How far away is the commercialization
of a cost-competitive fuel cell?
Millions of dollars of transactions flow through a computer system each day at the First National Bank of Omaha, Neb. With every hour of downtime costing the bank $6.5 million, the facility needed an on-site power system that would not only weather brownouts and power surges, but also produce the maximum amount of uptime. Many uninterruptible power systems (UPSs) promise 99.99% of reliability, which translates into 53 minutes of downtime per year, says Dennis Hughes, the director of property management. But when you're the seventh largest credit card processing facility in the country, power outages are simply not an option. To protect its computers and keep the data center up and running, the bank purchased four 200kW fuel cell units, which promise only 0.31 to 3.18 seconds of downtime per year or seven nines of reliability. These units are installed 15 feet below ground on the first floor of the 200,000-square-foot data center. In addition to the fuel cell array, a UPS system serves as a backup, and the electricity from the grid serves as a third layer of protection.
For clients who demand premium power quality and reliability, fuel cells can provide effective on-site power generation. Fuel cells produce electricity from a chemical reaction, operate like a battery, and have efficiencies of up to 85% when combined with heat recovery. While they may seem like a new technology, they've actually been known to science for more than 150 years. More than 250 stationary fuel cell systems are generating power for industrial applications such as hospitals, and data processing centers worldwide.
Although fuel cells aren't new, the market still faces several barriers to widespread commercialization, and it may take a long time for this technology to become an affordable replacement for more traditional forms of emergency power generation, such as diesel generators, flywheel systems, or battery systems. It could take even longer for fuel cell technology to make inroads into the mainstream, full-time distributed generation market. But increased funding on the federal level could boost the fuel cell industry. President George Bush has committed $322 million to the Department of Energy's 2006 fiscal budget for fuel cell and hydrogen technology programs, which is an increase of $20.5 million over the 2005 budget. The president's budget proposes level funding for fuel cells in power generation applications.
With a proposed appropriations increase for fuel cell technology, electrical contractors and engineers must try to understand fuel cells now so when the industry eventually takes off, they can be ready and waiting for the opportunity. Before your company decides to jump into this market, however, you should know about the current state of the industry, the measures to drive down the cost of the units, the challenges of processing the fuel, the benefits and drawbacks of this technology, and what lies ahead for the market.
Paving the way for commercialization. According to Allied Business Intelligence, Inc., the $40 million stationary fuel cell market will grow to more than $10 billion by 2010. These predictions are supported by Russell Waters, assistant professor of civil, construction, and environmental engineering at Iowa State University in Ames, Iowa. Waters is the author of a 2001 study titled, “The Impact of Fuel Cells on Electrical Contractors,” in which he analyzed the initial costs, future energy savings, and future costs of a 200kW fuel cell unit for the Electrical Contracting Foundation.
“When we started this study, the fuel cell market was really hot and people were investing heavily in fuel cell companies,” Waters says. “There was a feeling that the market was ready to burst any moment.”
The fuel cell market, however, didn't take off as expected. Manufacturers hoped to have their fuel cell units out in the market in 2001, but it didn't happen. Waters says that after having the luxury of some hindsight, he realized that the fuel cell market wasn't ready for full-scale commercialization due to issues with processing fuel and cost.
Since Waters conducted his study four years ago, however, some manufacturers have taken steps to reduce the cost of fuel cell units and improve the technology. Pierre Rivard, president of Canada-based Hydrogenics, says his company has made progress on the cost, performance, and the business development sides over the past two years. The manufacturer currently customizes its fuel cell units for each client rather than mass producing them due to each customer's diverse needs and requirements as well as the low volume. But over the past few months, the manufacturer has begun to standardize its core technology, establish certain power ranges, and deploy its units in many different areas and industries, such as the light mobility market. Rivard says his company is also focusing on reserve backup power in the stationary fuel cell market, which has a different need than the continuous power market, which caters to the electrical grid.
“In the reserve backup power market, you're displacing diesel generator sets or batteries with zero-emission equivalents,” Rivard says. “We have an advantage over batteries in that we can last a lot longer. For many applications where you need to have backup power for more than half an hour, it's very tough to compete with the fuel cell and hydrogen technology.”
Hydrogenics, like the other fuel cell manufacturers, however, still faces barriers to commercialization, such as the hydrogen refueling structure, streamlining the regulations, minimizing the hurdles to installation, and of course, driving down costs.
The price of premium power. The most expensive kilowatt hour is the one you can't get, says Bob Rose, executive director of the U.S. Fuel Cell Council, a trade association for the fuel cell industry.
