FuelCell Energy and Its Compicated Relationship With Natural Gas

If you are looking at fuel cell stocks and wondering whether FuelCell Energy (NASDAQ: FCEL  ) , Ballard Power Systems (NASDAQ: BLDP  ) , or Plug Power (NASDAQ: PLUG  ) will come out on top, just remember this: FuelCell Energy is the only one in this group that is betting solely on fuel cells as a means of power generation rather than energy storage.

While this does have some advantages for FuelCell, especially considering its molten carbonate technology -- efficient, but big and runs at very high temperatures -- it also means that FuelCell Energy has a rather complex relationship with its biggest competitor, natural gas turbines. 

Tune into the video below to find out why FuelCell Energy needs to be more competitive than traditional natural gas combustion technology but at the same time be reliant on cheaper natural gas. 

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  • Report this Comment On July 17, 2014, at 10:55 PM, Pagapa wrote:

    Your article implies that FuelCell Energy is playing a risky game because it "is betting solely on fuel cells as a means of power generation rather than energy storage."

    One would think that in your research on the company, you would have come across at least a few article that talk about using molten carbonate fuel cells for "tri-generation". If you haven't seen the word before, it refers to a fuel cell that can be used to simultaneously produce three products: heat, power and hydrogen.

    Hydrogen, as I assume you are aware, is the gas at the heart of just about every pilot-scale or commercial-scale energy storage project that's been discussed in the press in recent years. It is also the gas that will be stored and dispensed at the hydrogen fueling stations that California will be rolling out over the next year and that are being rolled out fast and furiously in Europe and Japan.

    Simply put, "tri-generation" means: (a) that FCEL is in both the power generation and power storage business, and (b) that the the price of a kilowatt-hour of electricity is not the only metric that matters when you are trying to determine if/when molten carbonate fuel cells will become commercially viable.

    To illustrate, let's imagine that you own a shopping center in Southern California and are considering the purchase of a combined heat and power (CHP) system. Let's assume that you've determined that your power costs will be a few cents lower per kilowatt hour if you buy a CHP system based on combined cycle gas turbine technology rather than molten carbonate fuel cells and that you've also determined that your heat cost with either technology will be about the same.

    Gas turbines sound good up to this point, but now you need to consider the fact that a CHP based on FCEL's molten carbonate fuel cells could be configured to produce hydrogen during off-peak hours and as the number of fuel cell vehicles in California grows the market for hydrogen will also grow. So what if you can can offset your heat and power costs by selling hydrogen to the filling station next to your shopping center?

    According to the study cited below, when you factor tri-generation into your analysis, your argument that FCEL's molten carbonate fuel cells are too expensive to be commercially viable falls apart. I hope you'll read the article and read up on tri-generation before your next article on FCEL.

    Xuping Li, Joan Ogden, and Christopher Yang, “Analysis of the Design and Economics of Molten Carbonate Fuel Cell Tri-generation Systems Providing Heat and Power for Commercial Buildings and H2 for FC Vehicles,” Journal of Power Sources (2013), pp. 668-679.

  • Report this Comment On July 19, 2014, at 7:36 PM, jaketen2001 wrote:

    Tyler,

    I haven't watched the video, but I would point out that FCEL or indeed fuel cells as a whole, are not reliant on cheap natural gas. In fact, just the opposite is true. Since the chemical process involved in any of the fuel cell technologies is 200-300% more efficient than any sort of mechanical process like combustion, that then boils water, that then spins a turbine; more expensive natural gas will only accentuate the advantages of fuel cell technology, and minimize what may be higher up front capital expense.

    The increased efficiency also has a commensurate effect on the reduction in pollutant emissions.

  • Report this Comment On July 21, 2014, at 10:50 PM, REvinger wrote:

    fuel cells aren't very green if they use natural gas. it would be better to use solar or wind to produce hydrogen from water.

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