Fuel cell fever

Years of hype about “wave of the future” technology that could double propane use in the average home have failed to ignite the enthusiasm of most propane marketers who are still waiting to see their first fuel cell, let alone its impact on their business.

The domestic propane industry’s point of focus for fuel cells revolves mainly around stationary applications as opposed to vehicle-oriented innovations.

Yet, after a $100 billion investment to date in distributed power systems research worldwide, experts maintain bold predictions for the fuel cell market and for propane as a primary fuel source to make it run.

What makes fuel cells attractive is that homeowners can become their own utility, eliminating the need for power lines. With consumers looking for more reliable electricity without the restrictions of being on the traditional grid system, fuel cells could well be the alternative that meets their demand and helps propane marketers grow their business.

Fuel cells produce electricity much like a battery that is continuously recharged by a fuel source. Their fuel source can be any hydrogen-rich fuel, including propane, methanol, natural gas, gasoline, diesel and fuel oil. With twice the hydrogen per molecule as natural gas and none of the toxic concerns associated with other fuels, propane offers vital advantages in the emerging fuel cell markets.

Preliminary calculations show annual consumption for a typical propane home could increase by 1,000 to 1,500 gallons per year in homes where fuel cells provide most of the electricity. This would more than double current propane consumption for many residential propane customers. Equally important, many of those new gallons would be added during the slow summer months.

So what’s taking so long for the dream to become reality?

Despite technological improvements and extensive research that is pushing fuel cells toward commercialization, fuel cell costs and efficiencies still must improve. The technology still needs to be widely proven in the field under real-life weather and demand conditions. There also needs to be an increase in the manufacturing capacity required to build fuel cells in large numbers.

But there is no shortage of optimism that in the very near future, fuel cells will be heating homes, powering cars and fueling power plants.

Fuel cells are not new; they actually were invented about 160 years ago. NASA has used fuel cells to generate electricity in spacecraft since the 1960s.

What They Say

A key business analysis reports that the fuel cell field remains a wide-open endeavor that is not likely to be dominated by a single technology or corporation.

“There’s clearly an enormous market potential for many of these companies to succeed,” says Bear Stearns & Co. analyst Robert Winters. “Tremendous advancements in performance and costs over the past decade are bringing the futuristic idea of fuel cells closer to reality. With the potential for higher efficiency, lower operating costs, zero emissions and quieter operations, the use of fuel cells could revolutionize the power industry.”

Winters speculates that power generation will evolve from its current radial design – centered on large centralized generating facilities – to a more de-centralized system where the power-producing assets will be moved closer to the point of consumption, such as site-specific locations ideally positioned for propane use.

“Clearly, interest in fuel cells is growing rapidly among policy makers and in the marketplace,” agrees Robert Rose, executive director of the U.S. Fuel Cell Council. Last June on Capitol Hill in Washington, D.C., the association sponsored an exhibition of fuel cell technology from some 30 manufacturers – including examples of propane-powered units – that attracted considerable attention from the highest levels of the government.

“This administration is committed to the development of fuel cells,” declared U.S. Energy Secretary Spencer Abraham in a keynote address, noting fuel cells represent a cutting-edge technology that is worthy of additional tax-dollar investment.

A fuel cell prototype the size of a chest freezer will have be slimmed-down in size before mass acceptance is likely.

Propane’s fuel cell potential has attracted international interest, according to Robert Myers, technical director for the World LP Gas Association. The propane industry would do well to actively work at positioning itself within this field, he believes.

“Commercialization of propane fuel cell technology is fundamental to the success of the propane industry in the 21st century,” Myers observes. “But don’t look for them at the local Home Depot or Sears real soon.”

Despite those sentiments, Myers does not think fuel cells will soon be like lawnmowers – one in every yard. He says the size of the market both worldwide and in the United States depends greatly on reducing the cost of the fuel cell units.

