Change ahead for energy industry: Fuel cells in 2020

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By Kerry-Ann Adamson, Research Director, Pike Research

Kerry-Ann Adamson

In terms of diffusion of new technologies, 2020, believe it or not, is just round the corner.  Eight years from now, how different could the energy sector be?  And what role in this new world will fuel cells play?

Let's look ahead and envision a possible scenario. 

To keep it relatively simple, let's take just two applications: Residential combined heat and power (resCHP) and prime power for industrial applications.  These two map well onto market needs in Europe (for resCHP) and North America (prime power for industrial applications).  Even more exciting is the potential for resCHP in North America, off grid power in Latin America, Africa, India and the Middle East, and prime power in Russia and Australia – but for these we really need to go further out than 2020.

European Union 2020

Within the European Union, Germany, Denmark and the U.K. are all working hard to remove barriers to the adoption of resCHP systems, comprising all types of technologies, including fuel cells.  From feed-in tariffs to research and development funding to new policy initiatives, the EU's energy landscape is rapidly evolving, especially around efficient, distributed, and resilient energy systems.

Indeed, it is not difficult to envisage a scenario in which residential CHP for single family homes and multi-unit dwellings is successful by 2020 and longer-term becomes the norm.  Specifically, resCHP could easily reach levels of some 200,000 systems per country deployed annually. This is well below the level of new building stock in most countries, and at a level reachable with targeted, minimal, new investment now, in 2012.

In terms of capacity this would represent 200 megawatts per year, per country of new baseload generating capacity, assuming 1-kilowatt systems in each home.  If 20 percent of these systems go into multi-unit family dwellings, capacity could quickly ramp up to 560 MW of new baseload generating capacity annually per country.  Taking into account the timelines of older generating capacity due to go offline, as well as the phasing out of nuclear plants in Germany, we could need to see these targets increase somewhat, to around half a gigawatt (GW) annually per country.  This much more aggressive scenario would require market intervention by governments on a much larger scale in the near term.

The benefits for utilities would include:

  • Ease of expansion, of both roll-outs and capacity, of power generation plant
  • The ability to fill gaps in energy demand quicker than with centralized power production
  • Lower lifetime and decommissioning costs than under the traditional business model
  • Reduced residential emissions
  • The opportunity of integration of residential renewables to provide further peaking power for the home

North America 2020

In North America, the footprint of commercial and institutional buildings is growing.  In the U.S., at least, we also know energy intensity from commercial or industrial buildings is unlikely to decline between now and 2020.  Combine these factors, and by 2020 energy demand from the commercial and institutional building stock in North America will reach three quarters of a terawatt per annum.

One way to reduce the energy intensity is to speed up the roll-out of fuel cell systems from companies such as Bloom Energy (100kW, Solid Oxide Fuel Cell), ClearEdge Power (5kW – 15kW, Polymer Electrolyte Membrane Fuel Cell), FuelCell Energy (350kW plus, Molten Carbonate Fuel Cell) and UTC Power (400kW, Phosphoric Acid Fuel Cell). Each of these companies are producing systems for commercial or institutional use, and together they cover four types of fuel cell with capacities of from 5kW up to 400kW per system.

In the U.S. there are already a number of states with active Renewable Portfolio Standards that allow for the adoption of fuel cell technology.  The two leading states are clearly California and New York.  At the moment, though, the fuel cell industry in North America is only focused on a small geographical fraction of the available market, primarily due to the clearer policy drivers and subsidies available in those sectors.  If there was a clear policy that any new buildings, or building undergoing a retrofit, had to reduce the energy intensity of its footprint we could see a faster uptake. This increased rate of adoption early on would have the side impact of seeing in increased cost out in the overall technology through higher learning curves. Facilities such as hospitals, campuses, large office buildings, prisons, and hotels could represent a market of hundreds of MWs a year in North America alone.

One of the benefits of putting this in place right now is that, with the natural gas boom in North America, maximizing the lifetime of the natural gas resource should be high on governments' priority lists.  Pushing the adoption of technologies that utilize natural gas efficiently, including fuel cells, is one easy win way of doing this. 

The benefits for utilities would include:

  • Reduced baseload demand from the aging grid
  • The potential for higher involvement by independent power producers and energy service companies
  • Ease of expansion of roll-out and capacity
  • The ability to fill in gaps in energy demand more quickly than with centralized power production
  • Lower lifetime and decommissioning costs than under the traditional business model

We are currently in a unique time of transition in the energy sector, and to a large extent any adoption scenario we discuss will depend on the actions of governments and investors as well as technology developers. The stationary fuel cell industry could go from strength to strength between now and the end of this decade – or it could die.

About the Author
Kerry-Ann Adamson is a Research Director leading Pike Research's fuel cells practice, with responsibility for content management, key industry and client relationships, and consulting engagements. She has an extensive background in researching emerging technologies in the stationary power sector including fuel cells as well as combined heat and power.