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					   Clean Energy Group
      Mid-Atlantic Energy Star Partners Meeting
                 Ramapo College of New Jersey
                       March 7, 2002


 Fuel Cells: Investigating the Economic and
Engineering Issues in the Decision to Install

       Lew Milford                  Steve Fairfax
       Clean Energy Group           MTechnology, Inc.
                                    2 Central Street
       50 State Street, 3rd Floor
                                    Saxonville Industrial Park
       Montpelier, VT 05602
                                    Saxonville, MA 01701
       (802) 223-2554
                                    (508) 788-6260
       Lmilford@cleanegroup.org
                                    fairfax@mtechnology.net
Who is Clean Energy Group?

  New U.S. non-profit
  Foundation funded (The Pew Charitable Trusts,
  Energy Foundation, John Merck Fund)
  Collaboratives with State Renewable Funds
  Focus on new “niche” fuel cell markets
  Approach: Non-profit/business partnerships
  Local partnerships / SDF




           Clean Energy Group • 50 State Street • Montpelier, VT 05602
                       (802) 223-2554 • fax (802) 223-4967
                              www.cleanegroup.org                        2
Collaborations for Learning

   Emerging markets: future size and scope?
    “Markets that do not exist cannot be analyzed…Not only are
   market applications for disruptive technologies unknown at the
   time of their development, they are unknowable. The strategies
   and plans [for disruptive markets]…should be plans for learning
   and discovery…” (Professor Clayton Christensen, The
   Innovator’s Dilemma, Harvard Business School Press, 1997.)




              Clean Energy Group • 50 State Street • Montpelier, VT 05602
                          (802) 223-2554 • fax (802) 223-4967
                                 www.cleanegroup.org                        3
Why Fuel Cells?

  Power quality needs in computer based economy
  Only technology to deliver computer grade power
  Cost competitive if losses adequately considered
  Preferable to other technologies on life cycle basis
  Low emissions for future environmental controls
  Exempt from permitting = lower transaction costs
  But: need for “value added” commercialization




           Clean Energy Group • 50 State Street • Montpelier, VT 05602
                       (802) 223-2554 • fax (802) 223-4967
                              www.cleanegroup.org                        4
Fuel Cells and Industry Collaborations

  John Merck Fund / State Funds initiatives
  Non-profit information source
  Collaborative analysis to find value / study options
  Focus: fuel cell economics and engineering
  Interest in more in-depth investigations across
  industry sectors




            Clean Energy Group • 50 State Street • Montpelier, VT 05602
                        (802) 223-2554 • fax (802) 223-4967
                               www.cleanegroup.org                        5
Interest in fuel cells is driven by the need for
uninterrupted, high quality power
   The importance of power reliability and quality is increasing as
   more and more equipment is dependent on digital circuitry.
   Power disruptions cause equipment to fail.
       Disruptions greater than 1/2 cycle (8 milliseconds) cause failure of
       computers and other computer-controlled devices.
       Disruptions greater than 10 seconds cause failure of pumps, fans,
       emergency lighting, and life support systems.
       Longer disruptions cause failure of industrial equipment,
       refrigeration and HVAC systems.
   As a result, companies and organizations in diverse industries
   face potential for significant losses.
       A study by Sandia National Laboratories estimated losses from
       power disruptions at more than $150 billion per year in the U.S.
       Another recent study by EPRI suggested that this figure could
       exceed $188 billion per year.


               Clean Energy Group • 50 State Street • Montpelier, VT 05602
                           (802) 223-2554 • fax (802) 223-4967
                                  www.cleanegroup.org                        6
Organizations are susceptible to different types of
power disruptions

   Equipment can fail as a result of a power outage -- a complete
   loss of power (zero voltage) at the plug. Such outages arise
   from faults on the transmission or distribution system.
   However, equipment can also fail as a result of other types of
   disruptions including voltage sags, surges, transients,
   harmonics and phase voltage imbalances. These types of
   disruptions can arise from any number of sources, including
   lightning, remote faults, capacitor switching, harmonic
   resonance, large step loads, overloaded equipment, high-
   impedance connections, and poor grounding.
   From the perspective of the organization, any power disruption
   that causes equipment to fail exposes it to potential economic
   losses.

