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Obviously, having to run fuel cells on fossil fuels-and heat and cool them-undercuts some of their advantage over conventional power plants such as those using natural-gas-burning turbines or coal-fired furnaces. But it doesn’t eliminate that advantage. Even when encumbered with natural-gas-fed reformers, fuel cells produce no emissions other than carbon dioxide. To be sure, carbon dioxide is a greenhouse gas; but because fuel cells are more efficient than fuel-burning plants, they produce far less of it.

That efficiency is the key to selling fuel cell power generators. The PC25 operates at an efficiency of about 40 percent, meaning that nearly half the energy it takes in is converted to electricity, with the rest lost as heat. In comparison, the 250-kilowatt gas turbines that organizations normally purchase as alternatives or supplements to utility power operate at about 30 percent efficiency (see “Power to the People,” TR May 2001). The PC25’s efficiency edge translates to a savings of about 30 percent in fuel costs. The edge is widened for customers who can make use of a fuel cell’s waste heat, much of which is easily captured from the clean air and water removed from the cell; the heat from turbines, in comparison, is usually tied up with noxious emissions.

Unfortunately, for most power users this edge is wiped out by fuel cells’ higher purchase price. A typical PC25 setup comprising an 800-kilowatt bank of four units goes for nearly $4 million, compared to less than $2 million for a comparable gas turbine generator. But James Bolch, International Fuel Cells’ manufacturing head, believes he can get the production costs for the company’s next generation of fuel cells to competitive levels. For starters, the company is abandoning its current cell design, with its phosphoric-acid electrolyte, and moving to a cell whose electrolyte is a thin plastic membrane-which is becoming an industry standard because it is less expensive to produce. In addition, the company is exploring new techniques for applying the $20-per-gram platinum-based catalyst in thinner coats without sacrificing performance, as well as plate designs that add efficiency by more effectively ushering hydrogen to the membrane and channeling residue water away.

Of course, International Fuel Cells has to first bring its volume up before it can start taking advantage of these opportunities. To do that, the company has focused on potential customers who may be willing to pay a significant price premium in order to capture the fuel cell’s advantages. Such customers include those that require an especially reliable source of power-or simply more power than can be had from the utility grid-as well as heat, and don’t want to live with the emissions of a gas turbine. “There are applications where paying $4,500 per kilowatt of capacity is a good deal,” insists Guy Hatch, director of residential business at the company.

As it turns out, there are plenty such potential customers. Data centers, for example, require a constant, steady source of electricity and typically use a local generator to either smooth out power from the grid or back it up in case of an outage. First National Bank of Omaha in Nebraska installed a set of PC25s after an outage brought down its credit card verification network, costing just one of its customers-The Gap-$6 million in sales. And it’s not just computers that need reliable power: the U.S. Postal Service’s main facility in Anchorage, AK, decided to go off the grid in favor of PC25s when repeated brownouts lasting as little as a fraction of a second caused its sorting equipment to jam. At the dedication ceremony for the new equipment, a blackout left the surrounding region dark while the facility remained fully operational; the attending dignitaries had to assure observers it wasn’t a planned demonstration. Even sites in the hearts of big cities can find utility power unavailable because existing cables have nearly maxed out on their ability to bring more power in. New York is one such city; power inadequacies prompted the Central Park police station to install a PC25 in lieu of marring the bucolic setting with the whine and fumes of a traditional gas turbine. The Cond Nast building in Times Square operates a PC25 on its fourth floor.

The ability to put the fuel-cell-based power generator’s waste heat to work is the factor that makes the numbers work out for some purchasers. In addition to helping to warm buildings in the winter, the heat can in hotter months drive a type of air conditioner called an “absorption chiller.” First National estimates an annual savings of $200,000 in heating costs and even uses the warm water coming out of the fuel cell to melt ice and snow in its headquarters’ plaza. A potential big reduction in home heating and air-conditioning bills is one reason International Fuel Cells, along with Ballard, H Power and other rivals, believes it can get upscale, environmentally conscious homeowners to spring for units that put out about five kilowatts and that might eventually sell for as little as $5,000 or so-though the first units are likely to go for four times that much. “We spoke with one homeowner who had been looking at spending $50,000 for solar panels,” says International Fuel Cells’ Hatch, who thinks $20,000 for a fuel cell doesn’t seem that outrageous in that context.

