Fuel cell future: the Sulzer perspective18 May 2001
In successfully defending itself from a recent predatory takeover bid Sulzer has been painting a very optimistic picture of the future for its Hexis fuel cell technology, which is aimed at the domestic heating and power market.
One byproduct of the hostile takeover bid from InCentive Capital that Sulzer has recently successfully fought off has been to raise the profile of Sulzer’s Hexis fuel cell technology. The Sulzer management claimed that the offer from InCentive Capital grossly undervalued the Hexis technology that the company has been developing since 1991.
Sulzer’s basic assumption is that fuel cells will account for a large proportion of the emerging multi-billion dollar market for decentralised power. What is driving this demand for fuel cells? Sulzer cites the following:
• double digit growth in demand for reliable and cleaner power from first-world economies;
• energy security concerns (notably in the US);
• projected growth of 14-15 per cent per annum in the distributed power generation equipment market, which was estimated to amount to about US$10 billion in 2000;
• pollution control legislation demands significantly cleaner energy conversion technology;
• increasing pressure for more efficient use of fossil fuels.
If Sulzer can keep to its timetable of bringing the Hexis solid oxide fuel cell (SOFC) to market in 2001, it can indeed claim to be the first company to offer a commercial residential fuel cell system, giving it, at least for the time being, the edge over other, higher profile, players such as Plug Power. Sulzer believes that it has a significant “first mover advantage” and is about two years ahead of the competition in terms of technology.
The Hexis high-temperature fuel cell is designed to cater for the space and water heating and baseload electricity requirements of a single household. It is being developed by Sulzer Hexis Ltd, which was founded in 1997. The Sulzer Hexis system has a power generation capacity of 1 kW and 2.5 kW of heat output. It will be fitted with a conventional condensing boiler for additional heating needs. With an electrical power generation efficiency of 25-30 per cent, the overall efficiency will be around 85 per cent thanks to waste heat utilisation
Sulzer says it is targeting 4 per cent of the European and US domestic gas heater markets, estimated to be worth about US$12 billion in 2010. According to figures presented by Sulzer, the current Western European market for gas heating systems is estimated to be 2.5 million units per year, while the current US market for gas-fired hot water heaters is estimated at 2.6 million units per year. Sulzer is hoping to pick up 260 000 of these units per year by 2010, with the Asian markets offering additional potential.
In field tests, some 65 600 operating hours have been clocked up since 1998. From 2001 to 2003, several hundred Hexis systems are projected to be sold to energy supply firms in Germany, Austria and Switzerland. Full commercialisation is planned for 2004 in Europe and first commercial sales to the USA are projected for 2005.
In late March 2001 Sulzer unveiled its Hexis fuel cell powered domestic heat and power generation system at the International Sanitation and Heating Trade Fair in Frankfurt and at the same time announced distribution agreements with two German power suppliers. Oldenburger EWE AG, Germany’s largest regional power supplier, will be purchasing at least 155 Hexis fuel cell systems (of the prototype HXS 1000 model) between 2001 and 2003. Over the same period EnBW Energie Baden-Württemberg AG – one of the largest national power suppliers in Germany – will purchase 40 of the systems.
These distribution partners will be the owners and operators of the systems. That means that the end users do not bear any financial risks or risks associated with the failure of the systems to function as intended (ie the basis will be energy contracting). The systems will be installed and maintained by local installation firms.
As of April 2001 Sulzer Hexis says it had signed letters of intent for 300 fuel cell units (of the HXS 1000 type) and 600 of the HXS 1000 systems will be tested over the next three years.
The main fuel envisaged for the Hexis system is natural gas but it is designed to be very flexible in terms of fuel choice. The use of renewable energy sources, eg biogas, LPG or oil is under development.
The Sulzer strategy, as already noted, is to focus on domestic heat and power applications. One reason is that this approach fully exploits the existing natural gas infrastructure. Also, the entry price for the residential mass market is reckoned to be 1500 US$/kWe, compared with about 60 US$/kW for automotive engines, while the space and weight constraints are significantly less demanding in residential applications than in transport uses.
The Hexis SOFC
Sulzer has identified high temperature SOFC technology as the most suitable for the residential marketplace. At the beginning of the 1990s Sulzer decided in favour of the high-temperature or solid oxide fuel cell (SOFC). At the heart of the Hexis fuel cell is the zirconia ceramic electrolyte, which has the function of spatially separating the chemical reactions. It is very thin, gas-tight, electrically insulating, ion conducting (O2-), with the result that the oxidation reaction (chemical energy) causes charge separation (electrical energy).
The SOFC type is certainly the most exacting fuel cell technology from the materials standpoint, but it offers the advantage of uncomplicated fuel pretreatment. Since, with this type of fuel cell, the oxidant, the O2- oxygen ion, migrates through the zirconia ceramic electrolyte, there is great freedom of choice regarding the chemical species to be oxidised. With the PEFC for example, in contrast, it is the H+ hydrogen ion (or proton) that crosses the electrolyte, which means that the fuel must be purified hydrogen. The SOFC naturally also works with high purity hydrogen, but it does not rely upon this fuel, which is expensive to produce and difficult to handle. The system also works with natural gas, which is envisaged as the principal fuel, liquefied petroleum gas and methanol.