Because of the high value placed on premium power, fuel cells can provide an environmentally friendly and efficient solution for backup power for data centers and manufacturing facilities.
Right now, however, fuel cells are expensive, and Rose says the price reflects the low volume. For example, the plastic membrane that's used inside the fuel cell sells for $500 per square foot in small quantities in the fuel cell industry, but for only $50 per square foot in a fertilizer plant due to its widespread use in the manufacturing process.
“We need to develop a market big enough so that big-time suppliers have an interest in negotiating prices,” Rose says. “The technology is new enough that cost reduction options can help yield a lot of benefit, payoff, and bang for the buck.”
Most manufacturers currently build their units in-house, but some companies are experimenting with outsourcing, Rose says. Another way to decrease the cost of production is to reduce the number of components, which in turn decreases the amount of labor hours spent on the unit. Ultimately, however, manufacturers need to find applications that will allow them to have a sufficient volume of units to bring down the cost.
“As we've seen with most industries, as the volume doubles, the cost is cut in half,” Rivard says. “This is something witnessed in all industries from semiconductors to electronic appliances.”
Hydrogenics has managed to reduce the cost of the fuel cell units by 50% each year over the past three years, Rivard says. The manufacturer's pricing now ranges from $5,000/kW to $10,000/kW. Iowa State's Waters forecasts that once manufacturers are able to increase their production quantities, they'll be able to get the cost of a fuel cell unit down to $1,000/kW. Even at this reduced rate, however, a fuel cell unit will still cost two to three times as much as a diesel powered generator, which typically costs between $300/kW and $500/kW.
“There is a huge cost differential between fuel cells and some of the more traditional ways of producing backup power,” Waters says. “With government incentives, the right gas and electricity prices, and wider adoption, fuel cells can work out financially at $2,000/kW. The magic number that would really make fuel cells sell is $1,000/kW.”
Waters says he forecasts that fuel cell units will follow a pricing curve like any other technology. For example, he remembers a story about a store in England that sold VCRs for $4,000 to $5,000 when they first came out on the market in the '70s. Within the past three decades, the price has dropped to about $50 to $70. Similarly, once the fuel cell companies are able to ramp up their level of manufacturing, they'll also be able to drive down the cost of the units.
Fueling a fuel cell. A carbonate fuel cell converts a hydrocarbon fuel, such as natural gas, into electricity without the combustion of the fuel. Because hydrogen isn't available as a free state commonly found in nature, fuel cell manufacturers must manufacture the fuel from other substances, namely water, which is 66% hydrogen, or natural gas, which is 76% hydrogen.
“A fuel cell needs fuel,” Waters says. “I wouldn't call this a disadvantage but a reality. The problem is that you can't just hook up to the hydrogen pipeline. It takes a lot of filtering and processing to purify the hydrogen before it hits the fuel cell.”
Manufacturers often break down natural gas, extract the hydrogen, and filter out such contaminants as carbon monoxide, carbon dioxide, and sulfur through a process called reforming. Vehicular applications, however, are able to use water as a fuel through reverse electrolysis. In this process, hydrogen is created from the water without the need for any purification. While some stationary applications are running on hydrogen through reverse electrolysis, the majority of units operate on hydrogen derived from natural gas, Rose says.
Fuel cells can also run on bottled hydrogen, methanol, diesel, biogas, coal gas, coal mine methane, and propane. Some of the fuel cell family members were developed as coal gas strategies in the '70s. For example, molten carbonate fuel cells use carbonate as an electrolyte (Table). While the average U.S. fossil fuel plant burns coal at an efficiency of 33%, a carbonate fuel cell can reach a fuel efficiency of 45% to 50% when using coal gas and other methane-based fuels. The efficiency of the fuel cells is also dependent on the type of technology. While low-temperature fuel cells, such as PEM and phosphoric acid fuel cells, require an external reformer to filter out contaminants, high-temperature fuel cells, such as molten carbonate and solid oxide fuel cells, have an internal reforming process and can generate electricity directly from a hydrocarbon fuel.
Ups and downs.. Fuel cells have an advantage over other distributed generation technologies because they're electrochemical devices that rely on chemistry rather than combustion.
“They are inherently more efficient than burning a fuel,” Rose says. “In most cases, it's hydrogen and oxygen, and the only byproducts are water, heat, and useful energy. The electrochemical nature of a fuel cell makes it fundamentally a better strategy for the energy future than any kind of combustion system.”
