FuelCell Sees First Large-Scale Plant Deal in Europe This Year

Apr 11, 2014 3:24 pm ET

April 11 (Bloomberg) -- FuelCell Energy Inc., the company that built the world’s biggest fuel-cell power plant, expects to sign its first contract for a megawatt-scale project in Europe this year.

FuelCell built a 250-kilowatt plant in central London to showcase the technology and will complete another one of comparable size within a few months, said Chief Executive Officer Chip Bottone. The company is talking to potential customers there and in Germany and Italy.

FuelCell completed a 59-megawatt project in South Korea in February, the world’s largest facility making electricity with fuel cells. It also built last year a 14.9-megawatt plant in the U.S. for Dominion Resources Inc. The deals suggest growing acceptance of using the technology to generate electricity on a large scale.

“We expect to sign some contracts for megawatt-scale plants in Europe this year,” Bottone said in an interview in London. “We are working on several projects right now.”

Fuel cells use hydrogen or natural gas to generate power and heat through a chemical reaction.

Shares Surge

FuelCell has more than doubled in the past year.

The company has said the the long-term sales potential in Europe is about 90 megawatts of projects, said Robert Stone, an analyst at Cowen & Co. in Boston who has the equivalent of a hold rating on the shares.

“Any progress on that pipeline would be welcome news,” Stone said in an interview today.

A megawatt-scale plant costs about 3,000 euros ($4,165) a kilowatt to build, Bottone said. The Danbury, Connecticut-based company is seeking to reduce this by 30 percent, a target it will achieve when it’s making about 200 megawatts of systems annually. It currently manufactures about 70 megawatts a year at its U.S. factory.

FuelCell’s systems typically run on gas and produce energy for campuses, factories and utilities. They use molten carbonate technology, which doesn’t require precious metals or rare-earth elements. Other fuel cell designs require platinum, and companies including General Electric Co. have said that may limit demand.

FuelCell’s power plants emit about a third less carbon dioxide than systems that produce power from burning gas.