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Looking ahead

January 1, 2003 By    

The promise of new technology that could double propane use in the average home remains an elusive tease for propane marketers with visions of fuel cells selling off the shelves the local Home Depot or Sears.

In truth, experts say it could still be another five or more years before propane-powered fuel cells reach the level of commercialization that will tangibly benefit U.S. propane marketers.

In November, two dozen propane industry representatives met with an equal number of fuel cell industry leaders to explore ways to collaboratively push the sputtering agenda forward. But with only two developers anywhere close to offering high-priced propane products to the public, the talks failed to generate the kind of spark that the propane industry has been awaiting for decades.

Fuel cells in a wide variety of configurations were displayed at the 2002 Fuel Cell Seminar trade show in Palm Springs in November.
Fuel cells in a wide variety of configurations were displayed at the 2002 Fuel Cell Seminar trade show in Palm Springs in November.

The meeting was facilitated by Bob Wichert and Jeff Bentley of Breakthrough Technologies, a nonprofit charitable and education organization dedicated to the promotion of fuel cells, and Larry Osgood, a consultant to the Propane Education & Research Council on fuel cell research and development grant issues.

Wichert said the goal was to lay the groundwork for a technology transfer plan to maximize the propane industry’s ability to participate profitably in the fuel cell market when it develops. According to Osgood, fuel cell development currently is receiving about 40 percent of PERC’s research and development funding.

So, how soon will there be a fuel cell that can be sold to the housing market?

Wichert and Osgood said the answer is increasingly uncertain. The unit that H Power had contracted to sell through rural electric cooperatives may no longer be available following the company’s recent sale to Plug Power, which was developing its own units. A contract that ECO – a consortium of coops – signed with H Power to buy 12,300 residential units was downgraded last year from an exclusive to a nonexclusive arrangement. It now may be doomed, Wichert speculated, noting that a press release about the acquisition said the ECO contract may be cancelled.

In residential-sized propane fuel cells, H Power has the only unit out to date. According to Osgood, there are 16 H Power units in the field, all but two of which are propane fueled. “They’re all test units,” he noted.

Idatech is expected to be next with a residential-sized propane unit. But the fuel cell industry, which has been claiming for 10 years that they were just three years or so away from commercializing their products, is an uncertain one.

“There have been promises made, and promises not kept,” Wichert conceded.

Facing financial markets that are increasingly skeptical of fuel cell developers’ claims and promises, at least two companies have recently terminated their fuel cell programs. Many have gone out of business, and even among the survivors, some may never produce a product.

“Some of the fuel cell energy companies are nothing but a stock play,” Wichert warned, noting that any true developments are unlikely to bring quick results.

“It’s a long-term commitment. It’s not going to be here tomorrow,” he said.

The counter-seasonality of fuel cell fuel demand is enticing for the propane industry, as high summer electricity use in will result in higher propane consumption during the hottest months of the year.

But Wichert acknowledged that the true potential of fuel cells is more likely to be realized with co-generation, which uses the heat as well as the electricity produced by the cells. Cogeneration is more likely to be fully used in cold weather, and could replace conventional propane-fueled heating appliances with higher efficiency fuel cells. That conceivably could reduce propane’s total winter fuel demand.

Bentley said that in his study of the potential for propane fuel cells undertaken under a PERC grant, the markets where propane made the most sense were in small residential applications. He forecast that propane will be most competitive in fuel cells below 100 kW.

Developers who are interested in working with propane see a potential problem from sulfur the ethyl mercaptan odorant in products targeted for consumer use. Others are uncomfortable with the heavier hydrocarbons that are often found in what they see as a highly variable fuel. Those that have already developed fuel reformers for propane include Chevron/Texaco, Hydrogen Source, HyRadix, Idatech and Nuvera.

High cost, uncertain efficiency and the short unit life spans continue to be crucial hurdles for fuel cells.

Proton exchange membrane fuel cell makers are focused on the 5 kW market and 20-50 kW units. PEMFCs are expected to commercialize first, when costs reach as low as $200/kW, while solid oxide fuel cells (SOFCs) are targeting the area of $1,000 per kW. The companies surveyed forecast an average cost of $4,000 per kW by 2006 – still far above the cost of other types of commercially available generators with combustion engines. A major exception was General Motors, which plans to reach $500 per kW by 2006.

Bentley estimated that a 5 kW fuel cell at a 30 percent duty cycle with 30 percent efficiency could generate 1,000 to 1,800 gallons of propane demand annually. With a $4,000 system cost, the fuel cost becomes the dominant issue.

While a consumer price of 80 cents to $1.60 is normal, propane fuel cells are likely to cost 10 to 30 cents/kW to operate. It is only in the range below $1.20 per gallon that you can still make an economic case for propane as a residential fuel cell fuel, Bentley said.

Bentley and Wichert both said they believe the propane marketer has information about the potential rural customer for fuel cells that would be important to a fuel cell maker in crafting a marketing program.

“You have customers where you know fuel cells make sense,” Wichert said. “These customers are ready for high-value electricity. Many fuel cell companies don’t know where they’re going to find the customers.”

Rural electric cooperatives have been eager to market residential units because they have the potential to reduce the cost of infrastructure for the utilities. Installing fuel cells instead of new power lines to remote locations has been promoted by ECO, which installed some propane prototypes. But that group also has promoted the view that methanol might be the renewable fuel of the future for those units.

Wichert suggested that a possible option for the propane industry would be to partner with electric coops.

