Image Source: FuelCell Energy Media Relations.

What's harder than developing new technology that could change the way we produce and consume energy? Getting someone to buy it. Even though there is a decent list of reasons why someone would buy power-generating fuel cells from manufacturer FuelCell Energy (FCEL -2.43%), signing customers up has not proved easy. 

So what is FuelCell Energy going to do about it? According to management, it might take a play out of the SolarCity (SCTY.DL) playbook. Let's look at what FuelCell likes about SolarCity's business model, and how it could use that strategy to get fuel cells off the ground. 

It's OK -- you don't need to own it
Energy equipment isn't cheap, so persuading individuals or businesses to fork over the cash to purchase a fuel cell power generation system or a solar installation can be challenging. To combat this problem, SolarCity and other solar installation companies have come up with this strategy: Don't sell the panels, sell the power from the panels. This has given rise to the individual power purchasing agreement. In SolarCity's case, the company will install solar panels for an individual-- residential or commercial -- but keep possession of the panels. In exchange, the individual agrees to purchase the power generated from the installation for 20 years.

Source: SolarCity Investor Presentation.

The one hurdle with power purchasing agreements, though, is that someone with deep pockets must help foot the bill for the up-front installation costs. Both SolarCity and FuelCell Energy aren't big enough yet to cover these financing needs on their own, but SolarCity has been very effective at packing several power purchasing agreements into securities and selling them to financial partners. 

Source: SolarCity Investor Presentation.

It's safe to say that FuellCell Energy is among the companies that have taken notice to the way SolarCity does business. On a recent conference call, FuelCell CEO Chip Bottone said the company was looking hard at offering power purchasing agreements in the vein of SolarCity because of the high up-front capital costs involved with FuelCell Energy's complete power station packages.

FuelCell has already laid the groundwork for this with its first power purchasing agreement through NRG Energy. As part of the deal, NRG will take operational control of a recently installed facility and will sell the power from that system on a long-term power purchasing agreement. Also, NRG has granted an additional $40 million credit facility to FuelCell energy to help fund further projects that could use power purchasing agreements rather than direct sales.

Why it will be harder for FuelCell Energy to pull off
Before you call up the company for your own fuel cell power station for the home, know this: FuelCell Energy's current offerings aren't really built for the individual or residential owner. The smallest offering is a 300-kilowatt system, which is enough to power 15-100 individual homes depending on energy demands. So unlike SolarCity, which can market to individual homeowners, Fuel Cell is limited to customers with much higher power demands. Customers for these types of systems include hospitals, universities, and larger-scale commercial operations. It's not a huge issue, since these are the customers FuelCell Energy hoped to target anyways, but the smaller set of customers will mean growth might not be as pronounced as that seen at SolarCity.

Also, one reason SolarCity has made this strategy effective is that it has immense control over the entire operations of its installed systems. Unlike the SolarCity model, in which the company retains ownership of the panels, FuelCell Energy's deal with NRG Energy calls for NRG to remain owner of the actual power generating assets; FuelCell Energy will simply be the system manufacturer and a contractor for any maintenance. This means NRG Energy is responsible for the power purchasing agreements; as a utility-scale provider, it has the option to select other forms of power generation for those contracts.

What a Fool believes
SolarCity's business model is sending shock waves across the energy space, and it could help companies like FuelCell Energy skirt the large up-front costs that have constrained so many other emerging energy technology companies. If FuelCell can nurture its relationship with NRG Energy -- which shouldn't be too hard, as NRG has a ownership stake in FuelCell already -- then it could be a mechanism to do what the company needs more than anything else right now: grow sales.