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Summary:

Now that Japan, Germany and other European countries have started to move away from nuclear plans, large fuel cell makers like FuelCell Energy are seeing an uptick in interest in those countries. That’s what FuelCell Energy CEO and President Chip Bottone told me in a recent interview.

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Now that Japan, Germany and other European countries have started to move away from nuclear plans, large fuel cell makers like FuelCell Energy are seeing an uptick in interest in those countries. That’s what FuelCell Energy CEO and President Chip Bottone told me in a recent interview. FuelCell Energy currently sells about 65 percent of its fuel cells outside of the U.S., where about two thirds of its customers are utilities.

Fuel cells create a chemical reaction to produce electricity and heat. They look like large industrial refrigerators filled with stacks that are lined with catalysts (a metal, sometimes platinum), and a fuel (commonly natural gas) is inserted in one side and runs over the stack. Electricity and heat flow out the other side. Utilities and industrial and commercial businesses are sometimes interested in the technology because it is cleaner power than fossil fuels, and it’s distributed.

However, as Bottone explained in an interview, the overall fuel cell industry has over promised and under delivered for a good two decades. Prices have largely remained too high to be competitive with grid power. FuelCell Energy itself saw its stock close at below $1 per share on Monday.

But FuelCell Energy also says that it’s at a point where it’s making money off of the individual fuel cell power plants that it sells (it generated a gross quarterly profit from products and service for the first time last quarter), and when it ramps up its manufacturing capacity to 80 to 90 MW per year (it’s currently at 56 to 60 MW) it will be profitable. That could make it a record-holder as the first profitable fuel cell company.

To get to those profitable goals, FuelCell Energy has been selling fuel cell power plants at the size of megawatts — the bigger installation the better the economics are, says Bottone. The company has installed 182 MW to date (Updated: this is actually both installed and in backlog), and sells its fuel cells at around $3,000 per kilowatt. When it ramps up its production to that 90 MW, it will be able to sell the fuel cells closer to $2,000 per kilowatt.

FuelCell Energy has it has already installed the most fuel cells in the world, and that its stack — the place where the chemical reaction occurs — can last five years. Stack replacement is one of the pain points for the younger fuel cell companies like Bloom Energy. FuelCell Energy operates the power plant for the customer, including doing maintenance and replacing parts. Eventually the company thinks it can get its stack to last 7 years.

If more utilities and businesses across the world start to look to fuel cells as one way to create more clean power, particularly now that nuclear is becoming less supported, it could help FuelCell Energy reach that profitable point. Fuel cells, like nuclear, offer base load power (not fluctuating throughout the day like the sun and wind). But of course, nuclear power plants have been built to offer gigawatts of power, instead of a few megawatts.

In the U.S. utilities have moved pretty slowly when considering fuel cell tech. According to a report that consultants Black & Veatch released in June, utilities in the U.S. think that fuel cell technology will have one of the least impacts on their businesses in comparison to other types of green technology.

  1. Jonathan Jeckell Tuesday, October 18, 2011

    This is completely backwards. Fuel cells convert a fuel (such as hydrogen) into electricity. You can’t mine hydrogen on Earth, and nuclear power plants & renewables are the cleanest ways to make it. So closure of nuclear plants takes away options to make fuel cells viable…unless you want to burn coal or natural gas to make it, which defeats the purpose.

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  2. Rob (Bob) Wilcox Tuesday, October 18, 2011

    I am a big believer in fuel cells. And Japan has an export-worthy Ene-farm program. But Japan imports its natural gas. So a better solution for base load there is geothermal. Likewise converting transport to renewables with electric vehicles would be a good strategy for Japan, and Nissan, Toyota and Mitsubishi are focused on it. Wave and offshore wind varies, but not to the extent of onshore wind and solar. Again a good source for Japan. Japan will be a great market for smart grid technologies and Japanese consumers have a much greater apetite for in-home energy management than in the US.

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  3. @Jonathan: Most large stationary fuel cells (MCFC or SOFC) do not require hydrogen as a fuel but can actually run on natural gas or similar fuels at pretty high efficiency; this also holds for the products from FuelCell Energy.
    Separately, many countries are ramping up renewable energy generation fast (Germany already passed the 20% mark of electricity from renewables this year) with growth coming largely from wind and solar, which are both fluctuating. As a result, you will increasing see times where renewable energy is produced but cannot be used at the time, eventually leading to a necessity for large scale storage in the TWh range. Producing hydrogen and using it as a chemical energy storage is one of the few options being discussed, and there is a good chance that you see ‘green’ hydrogen becoming available trough that route pver the next years.

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  4. the fuel cells are too expensive

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