              Clean Energy Group • 50 State Street • Montpelier, VT 05602
                          (802) 223-2554 • fax (802) 223-4967
                                 www.cleanegroup.org                        7
         Power outages occur almost every day in service
         territories throughout the country…
                                                                      Interruption Events
                                                 Massachusetts Electric and Boston Edison Service Territories
                                                                        November 2000
                                        16
                                                                                                              Total Number of Interruption
                                        14
                                                                                                              Events = 89


                                        12
                     Number of Events




                                        10


                                        8


                                        6


                                        4


                                        2


                                        0
                                             1   2   3   4   5   6   7   8   9   10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
                                                                                                Date
Source: Nexus Associates, Inc. based on outage reports submitted to the Department of Telecommunications and Energy, Electric Power Division.
                                                 Last November, there were approximately three outages per day
                                             in these service territories, each affecting an average of 800 customers
                                                         Clean Energy Group • 50 State Street • Montpelier, VT 05602
                                                                     (802) 223-2554 • fax (802) 223-4967
                                                                            www.cleanegroup.org                                                   8
… but outages are just a small part of the story.

  Monthly Power Disruptions at Individual Facilities in U.S.

  Event                                                            Median                   Average

  Sags / undervoltages                                                 4.1                   27.9

  Swells / overvoltages                                                3.4                   13.9

  Transients                                                        15.7                     63.5
  Source: Duke Power, Sandia National Laboratories




Any of these events may cause equipment to fail.


                              Clean Energy Group • 50 State Street • Montpelier, VT 05602
                                          (802) 223-2554 • fax (802) 223-4967
                                                 www.cleanegroup.org                                  9
Power disruptions can lead to significant losses
                                               TIME REQUIRED TO
                                               RESTORE NORMAL
                                                  OPERATIONS


    Power            Equipment                     Immediate                 Financial and
  disruption       damage/failure                consequences                other losses




   Organizations incur additional expenses to put equipment back
   on line and restore normal operations.
   During the time in which normal operations are suspended,
   organizations cease certain activities, resulting in additional
   expenses and/or forgone revenues.
   In some instances, losses are irreplaceable – data, specimens,
   increased morbidity and mortality.

               Clean Energy Group • 50 State Street • Montpelier, VT 05602
                           (802) 223-2554 • fax (802) 223-4967
                                  www.cleanegroup.org                                        10
Organizations are installing UPS systems to reduce
the chance of power disruptions and avoid losses

  Conventional UPS systems that incorporate standby generators enable
  companies to shut down equipment in an orderly manner and/or maintain
  operations.
       Solid-state power processor (UPS)
       Lead-acid battery bank (5-30 minutes)
       Diesel/electric standby generator (on-site generation)
       Transfer switch (mechanical or solid-state)
  Conventional UPS systems do not avoid power disruptions that originate
  on the customer side of the meter.
  Moreover, standby generators have limitations.
       Nuclear power plant diesels fail to start 1% of time and 15% fail
       within 24 hours.
       Moreover, diesel generators are difficult to permit and require SCR or
       other air pollution controls for continuous operations.
  Given these limitations, organizations are beginning to take a hard look
  at fuel cells as part of enhanced UPS systems.
                Clean Energy Group • 50 State Street • Montpelier, VT 05602
                            (802) 223-2554 • fax (802) 223-4967
                                   www.cleanegroup.org                        11
A fuel cell-based premium power system can
reduce the risk of a power disruption

 With a conventional UPS system and diesel generators, the chance of
 having at least one system failure in 20 years is roughly 67%.
 By providing an independent energy source, a fuel-cell system in
 combination with enhancement to the UPS system can reduce the
 chances of system failure to 1% over the same time frame.

