Among a new wave of market reports pointing to an imminent surge in fuel cell sales, one from Allied Business Intelligence suggests that fuel cell installed capacity could increase by an astonishing factor of 250 in the next decade. Is this absurdly optimistic? Perhaps not. A number of very promising looking fuel cell technologies are now on the threshold of early commercialisation. These range from residential-size units to installations sized for industrial facilities prepared to pay a premium for reliable power.
The starting point in terms of world installed generation is of course very low. The current fuel cell world installed capacity is reckoned to be a paltry 75 MW. Even the 2010 figure, projected by Allied Business Intelligence to be 15 000 MW, is modest when set against world installed electrical generating capacity as a whole, which is currently running at well over 3000 GW. But the potential for such a growth rate is extraordinary in a sector of the energy industry – apparently greater even than wind turbines – and not surprisingly is attracting increasing interest from the investment community.
The Allied Business Intelligence report, Stationary fuel cells: US & global early market opportunities, considers units in the size range, 50 W to 30 MW and sees what it calls "free fuel markets" as an area with an "early and large potential". A good recent example is Fuel Cell Energy’s King County Waste Water Treatment Plant, in Washington state, which will use waste gas from the water treatment process as its fuel source.
According to the Allied Business Intelligence report, the US market will take the early lead, which comes as no surprise. Connecticut’s Resources Recovery Authority has just announced what is claimed to be the largest stationary fuel cell order yet placed in the United States. This is for 12 Fuel Cell Energy units having a combined capacity of 25 MW, with the objective of helping to ease constraints in the overstretched Connecticut grid. They are in addition to a further six 200 kW fuel cell plants ordered for Connecticut from International Fuel Cells. The cause of fuel cells in the United States has certainly not been damaged by California’s recent travails – still all too vivid in the collective short term memory.
But ABI believes that "Germany and Japan are the other two giant markets that will realise early deployments." In the Japanese residential sector Ebara Ballard has recently unveiled a 1 kW domestic cogeneration plant using proton exchange membrane fuel cell technology. In Germany MTU Friedrichshafen is busy promoting its 250 kW "Hot Module" (which also uses Fuel Cell Energy technology) and claims that "for the first time ever, a high temperature fuel cell will go into service in the medical sector." This is the fuel cell cogen unit at the Rhon-Klinikum in Bad Neustadt/Saale, due to be inaugurated on 7 May. It will be the second Hot Module to enter operation, with four more under construction in the United States. Meanwhile, plans have just been announced for what is claimed to be the UK’s first fuel cell CHP system. This will be located at the "Pool in the Park" in Woking, Surrey.
The substantial commercial promise of fuel cell technology has also gained some visibility in the course of the takeover struggle that venerable Swiss engineering company Sulzer has been embroiled in. For some years Sulzer has been quietly developing what it calls Hexis, which is due to go commercial later this year. This is a high temperature solid oxide fuel cell for domestic cogeneration, with a capacity of 1 kWe and 2.5 kWt. It employs novel circular, planar cells, has a number of elegant features and has been successfully run on a range of fuels, including oil, natural gas and gas from waste dumps. A test stack was run from 1997 to 1998, clocking up 12 000 hours, while a first field test system was installed at Winterthur in 1997, feeding 1 kW to the grid in July 1998. A second field test system has been running in Dortmund since September 1997. In the autumn of 1998, four systems were installed for three-year test runs, and in 1999 and 2000 two more trial systems were started up, with partners including Tokyo Gas, Sociedad de Gas de Euskadi of Spain and Gasunie of the Netherlands, as well as Swiss and German utilities.
The first fruits of this solid but not wildly publicised development work came on 27 March when Sulzer signed marketing agreements with German power suppliers Oldenberger EWE and EnBW Energie Baden-Wurttenburg. This means that Sulzer has sales of at least 200 units already in the bag over the period 2001-2003, with additional sales envisaged in Austria and Switzerland and a marketing campaign in the USA planned to start in 2005. One argument that Sulzer management has fielded in fending off the hostile bid from InCentive Capital is that it seriously undervalued the Hexis technology.
Undervaluation of the potential for fuel cells is not something that Credit Suisse First Boston (CSFB) can be accused of. They are handling Innogy’s proposed flotation of its Regenesys fuel cell energy storage business and estimate that it could be worth as much as $1.45 billion – which is not bad considering there have been no commercial sales of the system to date.