“Today’s costs are in the range of $4,000 per kilowatt, although some manufacturers claim they are substantially below this. It is also generally agreed that to carve out a market, the cost to the consumer must be in the range of $1,000 per kilowatt, installed. That means the cost to the manufacturer, allowing for markup, distributor margin, warranty and installation must be somewhere in the $400 per kilowatt range – something like a 90 percent reduction from today’s costs. That won’t happen overnight,” he says.

Propane Invests

It could be five to 10 years before propane-powered fuel cells reach the level of commercialization that will tangibly benefit U.S. propane marketers, agrees Larry Osgood of Consulting Solutions, which advises the Propane Education & Research Council on matters relating to fuel cells.

“It’s exciting and it has great potential, but there’s still a long way to go,” he observes, noting that the domestic propane industry’s point of focus for fuel cells revolves mainly around stationary applications as opposed to vehicle innovations that the auto giants are more suited to develop.

A simple fuel cell

The devices under development need to be made smaller and more efficient before mass acceptance is likely to occur. Thus far PERC has invested some $2.5 million in propane fuel cell research. Not surprisingly, PERC’s emphasis remains directed at potential residential and smaller business applications to match high propane sales volumes.

“We have a low-cost, efficient research program that keeps propane involved in the key fuel cell technologies,” Osgood reports.

PERC’s substantial investment in fuel cell technology is an exceptionally wise use of industry funds, according to Myers.

“The timing is perfect, the costs are reasonable, and there will be a market for propane fuel cells,” he observes. “If the propane industry doesn’t get in on the ground floor of basic research at the inception of these new technologies, it will either never become a player, or the costs to do it later will be prohibitive.”

He also issues several caveats about the burgeoning technology.

“Fuel cells are not simple appliances. Some components use very exotic and expensive materials. Significant progress is being made to use less expensive materials in order to lower manufacturing costs. Every fuel cell today is hand made. Even when all the development work is done, the manufacturing has to be transferred to mass production. That takes time and money. Then, we have a few propane issues to resolve. Fuel cells don’t like sulfur, water and residue – common constituents in our propane,” he says.

“Think about it,” Myers adds. “Relatively simple motor fuel systems are plagued with these same fuel composition issues, and we haven’t solved them very well in 50 years. If a motor fuel vaporizer consisting of a couple of seats, a diaphragm and some basic mechanical parts gets fouled with ‘commercial grade’ propane, consider what happens to a very sensitive membrane or catalyst in a fuel cell.

“Propane fuel cell technology may be market ready before the fuel is, or at least the industry’s willingness to do something about fuel composition.”

Harnessing propane

Analogies abound among fuel cells, computers and the early automobile industry.

The first computers were as big as houses; we now have the laptop. A PERC-funded pilot propane fuel cell earmarked for powering ticket booths in Yellowstone National Park is about the size of a chest freezer, yet another PERC-funded pilot system designed to power a telecommunications tower has already been slimmed-down to one-third its original size.

In the early days of the horseless carriage, one could go with a multitude of gasoline and diesel models, or fire up a Stanley Steamer. Likewise, while laboratories continue to test various fuels for powering fuel cells, propane remains a consistently hot prospect amid two top-targeted technologies: the Solid Oxide Fuel Cell and a Proton Exchange Membrane.

In a broad sense regarding the development of old-time motorcars and modern fuel cells, PEMs vs. SOFCs is roughly comparable to gas vs. diesel. The alternative is to saddle up a horse. PERC is funding research for both PEMs and SOFCs.

“We’re investing in the ‘best of the best’ for each,” Osgood says. “There may not be just one ‘winner,’ so we’ll have propane technologies suitable for different applications.”

To carry the car comparison one step further, the propane industry’s focus is on the fuel cell’s carburetor of sorts, which is called a reformer. A key difference, though, is that a carburetor mixes fuel and air for induction into a power-producing unit; a reformer separates hydrogen from hydrocarbon fuels to accomplish a similar purpose. The mission of perfecting the electricity-producing motor itself – a fuel cell’s stacks, etc. – is largely being left to large conglomerates outside of the propane industry’s purview.