                              The story of the “nines”
  Nines           % Available    Mean time to failure   Mean time to repair       Probability of failure
                                      (hours)                (hours)                 over 20 years
  "one nine"       90.0000%                 144                 16                      1.00000
  "two nines"      99.0000%               1584                  16                      1.00000
  "three nines"    99.9000%              15984                  16                      0.99998
  "four nines"     99.9900%             159984                  16                      0.67777
  "five nines"     99.9990%            1599984                  16                      0.10000
  "six nines"      99.9999%           15999984                  16                      0.01000




                    Clean Energy Group • 50 State Street • Montpelier, VT 05602
                                (802) 223-2554 • fax (802) 223-4967
                                       www.cleanegroup.org                                                 12
The decision to invest in a fuel-cell based system
depends on the value of potential losses


 Immediate consequences                                                 Financial and other losses

          Repair or replace equipment                                             Additional capital costs

         Address emergency situations                                              Additional labor costs

               Restore systems                                                   Additional material costs

 Interrupt, cancel and/or reschedule procedures                                    Unallocated overhead

           Lost data and/or samples                                                     Foregone revenue

            Injury and/or loss of life                                                  Additional liability




                          Clean Energy Group • 50 State Street • Montpelier, VT 05602
                                      (802) 223-2554 • fax (802) 223-4967
                                             www.cleanegroup.org                                               13
Medical Facility Collaborations
Harvard Medical School                             University of Pittsburgh Medical
      Shared system – Merck &                         Center
      Co., Inc.                                          Shadyside Hospital
      Capital costs: $7-9 million                        Risk of loss in patient care
      Six cell array with UPS and                        setting
      flywheel energy storage,                           Lead: UPMC Energy
      generating 480 kW of                               Manager
      premium power for each                             UPMC Team: Risk
      partner                                            managers, finance, surgery
      Joint RFP for ownership,                           facilities
      operation                                          PA Funds
      Would be largest US
      commercial fuel cell system
      in health care
      No final decisions made

               Clean Energy Group • 50 State Street • Montpelier, VT 05602
                           (802) 223-2554 • fax (802) 223-4967
                                  www.cleanegroup.org                             14
Companies that are interested in fuel cells should approach the
investment decision in a systematic manner

   The planning process should include the following
   steps:
       Assess risk of power disruptions
       Estimate value of lost loads
       Identify loads that require high availability
       Evaluate alternative system designs
       Develop ownership, operating and financing strategy.
   Such a process can introduce new thinking about
   energy options:
       The natural inclination of any organization is to continue to
       approach energy issues in traditional ways
       Fuel cells represent a new way to address rapidly evolving
       power requirements.

               Clean Energy Group • 50 State Street • Montpelier, VT 05602
                           (802) 223-2554 • fax (802) 223-4967
                                  www.cleanegroup.org                        15
    Current fuel cells use hydrogen to produce
    electricity through an electrochemical process

                                              Electric Current


Fuel Reformer
   Natural gas
    Propane
    Methanol
    Ethanol                                                                         O2



                 H2                          Anode                       Cathode




                                                          Electrolyte
                                                                                    H2O
                                                                                    + Heat

                      Clean Energy Group • 50 State Street • Montpelier, VT 05602
                                  (802) 223-2554 • fax (802) 223-4967
                                         www.cleanegroup.org                             16
Fuel cell companies are focusing on various
technologies in different stages of development
 Type   Electrolyte Electrode       Fuel     Temp    Electrical Cogen potential        Stage of             Manufacturer
                                 processor    (°C)   Efficiency                      development
                                                       (LHV)
PAFC    Phosphoric      Noble    External     200    35-40%       Hot water        Commercial sales          UTC Fuel
           acid         metal                                   Steam (low psi)                               Cells
        (liquid/gel)                                                                250 units in field

