For kids who aren't able to figure out for themselves that Santa Claus, the Tooth Fairy, and Superman aren't real, the truth comes as a nasty shock. Those of us at The Motley Fool who write skeptical opinions on alternative-energy plays have come to expect the same sort of reaction from the sector's true believers. With that in mind, I'll give FuelCellEnergy (NASDAQ:FCEL) bulls fair warning: You're not gonna like this.

Second-quarter results weren't too surprising -- or especially relevant, for that matter. Like a biotech company with products still early in development, FuelCell is a long way from proving itself profitable. In the meantime, the 50%-plus boost in revenue (and near-doubling of product revenue) is nice, but when you lose money on every unit, you don't really make up for it with volume. And as fellow Fool Rich Smith warned, the company's dilution of common stockholders continues apace.

Perhaps FuelCell will figure a way to make this all work, but I'm not betting on it. The company is targeting large-scale power applications, and the economics will be tough for the company to surmount. Incumbent generation technology seems to cost about $300 to $500 per kilowatt, while even optimistic assessments of molten carbonate generation (at commercial volumes) look to cost around $1,500 per kilowatt.

But wait, you say, what about the environmental aspects? Well, FuelCell's fuel cells still need natural gas to operate. What's more, companies like Evergreen Solar (NASDAQ:ESLR) and Suntech (NYSE:STP) continue to improve solar cells. In addition, companies like BASF (NYSE:BF), through its newly acquired Engelhard subsidiary, are making fossil-fuel-burning systems more efficient and less polluting all the time.

There's nothing wrong with taking a flyer on a risky idea, but FuelCell wouldn't be my pick. Heck, even companies like Eaton (NYSE:ETN) and DuPont (NYSE:DD) have thrown in their lot with a rival fuel cell system (PEM, instead of molten carbonate). Perhaps FuelCell can carve out enough of a market to create a profitable company. Personally, I wouldn't stick around and absorb the dilution just to find out.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).