electricity Rebate and Performance Incentive. Much like the Fuel Cell Rebate and Performance Incentive, this falls under the CST component of the New York RPS. A maximum of $1 million is available per anaerobic digester gas installation and is capped at 400 kW or the customer’s peak connected load – whichever is larger.


      The Connecticut Clean Energy Fund (CCEF) was formed in 2000 by the Connecticut Legislature and, as of 31 March 2008, CCEF’s funded projects, commitments and programme allocations exceeded $165 million. Connecticut utility customers pay a few extra cents each month towards the fund which is used to promote, develop and invest in clean energy sources for sustainable energy. Fuel cells have been enjoying significant success in the following two programmes:

      • On-Site Renewable Distributed Generation Program. Of the 33 completed projects, so far six have been fuel cells ranging from 200–250 kW with an installed capacity of 1.3 MW. The CCEF comprehensive plan announced on 31 March 2008 approved a further four fuel cell projects totalling 1.9 MW. The programme provides funding of $4,700 per kW with a maximum available of $4 million per project.
      • Project 150 – Long-Term Renewable Electricity Purchase Agreements. Project 150 is an initiative in Connecticut to build and operate 150 MW of renewable energy generating capacity. Connecticut utilities are required to procure at least 150 MW of power from Class 1 renewable energy sources under power purchase agreements approved by the Department of Public Utility Control (DPUC). The technical screening for proposed projects is carried out by the CCEF. Projects are limited to maximum size of 20 MW and minimum of 1 MW. FuelCell Energy has been approved for three projects totalling 16.2 MW in the second round of the programme and evaluation of the third round proposals is under way.

      Japan and Korea

      Japan is one of the market leaders for fuel cells across all applications. There are a number of significant drivers for fuel cell technology in Japan including very high electricity prices, reliance on imported energy sources, a strong commitment to the Kyoto Protocol and firm government commitments to fuel cells. Japan’s Ministry of Economy, Trade and Industry (METI) New Energy Programme targets for stationary power are 2200 MW by 2010, 10,000 MW by 2020 and 12,500 MW by 2030.

      1.2 MW fuel cell module for a DFC3000 2.4 MW power plant ordered by POSCO
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      The Ministry of Commerce, Industry and Energy in South Korea has a goal of 300 units (300 kW to 1 MW) by 2012 and a policy to increase the proportion of alternative energy in national energy consumption from 1.4% to 5% by 2011. POSCO Power has been working with the South Korean government to develop a very attractive incentive scheme (Table 1).

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      As of April 2004, all new public buildings with a footprint of 3000 m2 or more in South Korea are mandated to spend 5% of the construction costs on alternative energy equipment and installation. The significance of these incentives is reinforced in a recent announcement that POSCO Power has ordered 25.6 MW of systems from FuelCell Energy, scheduled for delivery in 2009, which takes the total ordered to date to 38.2 MW.




      There are no specific incentives, grants or funding mechanisms for fuel cells in the UK. However, there are a number of initiatives aimed at increasing energy efficiency and reducing the carbon footprint of new and retrofitted buildings from which fuel cells can benefit. These are as follows:

      • Building Regulations Part L 2006. These regulations set maximum CO2 emissions for whole new and retrofitted/renovated buildings with a total surface area over 1000 m2. This requirement is implemented by creating a target emission rate (TER) in kgCO2/m2/year. The TER is calculated by producing a model building of the same size, shape and use as the proposed building with the previous 2002 Building Regulation energy performance values applied. The same is then done with the new 2006 Building regulations and, typically, the results are expected to be 25% better (i.e. less CO2). A number of measures can be used to achieve this reduction including technologies that reduce fuel/energy use including fuel cells.
      • BREEAM. This energy assessment method for different types of buildings uses a points scheme (with a maximum of 100) to rate everything from sustainable design to energy and pollution (NOx). Use of fuel cells for on-site power can award as many as three points to the project. BREEAM also covers China and is growing in Europe. There are similar schemes in the USA (LEED) and Australia (Green Star).
      • Emissions Regulations. Although these are not fully finalized, there are measures afoot in the Environment Agency to exempt fuel cells from the regulations governing reforming gases on-site. This exemption will apply to fuel cells (such as those produced by UTC Power) that reform natural gas within their system to produce hydrogen. If the measure is implemented, it means organizations that install these types of fuel cells in the future will avoid the initial, annual and five-year costs of certifying the fuel cell within the strict emissions regulations.
      • Renewable Obligation Certificates (ROCs). The Renewables Obligation requires licensed electricity suppliers to source a specific and annually increasing percentage of the electricity they supply from renewable sources. The current level is 7.9% for 2007/2008 rising to 15.4% by 2015/2016. Suppliers that do not achieve the required Renewables Obligation are fined. One ROC is issued for every MWh of renewable power generated. Fuel cells are eligible if they use landfill gas, sewage gas, biomass (double ROCs) anaerobic digester gas or pyrolysis gas for CHP applications.