                                                                                                                             200 KW PAFC - UTC Fuel Cells
SOFC    Zirconium      Ceramic    Internal   1000    50-65%        Hot gas        Field demonstrations        Siemens
          oxide                                                 Steam optional                              Westinghouse
          (solid)                                                                 Several units in field
                                                                                   Commercial sales
                                                                                    beginning 4Q01




                                                                                                                               250 KW SOFC – Siemens
MCFC       Alkali      Nickel     Internal    650    45-60%        Hot gas        Field demonstrations        FuelCell
        carbonates                                              Steam optional                                Energy
          (liquid)                                                                 Expect to have pre-
                                                                                   commercial units in
                                                                                  place within one year
                                                                                   Commercial sales
                                                                                    beginning 4Q01


PEMFC    Organic        Noble    External      80    40-45%          NA           Field demonstrations         Avista       200 KW MCFC – Fuel Cell Energy
         polymer        metal                                                                                  Ballard
          (solid)                                                                  Commercial sales of        H Power
                                                                                  small residential units
                                                                                     beginning 4Q01         UTC Fuel cell
                                                                                  Ballard expects field        Nuvera
                                                                                   trials to continue
                                                                                     through 2003
                                                                                                             Plug Power



                                                                                                                                250 KW PEM -- Ballard
                                 Clean Energy Group • 50 State Street • Montpelier, VT 05602
                                             (802) 223-2554 • fax (802) 223-4967
                                                    www.cleanegroup.org                                                                      17
Emissions from fuel cells are much lower than those
associated with technologies that rely on combustion
   Because air pollutant emissions are low, several air quality
   management districts in California have exempted natural gas
   fuel cells from air quality regulations for power plants.
   Emissions released from fuel cells result from the need to
   reform hydrocarbon fuels to produce hydrogen. In the future it
   may be economical to produce hydrogen from water using
   clean sources of energy. In that event, fuel cell systems would
   be virtually pollution free.
                Emissions Profile of PAFC (parts per million volume)


                                      SCAQMD       PAFC
                                       Limits
                    Carbon monoxide      10         1.4

                    Nitrogen oxide        3        0.045

                    Sulfur dioxide       150        0.03

                    Non-methane          NA      negligible
                    hydrocarbons

                    Particulates         NA      negligible



              Clean Energy Group • 50 State Street • Montpelier, VT 05602
                          (802) 223-2554 • fax (802) 223-4967
                                 www.cleanegroup.org                        18
UTC Fuel Cells offers the only commercially
available product at this time

   UTC Fuel Cells is a unit of United
   Technologies Corp.
   UTC Fuel Cells has been
   involved with fuel cells for more
   than 40 years. Since 1966, all of
   the more than 100 U.S. manned
   space flights have operated with
   UTC-supplied fuel cells.
   The company began production
   of the PC25 unit in 1991.
   The company has delivered 250
   PC25 units to customers in 15
   countries.
   Combined fleet operations total
   4.5 million hours.
              Clean Energy Group • 50 State Street • Montpelier, VT 05602
                          (802) 223-2554 • fax (802) 223-4967
                                 www.cleanegroup.org                        19
The PC25 unit has three basic components




          Clean Energy Group • 50 State Street • Montpelier, VT 05602
                      (802) 223-2554 • fax (802) 223-4967
                             www.cleanegroup.org                        20
PC25 Basic Layout




   Source: International Fuel Cells

                         Clean Energy Group • 50 State Street • Montpelier, VT 05602
                                     (802) 223-2554 • fax (802) 223-4967
                                            www.cleanegroup.org                        21
The performance of the PC25 unit is well
documented

