We believe we are going to change the world”, says Gary Mittleman, president and CEO of Plug Power, fuel cell developer and manufacturer – a joint venture of DTE Energy Company (parent of utility Detroit Edison) and fuel cell pioneer Mechanical Technology Inc. At first glance this may look a little ambitious, perhaps verging on the evangelical, but it may just turn out to be true if Plug Power can achieve its stated mission of becoming “the first company to make and profitably sell one million fuel cell systems.”
An interesting and perhaps surprising aspect of the Plug Power fuel cell commercialization strategy is that it is targetting the residential sector. This contrasts with the approach of Ballard Generation Systems, Canadian based fuel cell developer, which is focusing, initially at least, on transport and small industrial applications, ie somewhat larger stationary systems than Plug Power’s residential-size machines.
A few weeks ago Alstom – a joint venture partner of Ballard – announced it was investing 25 million ECU in a factory to be built at Dresden, Germany for the manufacture of 250 kW Ballard fuel cells, to be “used in electric and thermal decentralized power generation plants in the 1 to 10 MW power range” and “particularly suited to combined heat and power systems or industrial and tertiary back-up power supplies.”
In the vehicle sector, Ballard already has a substantial joint venture underway with Daimler Benz and Ford (who have invested in the region of $800 million) to develop fuel-cell based engines, with a view to having 100 000 on the road by 2005. The conventional wisdom is that such mass production will reduce costs and open up the wider stationary power business.
Plug Power is effectively planning to work the opposite way. The reasoning, Mittleman explains, is that in the automotive world you need to get costs down to the hundreds of dollars per installed kW level, whereas in the residential sector $1000 per kW, or thereabouts, can be competitive.
Plug Power, which, like Ballard, is using PEM (proton exchange membrane) fuel cell technology plans to have its first residential power plants commercially available in 2001. These will have a capacity of around 7 kW and will sell for somewhere in the region of $7000-8000 (with leasing the most likely option). But once in mass production costs should drop dramatically, just as we have seen with personal computers, perhaps reaching $500/kW around 2003.
What Plug Power is not doing is taking on the industrial bulk power sector, which is used to paying considerably less for its electricity than the domestic sector and where the per-kWh costs of a natural gas fired combined cycle plant are hard to beat. In the domestic sector however Plug Power believes it can provide substantial savings to the consumer.
Part of the reason is that with a domestic power plant transmission and distribution costs are of course eliminated, and these tend to be a substantial proportion of the price paid by residential consumers for electricity (for conventional central power plant technologies typical figures might be between $350 and $700 per kW for generation plus a further $400 for transmission and distribution). Other attractions to the domestic consumer are independence from the grid (and grid disturbances, eg due to extreme weather or power plant outages) and environmental benefits due to reduced carbon dioxide emissions.
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“For Plug Power and GE it is no longer |
As reported in this month’s news, Plug Power has recently announced an important step forward, with successful operation of its PEM technology on natural gas. The “ability to utilize the existing natural gas infrastructure provides an important benefit to homeowners in our largest target markets – the United States and Europe,” says Mittleman.
For the last six months a Plug Power PEM has operated on hydrogen and is claimed to be the “first PEM fuel cell system to provide a home’s complete electricity independent from the utility grid”, while in November the company operated a methanol-based system.
Very soon now Plug Power is expected to finalise its joint venture with GE, “GE Fuel Cell Systems”, which will sell, install and service the systems and which plans to do this through partnerships with gas distribution companies, electric utilities, electric service companies and power marketers.
This will further strengthen GE’s position at the smaller end of the power generation market, giving it access to a spectrum of generation technologies ranging from 1350 MWe (the advanced boiling water reactor nuclear plant) down to 7kW.
The move essentially completes a process initiated in 1994 with the acquisition of Nuovo Pignone, the small turbine specialist.
GE’s shift of interest to smaller-scale generation continued in early 1998 with the purchase of Stewart & Stevenson’s Gas Turbine Division, packagers of small power generation equipment, and with the signing in May 1998 of an agreement with Elliott to sell and service its microturbines. A further scaling down into fridge-sized power stations was perhaps the next logical step.
For Plug Power and GE it is no longer a case of whether residential scale power plants will play an important role in the energy markets of the future but a question of when and where. So much for the plug, it remains to be seen whether the domestic consumer is ready to make the switch.
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