|Fuel Cell Energy Solutions' hybrid DFC-ERGTM power plant recovers energy normally lost during natural gas pipeline distribution operations Credit: Fuel Cell Energy Solutions|
The use of fuel cell technology in combined heat and power applications is commonly viewed as being at an early stage of development. However, Arjen de Jong and Martin Horstink argue that significant advances in the last 12 months mean this is no longer the case.
Anyone who believes that fuel cells are stuck in the R&D phase needs a reality check. Last year brought several remarkable key moments in fuel cell development:
- Fuel cells were outselling other micro-CHP technologies for the first time in history;
- The first fuel cell manufacturers began to break even;
- Startup of several new production sites; and
- Prolonged public funding in Europe and Asia for hydrogen and fuel cells.
And the end of these positive developments is not in sight, with 2014 promising new commercial product releases, especially in the micro-CHP field. Thus, the general outlook for fuel cell CHP is excellent. In fact, many organisations have invested heavily and will have to pursue the way up in order to keep investors satisfied.
Japan, and to a lesser extent South Korea, is leading the world in fuel cell CHP. Japan has come a long way, with its long-term programme called ENE-farm to develop fuel cell CHP technology and persuade end users to buy it. More than 80,000 units are installed, with sales numbers exceeding yearly sales of other micro-CHP technologies. And funding for this programme will likely be prolonged for the next few years (see Figure 1).
But the drivers for fuel cell CHP in Europe are also extensive. Germany is the European leader in the uptake of fuel cell micro-CHP systems. Callux, an extensive field test programme started in 2008, has installed and tested over 500 systems. And fuel cell micro-CHP systems can profit from several subsidies and tax exemptions in Germany, making it an economical, attractive solution.
A joint initiative of the European Commission and industry has designated fuel cells as a key technology for the EU and has set up a large R&D programme to support this development, with an expected budget increase of €1.4 billion (US$1.9 billion) for 2014–2020. CHP is an important pillar in this programme. One of the key CHP projects today is Ene-Field, in which up to 1000 fuel cell micro-CHP systems will be deployed. The first installations are installed already and the project is steadily progressing.
In the US, Bloom Energy is becoming a big player in the stationary power production market with its fuel cells. The company has announced that it could turn a profit in 2014. Although its system is not yet designed and packaged as a CHP system, the volume of production and onward technological developments hold big promise for further cost reductions and efficiency improvements. Bloom Energy sees good markets in Europe and recognises the significant opportunities for a system with heat recovery, though the first CHP system from this manufacturer has yet to come.
FuelCell Energy, another important international player in the field of large-scale stationary fuel cell power, has started a joint venture with Fraunhofer IKTS called Fuel Cell Energy Solutions (FCES). FCES has been set up to serve the European market and has recently reported that the first product from its German production site is scheduled for mid-2014.
A bright future ahead
Besides scaling up in production, several new fundamental technological breakthroughs can bring further cost reductions. A spearhead of these breakthroughs is, among others, limiting the use of rare earth materials.
|Fuel Cell Energy Solutions' CHP power plant produces 300 kWe and 140/235 kWth Credit: Fuel Cell Energy Solutions|
An example of one such breakthrough is SiEnergy's thin-film solid oxide fuel cell (SOFC). The thin-film concept allows operating temperatures of 350°C, in contrast to present SOFCs that generally operate between 650°C–800°C. The low operation temperatures allow for fast startup and load following capability. Due to the thin-film technology, use of rare earth metals is marginal and production can be based on chip industry manufacturing processes.
Another noteworthy development is that of ACAL Energy. ACAL is developing a radical redesign of the fuel cell concept with its FlowCath technology, enabling zero degradation and 80% less use of platinum in a PEM fuel cell. Their concept has already been proven during 10,000 hours of operation, an equivalent of 300,000 automotive miles.
|Fuel cell unit sales developments in Japan Source: Aisin|
And there are many more interesting innovations under development. Technological developments like these will keep renewing the business models and will lower the total costs of ownership.