      Germany has a receptive attitude to distributed generation and connecting fuel cells to the grid. Its compensation scheme provides a set number of cents per kWh sold back to the gird. This number is fixed for the first 20 years depending upon the power produced. The current compensation rates are summarized in Table 2. An illustration of how the scheme works is provided by the following example.

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      If a food processing plant has a fuel cell generating 2 GWh of electricity and 1.6 GWh of heat each year, uses biogas from its own wastewater treatment plant to power the fuel cell and feeds the electricity into the grid at a fixed rate of 14 cents for 14 GWh, the returns from the electricity company are approximately €280,000/year.

      Waste/by-product hydrogen

      Another interesting emerging market for fuel cells is industries with hydrogen as a waste or a by-product.

      For example, AFC Energy is focusing on the chlor-alkaline process which consumes 1% of the world’s electricity and produces 1.65 million tones of hydrogen per year as a by-product. The hydrogen at these sites is produced at a number of different locations across one large site and is generally flared. AFC Energy is developing 3.5 kW and 50 kW modular fuel cell systems to be installed across the site to produce electricity for use at the plants and is predicting a potential three year return on investment. AFC Energy has entered into a partnership with Akzo Nobel, the fourth largest chlor-alkali producer in Europe, and plans to deploy test systems later this year.

      The Dutch-based fuel cell developer, NedStack, also has a project running with Azko Nobel at Delfzijl, Holland. Its 50 kW system recently reached the milestone of 4000 running hours and has delivered over 200 MWh to the grid

      Looking forward

      The future looks bright for fuel cell on-site power production. Rising energy prices are driving industry, government and business to find more efficient ways to generate power and heat, and the economic and political climate is becoming friendlier to distributed generation.

      The technology is developing too, with UTC Power now taking orders for its new PureCell Model 400 fuel cell which can provide up to 400 kW of electricity and up to 1.7 million BTU/hour (1800 MJ/hour) of heat and FuelCell Energy releasing its Direct FuelCell-Energy Recovery Generation system, a hybrid fuel cell/gas turbine solution for use in gas pipeline letdown applications. There are also emerging technologies for utilizing industrial hydrogen streams.

      There are opportunities for companies looking to either deploy or become part of the deployment supply chain around large stationary fuel cells including energy service companies (ESCOs), installation, operation, servicing and maintenance.

      James Wortley is Business Development Manager for Fuel Cell Markets Ltd, Iver, UK.
      e-mail: james.wortley@fuelcellmarkets.com

      Fuel cell basics

      The basis of fuel cell technology is that the fuel is converted into electricity via an electrochemical process rather than combustion, with hot water produced as a by-product. Compared with other technologies in the sub 50 MW range and traditional grid connections, fuel cells can demonstrate higher overall efficiencies and significant environmental benefits including:

      • removal of particulate emissions
      • very significant reductions in NOx and SOx
      • substantial carbon savings.

      The core of a fuel cell system is silent and has no moving parts. This means fuel cells can achieve far higher efficiencies in fuel to electricity conversion than traditional technologies.

      Fuel cells are not a new technology but were discovered by a British inventor Sir William Grove in 1839. They were first used on the Apollo Space Missions in the 1960s to generate power heating/cooling and water, and have been used on board all NASA space shuttles ever since.