Among those attending were Heather Ball of the Texas Railroad Commission, Baron Glasgow of the National Propane Gas Association’s (NPGA) Southwest office in Scottsdale, Ariz., Sam McTier of McTier Supply, Lake Forest, Ill., John Kamps of Kamps Propane, Manteca, Calif., representatives of Ferrellgas’ Phoenix office, an Amerigas executive and several from Suburban Propane.

Also represented were an Idaho co-op, Gas Equipment Co. of Denver, Energy West of Payson, Ariz., Blue Star Gas of Garbervile, Calif., and Blossman Gas of Asheville, North Carolina.

Also present were fuel cell company spokesmen. Represented were:

Idatech, Bend, Ore.: Eric Simpkins, vice president of Idatech, a maker of PEM fuel cells. The company recently participated in a PERC-funded study to develop a 1 kW fuel cell that is “propane capable,” he said.

Idatech expects to have available next year its FCS 1200 system, which will generate 900 watts AC. It uses a Ballard Nexa stack and can be remotely monitored. It is currently being tested in natural gas and propane prototypes. The system consumes 4.8 ml of propane per minute. It should be commercialized late in 2003. Although no price has been announced yet, Simpkins said it would be “reasonably affordable,” and unit warranties were likely to be like “a tire warrantee” scaled over time.

Cummins Power Generation, Minneapolis: Paul Plahn of Cummins Power said his company sells $1.4 billion in generating products annually sized from 3 kW to 2 MW, and is the largest volume manufacturer and distributor of premium gensets.

The company also sells more than 85 percent of portable RV gensets nationally. The quietness of fuel cells will be one major selling point, he said.

Fuel cells may be too costly for standby power under 2,000 hours of use per year, he suggested, but may be attractive above that volume. Cummins has a $75 million, 10-year grant from DOE to develop an affordable 10 kW SOFC system complete with electronic controls, fuel systems and the rest of the fuel cell package. Cummins has no propane units in the field and expects that the company is still years away from offering them.

Ceramic Fuel Cells, Noble Park, Australia: Bruce Godfrey said his company is developing flat plate SOFCs, and wants to be a component maker, not a systems manufacturer. He forecast three to five years before his products get into the market.

A key aspect of fuel cell design, he added, is that there is “incredible interaction” between all components, so a systems design approach is essential. His company has demonstrated with a 1 kW stack operated at 31 percent utilization that “LPG is technically viable,” he said. He added that it is “a nice transportable fuel.”

Godfrey estimated that his company could participate in making a 1 kW residential unit available within about five years “if we had a partner.”

Global Thermoelectric, Calgary, Canada: Eric Potter, director of business development for Global, said the SOFCs Global is developing can be powered by LP gas “without the need for complex, costly fuel processing.”

Although Global “wants to develop a product that can get us into a mass market potential,” the company’s focus groups and other market research indicate that fuel cells it could offer “are not solving a problem today.” Only 14 percent of consumers were found to be very interested in fuel cells and potential early adopters. Global has 10 residential units operating in a demonstration project in Whitby, Ontario, Canada and is studying the load profiles.

The company has found that the longtime life of the unit is important in residential uses. A maximum of 15,000 hours is currently feasible, he added. With 27 percent efficiency in current prototypes, Potter said he expects at least 31 percent before a limited product launch late in 2005.

Global doesn’t expect to market directly to the consumer, but will distribute through energy distribution companies. Marketing agreements have been signed with Suburban Propane and Superior Propane of Calgary. The early markets, he said, are likely to be in California, Arizona, Michigan, New York and New England, where high existing electric rates will make fuel cell products competitive.

Global has received a $500,000 PERC grant to develop a fuel processor for propane by spring 2003. “We think this is a phenomenal technology to move forward.” he said, calling it “a huge opportunity” that may offer not just niche, but “broader market penetration.”

Although excess power is likely to be available from residential fuel cells at off-peak hours in which there is little demand for it, he expressed skepticism about the potential for consumers to sell their excess to the grid. “In a perfect world we’d be able to sell back to the grid. I don’t know whether we’ll be able to do that or not.”

UTC Fuel Cells, South Windsor, Conn.: Marelino Susas of UTC said his company has a “PC 25” 200 kW unit that can operate on propane, with 255 units installed worldwide. Although early units “had some problems,” he said, they were solved and now UTC “can leverage that.”

The company sees the unit as ideal for light commercial and industrial uses and “UTC thinks of this as a big market,” especially for off-grid users who often will find it cheaper than paying for a grid connection. The unit is “very expensive,” and is not being offered in a propane version.

A 5 kW unit, providing primary power as a load-following device is being operated on HD-5 propane in two locations – one in Europe and the other in Japan, mostly for heating. A beta program is planned for a 2002-03 version of the unit, which will be tall, like a furnace, and capable of grid connection or independent operation.

“We expect to commercialize these units in a couple of years,” perhaps by 2006, he said.

One goal of development work is to achieve 40,000 hours of useful life. The unit can generate electricity for 15 to 20 cents per kW on propane, depending upon the price of propane, he said, excluding the initial cost of the unit.

Others: Gary Allen, director of sales for Fuel Cell Technologies, Kingston, Ont., said some 5 kW propane units will be field tested by his company in 2003. Representatives of Ballard, Fuel Cell Energy, Hydrogenics, Plug Power and Siemens-Westinghouse said they have not focused on propane as a fuel.

Diane Hooie of the U.S. Department of Energy noted the federal agency is funding a hydrogen fueling development program for fuel cells, but “we do not have a propane program.”

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