FuelCell Energy, Inc.(NasdaqNM: FCEL), a leading developer of fuel cell power plants, and its partner Alliance Power Inc., a consultant in citing economical and environmentally friendly distributed generation facilities, announced they have been contracted to provide 500-kilowatts (kW) of green electricity to a secondary aluminum smelter in southern California.
Electricity produced by two 250-kW Direct FuelCell (DFC) power plants will be sold to TST, Inc., of Fontana, Calif., as part of a five-year power purchase agreement. Fuel cells provide the firm, 24/7 electricity that is appropriate for base load power requirements, which is critical for many industrial customers.
TST, a major American producer, trader and processor of aluminum, faces issues affecting many California industrials: increasing electricity costs cutting into profitability combined with stringent air pollution standards limiting access to on-site generation alternatives.
“Industrial customers in southern California are under mounting pressure to reduce emission of gases and particulates,” said Andrew Stein, CEO of TST. “We’re based in an area that has been the focus of a number of emissions initiatives. This project gives us an opportunity to take control of our energy sources with a market-priced source of electricity that actually decreases the amount of air-borne pollution.”
The DFC power plants are expected to be delivered to the TST site by the first quarter of 2006. Once the units begin operation, running on natural gas, their waste heat will be used to replace a large burner that preheats air as part of TST’s aluminum manufacturing process. The project is an outgrowth of SCAQMD, which issued a Request for Proposals to help reduce harmful emissions by industrial customers within its region.
“SCAQMD is a leader in setting air quality standards, not just for California but for the entire U.S.,” said James Michael, President of Alliance Power. “They continually determine how to set lower and lower emission levels for generating equipment that are economically realistic. With this demonstration, they will get first-hand data for developing new emissions standards that capitalize on the ultra-clean operation of fuel cells.”
Financial support for the fuel cell project includes up to $1.25 million from the California Public Utility Commission’s Self-Generation Incentive Program (SGIP), which encourages electrical customers to install distributed generation that operates on renewable fuel or contributes to system reliability. Another $500,000 stems from SCAQMD, through funds accumulated through emissions penalties.
“There’s an exquisite irony around this portion of the funding,” said FuelCell Energy Vice President of Sales and Marketing, Herbert T. Nock. “Money for this ultra-clean energy project comes from fines paid by polluters.”
The California Cast Metals Association (CCMA) also has actively participated in the government relations aspects and coordination of this project. “Due to the nature of our process (melting metal), metalworking facilities are some of California’s largest electricity consumers,” said CCMA’s Executive Director James Simonelli. “Ultra-clean, on-site generation is very attractive to our members when balancing the need for consistent, cost-effective power and a clean source for that electricity on our sites. We expect this project to be the first of many future projects.”
www.alliancepower.com
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