      Although the initial capital costs of the system are still relatively high (compared with existing technologies such as gas turbines and diesel generators), the operating, maintenance and servicing costs have been shown to provide returns on investment in the region of four to 10 years – it is even possible to make money from the plant in the long term.

      It is also possible to install fuel cells on-site and in locations on sites where other technologies are restricted; this is due to their very low noise, emissions, odours, vibrations and physical footprint.

      US: New York Power Authority (NYPA)

      One source of anaerobic digester gas is as a by-product of water purification at wastewater treatment facilities. The gas is often flared releasing greenhouse gases and particulate emissions, which are substantial enough to be designated as a stationary source of air pollution under the Federal Clean Air Act.

      The New York City Department of Environmental Protection owns and operates a number of wastewater treatment facilities and needed a more environmentally friendly way of managing the anaerobic digester gas produced. Working with the NYPA, it redirected the anaerobic digester gas to fuel cells at four sites around New York. The project was funded in partnership by the NYPA, NYSERDA, the US Department of Defense and the US Environmental Protection Agency (US EPA).

      The NYPA now has nine anaerobic digester gas fuel cells from UTC Power at five different locations in the city. The UTC Power anaerobic digester gas fuel cell has been tested by the US EPA’s Environmental Technology Verification programme.

      US: Alameda County Jail, Dublin, California

      In May 2006, a 1 MW FuelCell Energy DFC1500 fuel cell came online at the Santa Rita Jail in the County of Alameda. The jail needed to augment its 1.2 MW rooftop solar system with a reliable, grid-independent and clean solution that enabled it to manage peak load requirements. The system is able to provide approximately 50% of the facility’s electrical demand and 18% of its hot water demand. The combined efficiency of the solar/fuel cell system provides a net electricity saving of $266,825/year and is forecast to give total savings of $6.6 million over a 25-year period.

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      The DFC1500 conforms to the strict emissions standards set by the California Air Resources Board and also qualifies as an ultra-clean technology, which exempts it from air pollution control and air quality district permit requirements. The solution qualifies under SGIP and is exempt from stand-by charges and additional exit fees.

      An important benefit the system brings to the jail is its 24-hour reliability and independence from the grid, which helps reduce the jail’s vulnerability to natural disasters and grid outages.

      UK: Woking’s ‘Pool in the Park’ fuel cell installation

      Although this example is not the direct result of any of the measures mentioned above, it serves as an excellent example of how fuel cells can be used in leisure centre applications. However, future similar installations would benefit from the initiatives listed above.

      Woking Park pool and leisure centre – powered by a fuel cell CHP unit
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      The fuel cell was installed in 2003 and has an installed capacity of 200 kWe and 900,000 BTU/hour (950 MJ/hour) at 60°C. The system provides electricity for the facility (some is even exported to Woking Council residential properties under the Community Energy Programme) and the heat is used for hot water and to power absorption chillers in the hotter summer months.

      Facts and figures

      • The US Environmental Protection Agency (US EPA) recently released a report on FuelCell Energy’s 250 kW DFC300A fuel cell at the State University of New York, College of Environmental Science and Forestry at Syracuse. The report, which was produced under the US EPA’s Environmental Technology Verification (ETV) programme, estimated the system would reduce harmful atmospheric emissions of NOx by 3.52 tons/year and CO2 emissions by 1020 tons/year compared with using the US electrical grid.

      • UTC Power claims that installing 100 PureCell 200 kW phosphoric acid systems is equivalent to a reduction of around 78,100 US tons of CO2 and 278 tons of NOx (compared with the US grid average). Benefits are relative to US national average emissions from central power generation.

      • According to FuelCell Energy, its DFC technology produces 4.5 g NOx, 45 mg of SO2, 9 mg PM10 (particulate matter) and 444 kg CO2 per MWh. According to its figures this is 99.8% less NOx, 99.99% less SO2 & PM, and 51.75% less CO2 than an average US fossil fuel power plant per MWh. When comparing to small gas turbines (4.6 MW) FuelCell Energy claims its system produces 99.1% less NOx, 98.75% less SO2, 99.98% less PM10 and 34.4% less CO2.