                    Feature                                                   Characteristics
        Rated Electrical Capacity         •   200 kW/235kVA net after internal loads
        Voltage and Frequency             •   480/277 V, 60 Hz, 3 phase
                                          •   400/230 V, 50 Hz, 3 phase
        Fuel Consumption                  •   Natural gas: 2100 cft/h @ 4-14" water pressure (average over five years)
        Efficiency (LHV Basis)            •   87% Total: 37% Electrical, 50% Thermal
        Emissions                         •   <2 ppmv CO, <1 ppmv NOx and negligible SOx (on 15% O2, dry basis)
        Thermal Energy Available          •   Standard: 900,000 Btu/hr @ 140F
                                          •   High heat option: 450,000 Btu/hr @ 140F, 450,000 Btu/hr @ 250F
        Sound Profile                     •   Conversational level (60dBA @ 30 ft.), acceptable for indoor installation.
        Dimensions and Weight             •   Power Module: 10' x 10' x 18' , 40,000 lbs
                                          •   Cooling Module: 4' x 14' x 4', 1700 lbs.


        Average uptime                    •   88 percent
        Expected life                     •   Fuel stack: 40,000 hours
                                          •   Fuel processor: 64,000 hours




Source: UTC Fuel Cells
                              Clean Energy Group • 50 State Street • Montpelier, VT 05602
                                          (802) 223-2554 • fax (802) 223-4967
                                                 www.cleanegroup.org                                                       22
 The expected performance of the Siemens
 SOFC CHP250 unit

             Feature                                            Characteristics
    Rated Electrical Capacity   •   250 kW / 300 kVA
    Voltage and Frequency       480 VAC 60 Hz
    Fuel Consumption            •   Natural gas: 2130 cft/h
    Efficiency (LHV Basis)      •   64.5% Total: 47% Electrical, 17.5% Thermal
    Emissions                   •   0 ppm CO, <0.5 ppm NOx, 0 ppm SOx
    Thermal Energy Available    •   510,000 Btu/hr @ 210F
    Sound Profile               •   TBD
    Dimensions and Weight       •   TBD


    Average uptime              •   TBD, claimed 98 percent
    Expected life               •   Fuel stack: 40,000 hours
                                •   Fuel processor: 40,000 hours



Source: Siemens


                       Clean Energy Group • 50 State Street • Montpelier, VT 05602
                                   (802) 223-2554 • fax (802) 223-4967
                                          www.cleanegroup.org                        23
The Siemens SOFC unit is approaching
commercial production




          Clean Energy Group • 50 State Street • Montpelier, VT 05602
                      (802) 223-2554 • fax (802) 223-4967
                             www.cleanegroup.org                        24
Fuel Cell Energy is field-testing their design

   Molten Carbonate technology: no precious metals
   Limited field experience
   Good electrical efficiency: 47% vs 37% for UTC PAFC
   No reformer, but 2x size of UTC unit
   Limited utility of waste heat
      Available as 680 CFM hot gas only
      Most heat goes to preheat fuel, air
      Hot water/steam is NOT standard
   Challenging technical issues
      Seals in cell stack
      Corrosion at high operating temperature
      Large footprint


              Clean Energy Group • 50 State Street • Montpelier, VT 05602
                          (802) 223-2554 • fax (802) 223-4967
                                 www.cleanegroup.org                        25
The performance of the DFC 300 is roughly
comparable to the UTC PC-25

                   Feature                                                     Characteristics
       Rated Electrical Capacity         •   250 kW net after internal loads
       Voltage and Frequency             •   480/277 V, 60 Hz, 3 phase
       Fuel Consumption                  •   Natural gas
       Efficiency (LHV Basis)            •   47% Electrical
       Emissions                         •   <2 ppmv CO, <1 ppmv NOx and negligible SOx (on 15% O2, dry basis)
       Thermal Energy Available          •   Exhaust gas: 680 CFM @ 750 F
       Sound Profile                     •   “quiet”
       Dimensions and Weight             •   Power Module: 10.5' x 11.5' x 33', 90,000 lb


       Average uptime                    •   TBD
       Expected life                     •   TBD




Source:
www.FuelCellEnergy.com

                             Clean Energy Group • 50 State Street • Montpelier, VT 05602
                                         (802) 223-2554 • fax (802) 223-4967
                                                www.cleanegroup.org                                              26
Fuel Cell Energy (con’t.)

