A few weeks back, I read a report entitled Clean Energy Trends 2007, which predicted the rate of growth in various alternative-energy sectors over the next decade. While solar, wind, and biofuel were projected to grow to only three or four times their current size, the fuel-cell sector was expected to shoot from $1.4 billion in 2006 to $15.6 billion 10 years from now. The report further indicated that it expected the bulk of this growth to come from stationary fuel cells -- the type that FuelCell Energy (NASDAQ:FCEL) specializes in manufacturing.

As if on cue, I then came across a report that California State University at Northridge had purchased a 1-megawatt "Direct FuelCell" generator from the company. More recently, I found yet another report stating that POSCO Power, a subsidiary of South Korean steel producer POSCO (NYSE:PKX) and one of that country's largest independent power producers, had purchased a 2.4 MW fuel cell power plant from FuelCell Energy.

Where there's smoke, they say, there's fire. It turns out that in FuelCell's case, it's still way to early too tell whether a fire will soon be blazing. The sales are obviously a step in the right direction. POSCO's purchase is another positive sign, as is POSCO's $29 million investment in the company, but FuelCell is still burning money at a prodigious rate of around $20 million per quarter. In the last quarter, it lost $0.38 a share -- up from $0.34 cents a year ago.

It's estimated that FuelCell Energy must sell between 75 and 100 MW worth of equipment to be profitable. Therefore, while the sales to South Korea and Cal State Northridge are positive steps, the company still needs to generate a substantially higher number of sales.

The state of Connecticut is expected to award some multi-MW projects later this month, and I expect that FuelCell Energy, a Connecticut-based company, will get some of them. If the awards are small in nature -- say, between 2 and 5 MW, I wouldn't get too excited. If, however, they total in the neighborhood of 15 to 20 MW, that might just be a big enough spark to help the stock catch fire and start moving upward again.

In the meantime, if you are intrigued by FuelCell's long-term prospects, I'd encourage you to consider an investment in PowerShares WilderHill Clean Energy (AMEX:PBW), an exchange-traded fund that invests in a broad swath of forward-looking energy companies. The fund has a position in FuelCell Energy as well as ones in fellow fuel-cell producers Ballard Power (NASDAQ:BLDP), Plug Power (NASDAQ:PLUG), and Hydrogenics (NASDAQ:HYGS). As such, it remains a safer -- and diversified -- alternative-energy investment. The fund provides further clean-tech diversification by investing in both solar and wind power as well.

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PowerShares WilderHill Clean Energy is a Motley Fool Rule Breakers selection, and POSCO is a Motley Fool Income Investor pick. Check out either service free for 30 days.

Fool contributor Jack Uldrich is the author of two books on nanotechnology. He does not own stock in any of the companies mentioned in this article. The Fool has a strict disclosure policy.