Calif. leads domestic market for FuelCell Energy of Danbury
- November 4, 2010
California has become a key customer for FuelCell Energy Inc. as the state's utility companies continue efforts to provide clean energy for its 37 million residents.
Since June, the Danbury-based provider of fuel-cell power plants has shipped several units to the state through contracts with different energy suppliers. The most recent deal was announced Thursday with BioFuels Energy LLC of Encinitas, Calif., acquiring three units totaling 4.5 megawatts for the San Diego area.
"It's our leading domestic market," said Daniel Brdar, FuelCell's chief executive officer said. "Keep an eye on what we have coming out."
The agreement with BioFuels includes the installation of a 2.8-megawatt DFC3000 -- publicly traded FuelCell's largest unit -- at the University of California-San Diego, a 1.4-megawatt DFC1500 at San Diego's Water Reclamation Plant and a 300-kilowatt DFC300 at the Point Loma Wastewater Treatment Plant.
The DFC3000 will supply energy to the UC-San Diego campus and create 320 tons of air-conditioning capacity for buildings through by-product heat, while the DFC1500 will use biogas to provide on-site energy to the reclamation plant. The DFC300 will use biogas from the Point Loma plant, which treats 175 million gallons of wastewater daily from 2.2 million people, to fuel itself and provide directed biogas to the existing pipeline to power the two other plants.
"The citizens of San Diego will benefit from this project as we protect our air quality while also generating revenue for the city," Mayor Jerry Sanders said in a statement.
The City of San Diego estimates that the project will generate $2.6 million of revenue over 10 years from BioFuels Energy for the biogas it will buy, and save $780,000 in electricity costs to power the reclamation plant under a 10-year power purchase agreement with the company.
The entire project, which is slated to be operational by next summer and involves the first U.S. installation of the DFC3000, is being financed in part by the California Pollution Control Authority, and equity and debt investments from the New Energy Capital CleanTech Infrastructure Fund and the North Sky Capital CleanTech Alliance fund.
In June, FuelCell sold two DCF1500 units to Pacific Gas & Electric Co. for installation at California State University, East Bay and San Francisco State University, and in September sold a DFC1500 to the Rancho California Water District to power a pumping station in Temecula, Calif. FuelCell also sold a DCF1500 this summer to Olivera Egg Ranch in French Camp, Calif., which is using the unit to convert methane from chicken droppings into energy.
California has joined Connecticut and South Korea's Posco Power, which has a licensing agreement for FuelCell components, as FuelCell Energy's top areas of focus as a result of the state's growing wastewater industry, where biogas is converted into clean energy, said Jeff Osborne, an analyst with Stifel, Nicolaus and Co. who covers FuelCell Energy.
"In terms of availability and energy, supply is what drives people to seek alternatives," he said.
The deal with BioFuels represents a new step for FuelCell in that the DFC300 power plant will add biogas to the Point Loma Wastewater Treatment Plant's existing gas pipeline, in addition to creating on-site power, said Walter Nasdeo, an analyst with Ardour Capital Investments LLC.
"If this returns performance as expected, this could be an impetus for more traction in California," he said.
FuelCell shares closed Thursday at $1.26, up a dime.
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