A further advantage of the SOFC is that the heat is generated at a high temperature level, 700 to 1000 °C. The waste heat may be utilised directly in the reformer for fuel pretreatment and decoupled in a simple manner for heating purposes or to drive an absorption air conditioner. Unlike some of the competing technologies, complicated fuel pre-treatment systems are not needed. The fuel reforming occurs internally rather than requiring an outside system. The high temperatures also mean that the fuel cell is better suited to combined heat and power and combined cooling and power applications. But the temperatures are certainly still low enough to avoid the formation of nitrogen oxides.
The outstanding feature of the round, planar Hexis cells is the multifunctionality of the current collector. It acts simultaneously as a guide for the gas and as a miniature heat exchanger for the inflowing air. Since the pressure differences are minimal, there are no sealing problems. At the outer edge of the cell there is the possibility of burning off the unconverted fuel.
Field tests and pilot systems
Sulzer believes that the 65 600 hours of system demonstration operating hours that it had amassed (as of March 2001) are unparalleled in the fuel cell business, and also points out that current field testing is on natural gas (not hydrogen). Operating experience to date suggests that the Hexis system produces less than 5 per cent of the NOx emissions of conventional CHP systems.
Major milestones in the Hexis test programme have included:
Long-term lab test. A test stack ran in 1997-98 for over 12 000 hours under controlled lab conditions with hydrogen as the fuel. All components fulfilled the requirements extremely well. Power drop due to ageing was negligible. The electrical efficiency was 35 per cent.
Field test in Winterthur. A first field test system left the laboratory in May 1997 and was installed at a Winterthur municipal utility (StWW) site. This system is completely remote-controlled via modem and telephone line, and is powered by natural gas. It was initially used to test various fuel cell developments under realistic conditions. With one stack, over 1 kW was fed into the grid for the first time in July 1998.
The technical data for this stack were as follows: diameter, 120 mm; height, 518 mm; number of cells, 70; total cell area, 0.7 m2; operating temperature, 950 °C; stack voltage, 39 V; stack current, 27 A; electrical power, 1053 W.
Field test in Dortmund. A second field test system has been running since September 1997 at a Dortmund Energie und Wasserversorgung GmbH (DEW) site. The fuel cell stack installed was powered by natural gas from DEW’s low pressure gas grid. The system was also completely remote controlled, ie operated from a desk in Winterthur. The system was dismantled in 1998 after completion of the tests. Because of its positive experience with Hexis, Sulzer reports, DEW decided to become a distribution partner for the technology (as of autumn 2001).
Test operation with gas from a rubbish dump. In October 1997 it was demonstrated that Hexis cells can also be powered by gas from rubbish dumps.
Test operation with fuel oil. In July 1998 cells were successfully operated with fuel oil in the Hexis laboratory. Development of a fuel oil reformer is being pursued in a separate project supported by the Swiss Oil Association.
Overall these early tests were encouraging and demonstrated the stability of the thermally heavily stressed cell materials, successful system integration and the ability of the system to operate with a range of fuels. The experience gained from the first field test systems in Winterthur and Dortmund particularly played an important role in the development of pilot field test systems for long-term tests. Thanks to higher integration density and simplifications in the design, it was possible to drastically reduce the dimensions of the field test systems.
In the autumn of 1998 four systems were installed for three-year test runs. In 1999 and 2000, two more systems were installed.
Those interested are primarily energy supply companies who are evaluating the commercial possibilities of decentralised energy services based on Hexis. These companies assume a major share of the cost for the long-term tests, allowing Sulzer Hexis the freedom of putting its own resources solely into product development.
Sulzer Hexis says that since 1990 it has built up a comprehensive patent position, with eight in stack design, eight in materials, and 12 in systems and claims 100 per cent retention of key people.
Moving into manufacture
The first batch of 50 units is currently being manufactured in Winterthur, in a pilot production plant. Significantly, manufacturing costs of the prototype HXS 1000 Premiere model have been reduced by more than 50 per cent relative to those for the field testing units. Installation and operation will start this autumn.
Systems will be introduced only once full reliability is proven, with the target market being gas-connected houses in Europe and the United States. Sulzer reports that it has done extensive market research and intends to expand its production and sales partnerships to quickly achieve global coverage.
It expects long term prices of its Hexis technology to be competitive with conventional gas heating systems.
A key part of the Sulzer strategy is to retain responsibility over all critical, high added value elements of the production process, in particular stack design and assembly, fuel processing and system integration. Partners will be selected for supplying individual components. Utilities will be responsible for placing Hexis systems at the disposal of end-users (contracting). Installers will provide maintenance services. Sulzer Hexis will be responsible for providing training and support to utilities and installers.
Examples of Sulzer’s current partners in the Hexis project include: Plansee AG (metallic interconnectors); Nippon Shokubai (electrolytes); and ECN/InDec (ceramic components).
The cumulative investment in Sulzer Hexis to date is estimated at about CHF 70 million (excluding plant). Financial break even (on the basis of earnings before interest and tax (EBIT)) is expected in 2006.
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