“Once the hydrogen is produced, the cell stack doesn’t care where the hydrogen comes from; whether it’s from propane, natural gas or anything else,” Osgood explains.

Osgood predicts no battle between propane and natural gas to power fuel cells. Areas equipped with natural gas piping infrastructure will likely opt for natural gas, while propane will cover the more remote applications.

“Propane has some very unique attributes, but it’s not likely we’ll see a lot of propane tanks where natural gas is available,” says Myers. “An exception is those critical needs for emergency power where the fuel must be stored on site such as hospitals, airports, telecommunication centers, etc.”

Marketing alliance

Meanwhile, Suburban Propane and Global Thermoelectric Inc. of Calgary, Canada, have established an information-sharing strategic alliance aimed at developing and distributing SOFC power products in propane markets.

“We expect the alliance of Global and Suburban will accelerate the commercialization of our fuel cells,” says Jim Perry, Global’s president and chief executive officer.

“We plan to grow our fuel cell business by first targeting so-called early adopters of fuel cell products. Early adopters are those customers who – for a variety of reasons, but most often because of remote location – have unstable or expensive electricity supply and are therefore more willing to access new technologies sooner than other customers.” Perry stresses that “propane distributors are the key to accessing these markets, and through partnerships with groups like Suburban we expect to have a strong presence in such markets.”

“Fuel cells are a natural expansion of our business and should provide Suburban with a distinct advantage in our markets as well as increase the throughput of propane,” agrees Mark Alexander, Suburban’s president and CEO. “Having evaluated many of the technologies and technology vendors, we came to the conclusion that Global’s fuel cells fit best with propane and our customers’ needs.”

Alexander says Suburban, with some 750,000 customers nationwide, offers a network capable of supporting the sale, installation and service of fuel cell products throughout the United States.

Utilities buy in

The Fergus Electric Cooperative in central Montana serves 5,000 customers in 12 counties. Guy Johnson, fuel cell project manager for the Montana co-op, believes the technology could serve rural customers exceptionally well.

“We have people building homes three-quarters or one-half mile from a power line, and we want to be able to offer them something else as a power source,” he says.

Richard Jackson-Gistelli, a manager with the Emerald People’s Utility District in the Eugene, Ore., area, observes that fuel cells offer a great business opportunity. “Distributed power generation is going to be a fundamental part of the utility business, and fuel cells will be one of the options,” he says.

IdaTech, a Bend, Ore.-based developer of compact fuel cell equipment, last month began shipping pre-commercial field test units to 10 utilities in Oregon, Washington, Idaho and Montana under a multi-year contract with the Bonneville Power Administration.

The 3-kilowatt IdaTech units are powered by methanol. Methanol won’t necessarily be the primary choice once commercialization is achieved, however.

“Our reformer design has been tested on propane, natural gas, diesel, kerosene, naphtha and other fuels. Propane definitely has a place, especially with residential applications,” says Gordon Gregory, IdaTech’s communications director.

“The fuels will be the market-drivers in the long-term,” Gregory points out, explaining that consumers will ultimately make fuel cell purchase decisions based on fuel preference and the existing fuel infrastructures. “Propane and natural gas will clearly be the fuels of choice.”

The test systems represent significant technological advances over previous units delivered under the same Bonneville program in 2000. In addition to having an entirely different architecture, the newer units are more self-contained, have better controls and improved fuel processors (reformers), and have remote monitoring capabilities lacking in the former test units.

“Our processor is also quiet and small, about the size of a large cookie jar,” says Gregory.

“Our future commercial products will be built on this platform,” according to Alan Mace, IdaTech’s engineering field services manager. The field-testing is providing IdaTech with a tremendous amount of information, Mace points out. “Every time we do something, every time we ship or install a new system, we learn.”