Because fuel cells are powered by hydrogen and don't burn a fuel, they have zero emissions and produce minimal pollution. The first commercially available fuel cell power plants create less than 20 grams of pollutants per MWh, compared to more than 11,388 grams per MWh for an average fossil-fueled plant.
Rivard views the relative simplicity of a fuel cell as another key advantage. Unlike conventional engines with multiple moving parts, a fuel cell is quieter and simpler to maintain.
Fuel cell systems are also scalable and can be customized to fit the individual needs of each client. For example, a single fuel cell produces less than 1W of power, but each fuel cell system consists of many individual units. Thus, a user can combine 200kW fuel cell units to generate more than 1MW of maximum capacity.
“That adds to the inherent reliability of the system,” Rose says. “If you have 20 cells in a stack and one cell isn't working, the other 19 probably will and you probably won't even notice a difference.”
While cost is the primary barrier to commercialization, the technology also faces another fundamental disadvantage — a limited lifespan. The reliability of fuel cell systems hasn't been fully tested for a long period of time, Waters says. When conducting his research, he used a study from the Department of Defense, which installed fuel cells in 35 different locations around the country and measured their performance. For stationary power applications, users would need to see about 20,000 hours of operation to make their initial investment worthwhile.
“Fuel cells need to be able to operate for four or five years continuously,” Waters says. “From what I'm hearing, the fuel cells are not quite to that level of operation.”
Rose says it takes time to produce a record of reliability. And the more time that goes by, the higher the benchmark for success is raised. A decade ago, the electric utilities wanted fuel cell units that could operate for 40,000 hours, but now some of them are trying to reach a milestone of 80,000 hours.
Opportunities for electrical contractors and engineers. A fuel cell power plant consists of a fuel cell stack module and various fuel handling and processing equipment, such as pipes, blowers, and electrical interface equipment like inverters. A stationary fuel cell installation typically relies on two or three technicians with an additional support staff of about five or six software engineers and code experts. To install a fuel cell, the technicians must prepare the ground and the connection to the utilities, provide electrical input to the refueler, and connect the fuel cell output to the grid. A stationary fuel cell installation would also require troubleshooting from mechanical, software, and electrical engineers. Electrical engineers are often responsible for sizing the electrical loads of the system, determining the emergency power load, and figuring out the best sized unit to serve the load.
“Fuel cells might be a little more complicated than some of the other systems,” Waters says. “There is a lot of heat produced off of them and there's a chance of tying into your building's thermal system for some additional savings. That may fall a little bit out of the line of a traditional electrical engineer.”
At this time, no one industry is in control of installing and maintaining fuel cells. Because they're gas-powered devices that produce electricity, other trades such as mechanical contractors have pursued this industry. Electrical contractors, however, should view fuel cells as an electrical device that just happens to be hooked up to a gas source. Waters feels that electrical contractors can gain an edge over other trades because they have experience installing and reselling a similar technology — diesel generator sets.
“Electrical contractors should try to follow more of the diesel generator market where you have your supplier that sells the generator but then the contractor buys and resells it to the owner,” Waters says. “This is a way for them to get some of the profit off selling the equipment and get involved in the maintenance side of it.”
Waters said during the Department of Defense study the manufacturers involved with these early projects hired electrical contractors to prepare for the installation of the fuel cells. While the contractors installed the concrete pad and ran conduits to power the fuel cell unit, the manufacturers were responsible for bringing the fuel cell unit in, setting it in place, and connecting it.
Rose says that because fuel cells are an electrical technology, electrical contractors will have a good opportunity to break into the installation and maintenance side of the market. He also expects the trend to shift to merchant manufacturing rather than having engineers on-site.
“I don't think there's a question that this is an area that should provide jobs and opportunities in the future,” he says.
Hoagland Electric, a Fort Wayne, Ind.-based electrical contracting firm, is one contractor that would like to add fuel cell installations to its list of specialties, which include commercial, industrial, design/build, and 24-hour emergency service. President Dan Hoagland has contacted the major fuel cell manufacturers and is committed to investing the time, money, and training necessary to become an installer or dealer. When he is able to break into the market, he would like to ensure that his electricians provide a quality installation in order to give the fuel cell market a good name.
But at this time, rather than hiring outside firms, Hydrogenics has hired an inside team of electricians and engineers with varying skill sets. The manufacturer currently has 24 electricians and 15 engineers on staff. When these employees are brought on board, they receive a substantial amount of hands-on training and learn about hydrogen safety. They then join a team of technicians to learn how to assemble and install a fuel cell.
