Fuel cells and distributed generation
Nuon order changes the game for CFCL1 April 2008
The vision of residential distributed power generation took a decisive step closer to becoming reality in February with the announcement by CFCL (Ceramic Fuel Cells Ltd) that Dutch energy company Nuon has committed to place a volume order for fuel cell modules to be integrated with boilers and used in domestic micro CHP units, conditional on certain performance targets being met.
Nuon, the Netherlands' largest energy provider, will order 50 000 fuel cell stacks plus associated balance of plant (one stack plus balance of plant per micro CHP unit) from CFCL, to be delivered over a five year period, from June 2009. The order is dependent on a set of performance targets being reached for a commercial micro CHP unit, as agreed between CFCL and Nuon. The performance targets relate to weight and size (with wall mountable units being preferable in Nuon's target marketplace), power and heat output, efficiency, lifetime and degradation over time (a key issue for fuel cell based systems), carbon dioxide savings and of course price.
The idea is that the micro CHP unit will look just like a conventional high-efficiency boiler, however, as well as generating heat and hot water, it will also generate more than enough power to meet an average household's annual energy needs, says CFCL. This means more efficient use of natural gas resources while CO2 emissions are "up to 35% lower than from a gas-fired power station and up to 60% lower than from a conventional coal-fired power station," the company says.
It is also anticipated that the fuel-cell based micro CHP unit will be "easy to install" as it uses the same pipes as existing high-efficiency boilers.
Creating value for utilities
Assuming it goes ahead, the Nuon order is expected to generate substantial revenue for CFCL over the five years. As well as being "game-changing" for CFCL it would also be an important breakthrough for the fuel cell business in general, where commercial serial orders for power generation products have been very thin on the ground so far.
The integration of the CFCL fuel cell modules purchased by Nuon with conventional boilers will be done under a July 2007 agreement between CFCL, Nuon and two domestic appliance makers Remeha and De Dietrich Thermique (which are both part of the De Dietrich Group). This agreement covers the development of a fully integrated micro CHP unit for the residential market across the Netherlands and Belgium.
The micro CHP units will be deployed by Nuon to its residential customers to provide both electricity and heat in their homes. But the units will be owned, and to some extent operated, by Nuon.
This utility ownership concept, with the utility able to operate the fuel cells remotely, as a "virtual power plant", is a central feature of the CFCL business model, which is underpinned by the idea of creating value for power utilities. The major attraction of the micro CHP unit is envisaged to be as a source of high efficiency (55% or thereabouts) electricity generation (better than a modern CCGT when allowance is made for transmission losses).
CFCL's general approach is to form a three way partnership, with key utilities and domestic appliance makers ("appliance partners"), in target markets. To date, CFCL has signed three way agreements with Gaz de France and De Dietrich Thermique in France, EWE and Bruns Heiztechnik in Germany, E.ON and Gledhill Water Storage Ltd in the UK, and, as already noted, Nuon and Remeha in Holland.
In January 2008 CFCL also entered the Japanese market with the signing of an agreement with gas appliance maker Paloma.
Another crucial development, announced in a recent flurry of announcements from CFCL, is the important news that it has increased the power density of its steel/ceramic fuel cell stack, allowing the rated output to be doubled, to 2 kWe, at minimal additional balance of plant cost. This significantly reduces the unit's costs per kW.
A 2 kWe unit provides ample power for the average European household's annual "baseload" requirements, says the company, as well as additional power for export to the grid. According to CFCL, "A 2 kW unit can save up to three tonnes of carbon dioxide per year compared to existing electricity generation", which unlike micro CHP uses the grid and is therefore also subject to additional losses due to transmission.
The increase in electrical generation further reduces the heat to power ratio of the CFCL system, a key selling point relative to other distributed generation concepts (see Modern Power Systems, April 2007, pp 41-44).
The CFCL idea is essentially that the low heat to power ratio allows the fuel cell system to be operated all the time with the relatively small heat output it produces going continuously to the hot water tank, which acts as a thermal store. Power not needed in the house is transmitted to the grid, while additional space heating demands are met by the integrated boiler burner.
Gearing up for manufacture
Also significant is the fact that CFCL has now frozen the design of its fuel cell stack, paving the way for the start of bulk manufacture.
In this context CFCL has announced that it is investing r12.4 million in the construction of a facility in Heinsberg for the commercial production of its fuel cell systems. CFCL will assemble the fuel cell stacks and other core components at Heinsberg to produce complete fuel cell modules for delivery to CFCL's appliance partners in Europe and Japan for integration into conventional hot water boilers.
The industrial park in which the Heinsburg manufacturing facility is being built is in fact owned and managed by Nuon, which, during 2007 spent r400 000 on refurbishing the site in preparation for its redevelopment.
CFCL will assemble fuel cell systems at Heinsberg in automated and semiautomated production lines in a staged scale-up operation. Initial capacity will be 10 000 stacks per year, with volume production expected to start in mid 2009, to fulfil the Nuon order. The r12.4 million is the cost to CFCL of this first phase of the manufacturing project, including all plant and equipment and commissioning. Encouragingly this sum turns out to be significantly below previous expectations.
Phase II at Heinsburg envisages an increase in capacity to 160 000 stacks per year within the existing building. CFCL also retains an option to acquire a 'greenfield' site at the industrial park for a third phase production expansion.
CFCL first announced plans to construct a volume manufacturing facility in Heinsberg in December 2006 with the aid of a grant from the North Rhine-Westphalian government for the whole project of up to r3.2 million.
A further recent step is that, in line with the company's outsourcing strategy, CFCL has arranged for what it calls its fuel cell 'power chips' – ie the individual fuel cell elements that make up the stacks – to be manufactured by established ceramics specialists H.C. Starck and CeramTec at their facilities in Germany, and both companies have entered long term contracts. CFCL believes the power chips are well on their way to becoming what might be described as a commodity item.
On the other hand the ceramic powder (yttria-stabilised zirconia) that Starck and CeramTec will use to make the power chips will come from CFCL's own recently commissioned 20 t/y powder plant in Bromborough, Merseyside, UK, employing CFCL's own proprietary processes. This is to ensure that stringent quality standards are met in the manufacture of this crucial powder, which is used to make the ceramic electrolyte at the heart of the CFCL. It is in fact the solid oxide of the CFCL solid oxide fuel cell system.
CFCL is keeping powder manufacture in-house to minimise supply chain risks for its fuel cells. But the strategy also opens up the possibility of supplying zirconia powders to other industries employing sophisticated engineered ceramics outside the fuel cell sector. This could provide a very handy source of additional revenue. These other potential applications include the biomedical sector (eg replacement hip and knee joints), barrier coatings (eg for gas turbines) and catalyst support materials for diesel exhaust emissions control systems.
CFCL is working hard to "de-risk" all the fuel cell module manufacturing processes by ensuring they are all proven beforehand in CFCL's facilities in Australia, where the company was founded and where it retains its headquarters.
It is also building up an impressive IP portfolio. As of end February, CFCL had a total of 77 patents relating to its SOFC-based technology. Two patents were granted in the period July to December 2007, one for the steel/ceramic fuel cell stack concept and one for electrical connection inside a stack. In February two more patents were granted, one for a spinel coating to protect the stainless steel from corrosion and to prevent poisoning due to chromium migration from the steel, another for using hydrogen to desulphurise incoming fuel.
A key remaining area of risk that is being addressed is ensuring that rates of degradation (an unavoidable problem for electrochemical systems such as batteries and fuel cells) can be made slow enough to achieve acceptable stack life. CFCL is targeting 40 000 hours, with a stack efficiency degradation rate of about 0.5% per thousand hours.