Fuel cell suppliers target domestic CHP market

Fuel cell manufacturers are forging alliances with European utilities to pave the way for widespread installation of domestic fuel cell combined heat and power (CHP) units by the end of the decade. The technology will have to compete with conventional micro-CHP which is also expected to appear on the market in the next couple of years.

Fuel cells have been hailed as the clean energy source of the 21st century. In a fuel cell, hydrogen and oxygen react to produce an electric current and heat. Hydrogen can be supplied from a number of sources, including natural gas.

Hefty investments have been made in developing fuel cells to power vehicles (ENDS Report 311, pp 20-23 ). But most observers agree that stationary fuel cells for power generation are likely to be commercialised first.

"Residential fuel cells will occur well before transportation," said Jeff Bentley, chief operating officer of Nuvera Fuel Cells. The company is in negotiations with German utility RWE Plus to market its fuel cell CHP units to residential and small commercial customers by 2004. The units will have electrical outputs of 5-50kW with the smaller unit aimed squarely at the domestic market. Nuvera has shipped a prototype unit to RWE and will be field testing a range of systems next year.

Nuvera's systems are based on proton exchange membrane fuel cells and will run on natural gas or propane. Jeff Bentley hopes that electrical efficiencies, currently at 30-35%, will rise to more than 40% by the time the technology comes to market. Total efficiencies, including heat use, will be above 90%.

Heinz Bergman of RWE predicts that 5,000MW of fuel cell capacity could be installed in Germany by 2015. This would reduce carbon dioxide emissions by 70 million tonnes a year.

Another German utility, EWE, is testing fuel cell CHP units supplied by Sulzer Hexis. It plans to have 300 units installed in customers' homes by 2003.

Andreas Ballhausen of EWE told delegates at the Grove Fuel Cell symposium in London in September that fuel cells fit in well with its portfolio. The company already operates wind farms and delivers natural gas, and could use domestic CHP to meet demand when weather conditions are not favourable.

"We are not a power producing company, so we don't think that fuel cells will hurt us," he said. "It's just a question of where we can buy our electrical power cheaply." If the company can get cheap natural gas, domestic CHP may be the cheapest option.

Other fuel cell manufacturers including Plug Power and General Motors claim to have stationary units close to commercialisation. Plug Power is working with domestic heating specialists Vaillant to train installers and set up the required maintenance infrastructure.

However, the cost remains a significant barrier. According to Al Backman of Plug Power, its fuel cell systems currently cost around $10,000/kW capacity and will not begin to compete with conventional domestic boilers until they approach $1,000/kW. However, Mr Backman claims that by 2005 prices could fall to around $500-$1,000/kW - and could be as low as $100/kW by 2007.

Jeff Bentley explained that "Nuvera's strategy is to find areas where we are not competing directly with domestic boilers or the grid." Even so, the company hopes to have its units on the market at less than $1,000/kW by 2004.

Fuel cell CHP will face strong competition from Stirling engine micro-CHP technology. Developers are preparing to launch this technology in the domestic market within the next two years, and claim that up 2,400MW could be installed in the UK by 2010 (ENDS Report 319, pp 33-34 ).

Mish Tullar of BG Group, a leading developer of micro-CHP, said: "What's different [between micro-CHP and fuel cell CHP], from our perspective, is timing and cost. We can make Stirling engines cheaply, so that they are immediately competitive with domestic boilers. We are ready to mass market hundreds of thousands of units in 2003 - I don't believe that there are any fuel cells around that are ready for that scale of commercialisation."

Nuvera's Jeff Bentley argues that fuel cell systems have other advantages, and that the forecast investment of $8 billion in the technology over the next five years should deliver huge advances. "If you think [fuel cells and micro-CHP] are at parity now in terms of cost, reliability and availability, where are they going to be with that $8billion?" he said.

Even so, Mr Tullar maintains that micro-CHP has the edge in the short- to medium-term: "We are engaged in detailed discussions with Government and regulators on metering, grid connection, exporting power, trading and so on. Fuel cell developers are nowhere near to considering these issues, but they will have to be dealt with."

However, Mr Tullar agrees that fuel cells will the technology of the future. "When fuel cells become competitive with Stirling technology in cost and efficiency, then we'll switch," he said. "There is no conflict. Stirling engines going first into the mass markets will act as a stepping stone for fuel cells."

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