Rivard, who hires electricians who have completed a three-year course at a post-secondary institution, says having an inside team of technicians has many benefits.
“The more that experienced people work together, the faster you get the projects on track in terms of budget and delivery,” he says. “You also get better ideas and products in the end.”
Future of fuel cells. Without a crystal ball, engineers and contractors must sit still and wait for the full-scale commercialization of the technology. When looking into the future, Rose envisions a blending of various renewable generating technologies and hydrogen generation technology.
“The wind doesn't always blow and the sun doesn't always shine, and storing electricity as electrons is kind of hard,” Rose says. “A lot of people see hydrogen as a better storage mechanism. A lot needs to get worked out, and you have to look at the economics of those things as well as the technologies.”
Researchers have already figured out a way to generate hydrogen from solar power, and solar refueling stations are currently up and running in California. But the economics of it may restrict commercialization. Rose says the nation needs to drop the cost of solar and wind power, get higher efficiency electrolyzer systems, and make improvements in hydrogen storage.
“A lot of the challenges with fuel cells are not based on the fuel cell themselves, they are getting the fuel and storing it fuel affordably,” Rose says.
Rivard says he sees great potential for fuel cells because they can cater to all of the energy needs in society, from laptops to district power to busses to cars.
“It won't be a sudden transition or a revolution but rather a gradual evolution,” he says. “I think fuel cells offer tremendous potential.”
While the fuel cell market may not explode overnight, electrical professionals should have a solid understanding of this technology in the event that they're called upon to specify or install one. You may not get to work on such a large-scale project as the First National Bank data center, but you could discover an opportunity to learn about this technology, gain hands-on experience, and turn a significant profit by getting an early jump on the market. One day, you may even find that as the nation moves to more of a hydrogen economy, fuel cells will power the car you drive, the home you live in, and the place you work.
Sidebar: How Does a Fuel Cell Work?
Fuel cells use an electrochemical process to convert the chemical energy of a fuel into electricity, heat, and water. Although they operate like batteries, they never run down. Fuel cells continue to produce energy as long as fuel is supplied to the cell. The fuel processor converts a fuel such as raw natural gas into hydrogen-rich gas and extracts such contaminants as carbon dioxide and carbon monoxide. The power generator then combines hydrogen and oxygen into water and creates DC electricity. Lastly, the power conditioner converts the DC electricity into usable AC electricity.
Sidebar: A Fuel Cell-Powered Home
You can wash your dishes, clean your clothes, and watch TV in this one-bedroom home in Mobile, Ala. The only difference between this 500-square-foot house and other local residences is that it's built inside a laboratory at the University of South Alabama, and is powered entirely by a 5kW fuel cell.
The Department of Energy awarded Dr. Mohammad Alam, chair of electrical and computer engineering at the University of South Alabama, and his research team a $3.5 million grant to study the use of fuel cells in residential applications. The team spent four months constructing the home, and a professor attended a two-week training session to learn how to install the fuel cell unit.
“It turns out that with a 5kW fuel cell, you can basically satisfy the general power requirements of a typical home,” Alam says. “There will be times when the power demand will go way above 5kW, and during those times, you'll have to have some type of backup power supply to satisfy the demand.”
The $55,000 fuel cell supplies 5kW of power continuously, but to satisfy peak demand periods, it can provide up to 10kW of power for a total of 20 minutes. Alam says the average power demand in a typical home is less than 3kW, but during the morning and evening, energy use can skyrocket due to the heavy use of appliances. To monitor the energy consumption in the fuel cell-powered home, the students and faculty installed a smart energy management and control system. This system will monitor all the activities in the house, turn off lights in unoccupied rooms, and delay the operation of the washer or dryer after peak demand periods.
To simulate a real-world application, the research team collected data from 40 homes to generate a typical user load profile, which shows power usage levels during different times of the day. The University of South Alabama research team has received funding from the Department of Energy for Phase 3 of the project, in which the team will look at microgrid neighborhoods, which include five groups of 10 homes. For an earlier phase of the research project, the six electrical engineering, chemical, and software engineering graduate students simulated the effect of a 50kW fuel cell on a microgrid community of 10 homes.
Due to the cost of fuel cells, Alam says he doesn't anticipate that they'll be widely installed in the residential market anytime soon, but he does see fuel cells as a possibility for the future.
“In 15 or 20 years, it will become economically viable to power a home with a fuel cell,” Alam says. “In addition to generating electricity, if you use the heat, which is generated as a byproduct, it will become much more cost effective.”