   Fuel Cell Energy
   aggressively marketing,
   developing products
      Distribution agreement
      with PPL Energy Plus,
      others
      Multi-megawatt clusters
      Turbine hybrid
      development




             Clean Energy Group • 50 State Street • Montpelier, VT 05602
                         (802) 223-2554 • fax (802) 223-4967
                                www.cleanegroup.org                        27
The First National Bank of Omaha was the first
major commercial facility to employ fuel cells
  The facility processes credit card orders 365 days a year, 24
  hours a day. Due to the critical nature of the operations, the
  bank required an electrical system that provided greater reliability
  than traditional UPS systems. Critical load is roughly 320 kW.
  The fuel cell-based system has been operational since May 1999
       Four PC25 fuel cell units
       Two 1250 kW prime-rated diesel generators
       Four 260 kW Piller Uniblock rotary UPS units
       Two 16.5 MJ flywheels providing 50+second ride through
       Duel independent electric, gas and communication feeds.
  All fuel cells run at all times with excess power displacing utility
  power.
  Design model predicts 99.999995% availability against
  independent equipment failures given system redundancy.

               Clean Energy Group • 50 State Street • Montpelier, VT 05602
                           (802) 223-2554 • fax (802) 223-4967
                                  www.cleanegroup.org                        28
Risk reduction comes at a cost

 Component                                                               Quoted Price
 PC25 unit                                              $850,000 per unit (order volume = 1)
                                                        $815,000 per unit (order volume = 2)
                                                        $775,000 per unit (order volume = 3 or more)
 High grade heat recovery                               $20,000 per unit
 Double wall heat recovery/ heat exchanger              $10,000 per unit
 Estimated installation costs                           $100,000 per unit
 Fuel stack replacement                                 $300,000 per unit (every 40,000 hours)
 Fuel processor replacement                             $60,000 per unit (every 64,000 hours)
 Annual maintenance contract                            $35,000 per unit


 Annual gas costs                                       $80,000 at $5.00/mcf


 Rotary UPS / flywheel                                  $500,000 DEPENDING ON POWER




                          Clean Energy Group • 50 State Street • Montpelier, VT 05602
                                      (802) 223-2554 • fax (802) 223-4967
                                             www.cleanegroup.org                                       29
Institutions need to recognize that fuel cells
entail a premium price for energy

           Energy costs                                Per kWh at meter
           Cost of electricity                             $0.166
           Avoided energy
           costs                                               $0.129
           Premium paid                                        $0.036


 Assumptions: PC25 unit with optional heat recovery equipment, 100% utilization of
 available capacity and usable waste heat, electricity price – $0.105/kWh, gas price –
 $5.00/mcf, interest rate – 7%. Site specific installation costs are not included in the
 analysis.




                     Clean Energy Group • 50 State Street • Montpelier, VT 05602
                                 (802) 223-2554 • fax (802) 223-4967
                                        www.cleanegroup.org                                30
What would happen in the event of a total
power outage at your facility?

   Bank – Online transaction processing, ATM Network,
   credit card management
   Typical recovery time: 4 to 24 hours
   Revenue losses: $ millions at first instance, additional
   for extended downtime
   Customer retention: large customers likely to see
   alternates
   Possibility of fines, regulatory action
   Negative publicity and loss of reputation


            Clean Energy Group • 50 State Street • Montpelier, VT 05602
                        (802) 223-2554 • fax (802) 223-4967
                               www.cleanegroup.org                        31
Power Outage at Insurance Co. Data Center

