Enbridge Inc. (NYSE:ENB;TSX:ENB), a leader in energy transportation and distribution in North America and internationally, and FuelCell Energy, Inc. (NasdaqNM:FCEL), a leading manufacturer of fuel cell power plants for commercial and industrial customers, have entered into an exclusive product development and distribution agreement for a new multi-megawatt product, the Direct FuelCell – Energy Recovery Generation(TM) (DFC-ERG(TM)), specifically designed for natural gas pipeline applications in the U.S. and Canada.
The DFC-ERG power plant is a combined cycle generation system that combines a Direct FuelCell (DFC) power plant and an unfired expansion gas turbine for natural gas pipeline letdown stations where pressure reductions are required for local delivery. The DFC-ERG provides the heat necessary to prevent freezing that results in the pressure reduction process at these locations, eliminating the combustion-based system that is presently used today. There are hundreds of these type stations across North America, which are typically in areas with large commercial and industrial customers and/or in large cities.
This new product is a way to recover energy from pipeline operations that normally is not currently recovered and to improve on the DFC power plants’ already unmatched efficiencies and emission reduction benefits. Because it is a combined cycle power plant, the electrical efficiency of the DFC-ERG is approximately 60 percent. The companies are planning a megawatt (MW) demonstration as part of a commercialization program for products sized from one to 10 MW.
Out of several short-listed U.S. and Canadian locations for the demonstration plant, the final location is being finalized as part of negotiations with governments and new component suppliers for this new hybrid plant. Within its own operating system, Enbridge has identified the potential for over 40 MW of DFC-ERG power plants in the province of Ontario. The companies will initially target this market, as well as the six U.S. states – California, Connecticut, Hawaii, Maine, New York and Pennsylvania – that qualify fuel cell power plants on natural gas as an eligible technology under their Renewal Portfolio Standards (RPS) programs. According to a recent Primen/EPRI Solutions report, the RPS potential in these six states that currently qualify fuel cell power plants on natural gas as renewable is expected to be more than 10,000 MW by 2010.
“We are enthusiastic about this new hybrid product that offers best-in-class efficiencies and generates power without combustion and therefore substantially reduces emissions,” said Stephen J. J. Letwin, Enbridge Inc. Group Vice President, Gas Strategy & Corporate Development. “This is consistent with our strategy to invest in clean energy technologies and gives us another product offering that complies with the developing renewable and low impact energy mandates in the U.S. and Canada.”
“Our multi-megawatt DFC-ERG with Enbridge provides us with a highly efficient product for developing repeatable business in a new vertical market for our ‘ultra-clean’ DFC products,” said Jerry D. Leitman, Chairman and CEO of FuelCell Energy, Inc. “This further demonstrates the acceptance of our technology in larger sizes and that our products can be an integral part of meeting requirements for clean, efficient and reliable power.”
Additionally, Enbridge’s non-exclusive distribution agreement for FuelCell Energy’s standard DFC products (DFC300MA, DFC1500 and DFC3000 with introductory ratings of 250-kilowatts, one MW and two MW, respectively) entered into in November 2003 has been expanded to include the United States as well as Canada.
In connection with this transaction, FuelCell Energy, pursuant to a new warrant agreement, granted Enbridge warrants to purchase up to 1 million shares of FuelCell Energy common stock with order commitments of 40 MW of DFC products, including the new DFC-ERG power plant. The exercise prices of the warrants range from $9.89 to $11.87 and the warrants will expire in June 2010. FuelCell Energy’s previous warrant agreement with Enbridge has been canceled.
Loading...