Fall of nuclear could give boost to fuel cells

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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.

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