  Typical recovery time: 16 hours
  Losses: rarely tabulated or acknowledged
  Losses clearly >>$100k, possibly > $ 1 million
  Claim (batch) processing tolerates downtime better
  than OTP
  Reputation, Regulatory losses less likely than
  banking




           Clean Energy Group • 50 State Street • Montpelier, VT 05602
                       (802) 223-2554 • fax (802) 223-4967
                              www.cleanegroup.org                        32
Power Failure in Process Industries

   Process electrical loads typically very large, 1 – 50
   MW
   Not amenable to fuel cells @ 200 kW per unit
   Losses range from minor (machine reset and restart)
   to major (rejected product batch, damaged
   machinery)
   Losses rarely tracked by conventional accounting,
   SPC methods
   Losses even more rarely reported (negative
   feedback)
   Protection of computer controls (~1% of process
   loads) give substantial benefits
            Clean Energy Group • 50 State Street • Montpelier, VT 05602
                        (802) 223-2554 • fax (802) 223-4967
                               www.cleanegroup.org                        33
Power Failure in Semiconductor Fab Facility

   Extremely sensitive tools: 20% sag for 4 cycles causes outage
   Very large loads, up to 65 MW
   Transmission, sub-transmission feeds have frequent sags, few
   prolonged outages
   4-second outage caused by failure of protection equipment
      Plant evacuation
      Hazmat response
      37 hours to requalify processes, resume production
   Losses are highly confidential, can be used to infer chip yield
      Clearly many $ millions




              Clean Energy Group • 50 State Street • Montpelier, VT 05602
                          (802) 223-2554 • fax (802) 223-4967
                                 www.cleanegroup.org                        34
The cost of the fuel cell-based system needs to
be compared to the expected benefits


   It makes sense for an organization to invest in a fuel cell-based
   system if the incremental costs are less than the difference
   between the expected value of the losses using a fuel cell-
   based system and a conventional UPS



 Incremental Cost of Fuel Cell < PUPS (Potential Loss) - PFC (Potential Loss)




                Clean Energy Group • 50 State Street • Montpelier, VT 05602
                            (802) 223-2554 • fax (802) 223-4967
                                   www.cleanegroup.org                          35
Purpose of a Fuel Cell Study

   Identify and quantify RISKS associated with power failures
      Lost revenue
      Increased morbidity and mortality
      Increased insurance, litigation costs
      Negative publicity and associated effects


   Estimate BENEFITS of enhanced power systems
      The energy system currently in use
      Enhanced centralized UPS with diesel generators
      A fuel cell-based system incorporating UTC fuels cells (PC25)
      A fuel cell-based system incorporating Siemens fuel cells (CHP250)
   Develop conceptual proposal
   Detailed investigation next step, if desired
              Clean Energy Group • 50 State Street • Montpelier, VT 05602
                          (802) 223-2554 • fax (802) 223-4967
                                 www.cleanegroup.org                        36
Costs of Typical Alternative Systems
                                     UTC PC25       Siemens CHP250*    Enhanced UPS         Existing
   Protected Load                      200kW          Confidential        200 kW             60 kW
   Total capital costs*                             Greater than UTC
                                      $ 3,060,000                            $ 600,000        $ 100,000
   (installed)                                       Fuel Cell Costs


   Annual fixed costs                   $ 480,000                             $ 46,000         $ 18,000
   Annual fuel costs                    $ 128,000          ↓                  $ 15,000         $ 30,000
   Annual variable costs
                                            $ 154
   (other)
   Total annual costs                   $ 608,000


   Avoided energy costs                 $ 262,000                            $ 45,000          $ 15,000


   Net total annual costs               $ 345,911                            $ 106,000         $ 63,000


   Anticipated Subsidies               $1,100,000                                       0              0
   Net Present Value
                                       $2,600,000                           $1,100,000         $667,000
   (20 years, 7%)