How far can these mini power plants scale upward? At least one company hopes to turn out fuel cell generators that compete in price not merely with small gas-turbine generators but with the large generators employed by utilities. FuelCell Energy of Danbury, CT, has eschewed the solid electrolytes employed by virtually every other fuel cell manufacturer in favor of a molten carbonate. The material performs roughly the same function-conducting protons from the negatively charged plate to the positively charged one while repelling electrons. But it enables a simpler process for reforming hydrogen, which makes for a big technical advantage when it comes to mass production. As a result, FuelCell believes it can produce units that turn out up to three megawatts of power and operate at almost 80 percent efficiency. That’s better than even the largest central power-generating station can achieve. Plus, the electricity can be produced in the consuming company’s parking lot, instead of traveling across miles of power lines that are costly to install and maintain. “Utilities can produce electricity cheaply,” says Jerry Leitman, CEO of FuelCell Energy. “But most of the cost is in distributing and transmitting it.”

Hydrogen for the Masses

Even as fuel cell generators get more powerful and efficient, most everyone in the field sees their development more as a means of getting at the potentially enormous market for fuel-cell-powered cars than as a basis for the next-generation power grid. In terms of basic technology, the transition would be a fairly simple one: the same plate-sandwiched membranes that power the electric-generator products can be placed in smaller, relatively lightweight stacks capable of putting out the 50 kilowatts or so needed to power an electric-motor-equipped car while fitting in a trunk or under a back seat. Despite its long interest in electrical-power generation, International Fuel Cells, for one, is quite open about using the field as a stepping stone to the lusted-after car market. “Transportation is obviously an attractive target, and power generation applications are part of the path there,” says head of manufacturing Bolch. The company has already worked with BMW to produce a car that operates in part off its fuel cells, and with Hyundai to develop an all fuel-cell-powered car-and it claims to be in talks with at least four other major car manufacturers. It has also struck deals with Thor, a leading manufacturer of shuttle buses in North America, and Irisbus, a major European bus producer.

Commercially viable fuel cell cars remain years away, though, and may be decades off without a breakthrough in the battle to bring costs down. Right now, says Stroh, even mass-production economies wouldn’t allow fuel cells to come close to the price of internal-combustion engines, which sell for about $50 per kilowatt of power-generating capacity-beating fuel cells by a factor of about a hundred. “The cost of materials alone would make them far too expensive,” Stroh says.

Perhaps that’s why some experts believe that the fuel-cell-based power-generation and car markets will ultimately be heavily intertwined, with both generators and cars fueled from the same sources. The Rocky Mountain Institute’s Swisher envisions a scenario in which employees at industrial sites with fuel-cell power generators will fill their fuel cell cars up with hydrogen while at work-and even use their parked cars as supplemental power generators. “The ability to interconnect fuel cell facilities would be a catalyst in the market,” he says, eventually leading to similar applications for homeowners.

The ultimate result? Looking further out, it’s not hard to conjure up images of a full-fledged hydrogen economy, in which fuel cells power everything from laptop computers to airplanes and bicycles; indeed, experimental versions of all three are already under development. What’s more, if every home, business and community operates power-generating fuel cells, then it might make sense to link them all together in a massive national power grid, perhaps controlled via the Internet, so that surplus energy at any location can be spontaneously transferred to those locations suffering shortages.

Of course, as Stroh points out, even if no one obstacle to a hydrogen economy seems technically insurmountable, countless smaller ones still need to be overcome. But given that hydrogen makes up 75 percent of all known matter and is the fuel of stars, maybe the universe is trying to tell us something.

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