A New Force in Energy Markets

The Changing Face of Electricity Generation

Fuel cell power plants will provide a significant share of our electrical power in this decade and well into the next century. They are set to play a major role in a deregulated power industry. Large-scale plants will compete in the base load power generation market while smaller plants will penetrate the distributed power and cogeneration markets.

Base load generation currently relies on coal-fired, nuclear, or natural-gas-fired technologies. The natural-gas-powered fuel cell is more efficient, more environmentally friendly, and potentially more cost-effective than the current technologies in the base load market segment.

Technologies for the distributed power and cogeneration market segment include gas turbines, diesel engines, hydroelectric plants, solar and wind generation, and the already commercialized PAFC. In this market, MCFC and SOFC plants also hold distinct advantages: the smaller applications favor fuel cells for their high-efficiency, low-emission, and load-following capabilities. In addition, the attractiveness of economical and reliable on-site power generation may significantly expand the market for small-scale commercial and industrial power plants.

By the year 2010, it is estimated that approximately 130 gigawatts of new generating capacity will be installed in the United States while, in world markets and within a much closer time frame, nearly 550 gigawatts of generating capacity will be added. Fuel cell commercialization opportunities in the U.S. market are focused in several areas: repowering, central power plants, industrial generators, and commercial/residential generators.

Repowering

Estimates of plant repowering installations between 1999 and 2010 range from 15 percent to approximately 65 percent of the installed generating capacity. Most repowering will occur in central power plants: fuel cell installations of 100 megawatts or more are targeted to this market, powered initially by natural gas and later by coal gas.

Central Power Plants

New generating capacity of approximately 100 gigawatts will be required in the central powering market by 2010. Coal gas-powered fuel cell power plants are targeted to this market, with plants sized at 100 megawatts or more.

Industrial Generators and Commercial/Residential Generators The market for additional industrial capacity by 2010 is estimated at 3 gigawatts, and the market for additional commercial/residential capacity at 6 gigawatts. These markets are targeted for early entry and will be a proving ground for natural-gas fuel cell power plants sized from 500 kilowatts to 20 megawatts.

Boosting Competition and Economic Growth

The Clean Air Act and Non Utility Generators

The Clean Air Act mandates significantly reduced emissions of sulfur and nitrogen compounds from existing power plants, and sets strict limits on emissions from new sources. In the short term/these restrictions may encourage the use of i underutilized fuels, particularly natural gas, by electric power producers.

The increased use of natural gas will encourage electricity generation by non-utility generators (NUGs) - independent power producers, small power generators, cogenerators, industrial generators, and commercial/residential generators. Estimates of the effect of the Clean Air Act indicate that NUGs may provide as much as 50 to 70 percent of the total new generating capacity from 1999 to 2010. Natural gas could be the preferred fuel through 2015.

The Clean Air Act, with its emphasis on lower emissions, encourages the commercial use of fuel cell power plants. In the early market-entry years, a reliance on natural gas will predominate; later, as needs grow and new coal technologies emerge, a transition to coal-based systems will occur. The natural gas to coal gas transition follows the commercialization path planned for fuel cell technologies.

New Skilled Jobs in High Technology Manufacturing

In addition to providing enormous environmental benefits,(the increased of fuel cell power plants offers societal benefits. High-technology manufacturing processes are required to fabricate fuel ceils, and an increasing number of skilled jobs will have to be created to meet the demand for fuel cell stacks.)

A recent estimate suggests that a company will need to produce about 100 |megawatts of fuel cell stacks annually to achieve a competitive price of $1,000 to

f1,500 per kilowatt Current production capacity of all manufacturers totals about 60 megawatts per year. A significant increase in manufacturing facilities and employment throughout the Nation will occur as fuel cell usage increases.