Expectations for fuel cell CHP in the EU are high. This became clear during the fourth conference of the Fuel Cell Expertise Network (FCEN) in October 2013 in Amsterdam. Major existing suppliers like Bloom Energy from the US, Australia-based CFU (also known as CFCL) and Aisin from Japan showcased their past results and future plans. These companies have already established a large installed fuel cell base and have plans for further growth and further cost reductions which will impact the European market.
|Figure 2. Development of the fuel cell CHP market in Europe Source: FCEN|
CFU, with a high-volume fuel cell assembly plant in Germany, has recently signed a cooperation agreement under which, in the next two calendar years, a minimum of 1000 fuel cell micro-CHP units will be sold to Synergy International, the distribution partner for the Baltic States and Scandinavia.
Another major breakthrough comes from the Viessmann Group and Panasonic. They have jointly developed a new fuel cell cogeneration system, which will become the first polymer electrolyte fuel cell (PEFC) system available for single homes in Europe. It will be sold by Viessmann, starting in Germany in April 2014, and will bring Japan's well-developed fuel cell technology to Europe.
Germany and the UK already have incentives for investments in (micro-)CHP. In other countries, developments are also ongoing. For example, in the Netherlands, the province of Gelderland will implement a micro-CHP investment subsidy for households in 2014. The goal is to install at least 10,000 micro-CHP systems in the coming years, and expectations are that fuel cell systems will take a significant share from this subsidy.
The market potential for CHP systems in the residential segment amounts to millions of units. The CODE2 project and ENE-Field are currently researching this topic. With this enormous potential the expectations for fuel cell systems are high. Numerous manufacturers hope that they will deliver the next innovative generation of fuel cell technology. Their request, however, is a Europe-wide, extensive market entry programme which will enable a further ramp-up in production and provide opportunities to broaden the market.
Other niches also offer opportunities for fuel cell CHP systems. Plug Power manufactures a full suite of fuel cell-based products designed to fit seamlessly into the existing battery compartments of material handling equipment. The company has announced almost $30 million in bookings in recent months. Plug Power is targeting a break-even quarter in mid-2014, and predicts that major reductions in service and product costs lie ahead.
In addition, car manufacturers plan to introduce commercial fuel cell technology in large volumes by 2015. Stationary fuel cell systems will benefit from such developments, in the form of further product and manufacturing innovations, and the (expected) cost reductions that accompany larger production volumes.
Risks must be managed
Notwithstanding bright prospects and recent technological and market developments, risks and challenges still exist. In the 2000s, European utilities overinvested in fossil fuel generating capacity, boosting it by 16% Europe-wide and by more in some countries. The projected electricity demand increase has not been realised, as demand fell with the financial crises. Energy companies are struggling to adapt to this new environment, especially in countries with a sharp growth in renewables, so they are not likely candidates to pick up this development soon. But maybe the large number of local initiatives in the EU will.
Due to the abovementioned overcapacity, low demand for electricity and the influx of cheap renewable power production, the spark spread is at a historic low, which makes the financial business case for (fuel cell) CHP systems hard these days. In the residential sector, this effect is less severe due to taxes and VAT payments on gas and electricity.
Although the potential for fuel cell-based CHP is enormous in the residential market, serious competition from other technologies exists. CHP, mainly gas-based, has become a highly efficient and reliable alternative for heating over the past 20 years. In the past, fuel cell manufacturers have focused on product reliability and reducing cell degradation. Some manufacturers have developed products with an astonishing lifetime of 60,000 hours, or even more. In the coming years, fuel cell manufacturers will have to fulfil expectations regarding cost price reductions, to show that they can become competitive in the long term and that the potential can be tapped in the near future. Preferably a large number of manufacturers should be active on the market, to handle market demand and create a credible and constant supply of fuel cell CHP.
There is no doubt that there is a powerful ongoing movement that places fuel cell CHP as a key component of the European energy mix. With fundamental changes in European energy markets and strategy revisions by major energy companies, the big question is: who will pick up these chances first?
With many major players involved, there is no question of how big fuel cell CHP is going to be. Rather, the question is whether the high expectations for Europe can be met, and who will take advantage of the opportunities first.
Arjen de Jong and Martin Horstink work for energy consulting company Energy Matters on the Fuel Cell Expertise Network (FCEN). www.energymatters.nl.
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