    Risk of failure is not equal for all systems!
    Fuel cell costs include $1/watt DOD credit and 25% state incentive
    Both the UTC PC25 and Siemens CHP250 fuel cell systems are designed to
    run continuously – utility power is used as backup only
    Enhanced UPS includes redundant UPS, batteries, gensets
                           Clean Energy Group • 50 State Street • Montpelier, VT 05602
                                       (802) 223-2554 • fax (802) 223-4967
                                              www.cleanegroup.org                                          37
Each of the alternative systems has a predicted
probability of failure…

     Alternative               Predicted probability of at least
     Systems                       one failure in 20 years

     PC25                                         <10%
     Siemens                                       TBD
     Enhanced UPS                                  20%
     Existing                                      67%




                Clean Energy Group • 50 State Street • Montpelier, VT 05602
                            (802) 223-2554 • fax (802) 223-4967
                                   www.cleanegroup.org                        38
Avoiding revenue losses only does not justify the cost of power
protection – Including existing system at a typical facility!

                                  UTC Fuel Cell
                                                       Siemens CHP250          Enhanced UPS               Existing
                                     PC25
   Net system costs                  $2,600,000            Confidential           $1,700,000             $967,000
   Reduction in foregone
   revenue                             $ 77,400                                     $ 38,500               $ 11,400

                                                         > than UTC
   NPV                               $2,522,600           Fuel Cell               $1,661,500             $955,600
                                                            PC25

   Reduction in power-
   related morbidity and               >85%                                          45%                     0%
   mortality

   Reduction in emissions       NOx: 1.3 tons
   (annually)*                  SOx: 3.4 tons                                 Higher emissions
                                CO2: 630 tons


      The PC25 system would reduce expected power-related liability claims by 85 percent.
      Based solely on this risk reduction, the additional investment in the PC25 system would be
      justified assuming that expected power-related liability claims exceed $2.6 million.


 * Reductions in emissions per 250 KW unit. [The NEPOOL pounds per MWh assumptions are as follows: Nox (1.5lb./MWh);
 Sox (3.9 lb./MWh); CO2 (780 lb./MWh). The estimated avoided emissions figures are conservative; they do not account for
 any avoided emissions from the thermal loads (steam, hot water) that would be offset by the fuel cell system.]



                            Clean Energy Group • 50 State Street • Montpelier, VT 05602
                                        (802) 223-2554 • fax (802) 223-4967
                                               www.cleanegroup.org                                                         39
Assume existing UPS is rational, risk-neutral
investment for a typical system


                                IFC PC25          Siemens CHP250          Enhanced UPS   Existing
 Net system costs               $2,600,000        CONFIDENTIAL              $1,700,000   $ 967,000
 Avoided Wrongful Death
 Awards                        $ 5,375,000                                 $ 3,200,000   $ 967,000


 NPV (20 years, 7%)            $ 2,775,000                                 $ 1,500,000      $0




                          Clean Energy Group • 50 State Street • Montpelier, VT 05602
                                      (802) 223-2554 • fax (802) 223-4967
                                             www.cleanegroup.org                                     40
Financial incentives are available to help defray the cost
of fuel cells


   The US Department of Energy offers a $200,000 rebate per fuel
   cell.
   Subsidies and rebates and analytical costs potentially available
   from state system benefit funds
   Need for state specific public models of decisions to install




              Clean Energy Group • 50 State Street • Montpelier, VT 05602
                          (802) 223-2554 • fax (802) 223-4967
                                 www.cleanegroup.org                        41
Conclusion


  Tentative findings from collaborative processes:
    Customers lack basic objective DG information
    Lack of business data or methods to analyze risk
    Lack of criteria to compare new technologies
    High first cost, technology, financial barriers
    Need for Economics / Engineering Collaborations
    Institution’s interest?




             Clean Energy Group • 50 State Street • Montpelier, VT 05602
                         (802) 223-2554 • fax (802) 223-4967
                                www.cleanegroup.org                        42

				
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