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Title: Business Case for a Micro-Combined Heat and Power Fuel Cell System in Commercial Applications

Combined heat and power fuel cell systems (CHP-FCSs) provide consistent electrical power and hot water with greater efficiency and lower emissions than alternative sources. These systems can be used either as baseload, grid-connected, or as off-the-grid power sources. This report presents a business case for CHP-FCSs in the range of 5 to 50 kWe. Systems in this power range are considered micro-CHP-FCS. For this particular business case, commercial applications rather than residential or industrial are targeted. To understand the benefits of implementing a micro-CHP-FCS, the characteristics that determine their competitive advantage must first be identified. Locations with high electricity prices and low natural gas prices are ideal locations for micro-CHP-FCSs. Fortunately, these high spark spread locations are generally in the northeastern area of the United States and California where government incentives are already in place to offset the current high cost of the micro-CHP-FCSs. As a result of the inherently high efficiency of a fuel cell and their ability to use the waste heat that is generated as a CHP, they have higher efficiency. This results in lower fuel costs than comparable alternative small-scale power systems (e.g., microturbines and reciprocating engines). A variety of markets should consider micro-CHP-FCSs including thosemore » that require both heat and baseload electricity throughout the year. In addition, the reliable power of micro-CHP-FCSs could be beneficial to markets where electrical outages are especially frequent or costly. Greenhouse gas emission levels from micro-CHP-FCSs are 69 percent lower, and the human health costs are 99.9 percent lower, than those attributed to conventional coal-fired power plants. As a result, FCSs can allow a company to advertise as environmentally conscious and provide a bottom-line sales advantage. As a new technology in the early stages of adoption, micro-CHP-FCSs are currently more expensive than alternative technologies. As the technology gains a foothold in its target markets and demand increases, the costs will decline in response to improved manufacturing efficiencies, similar to trends seen with other technologies. Transparency Market Research forecasts suggest that the CHP-FCS market will grow at a compound annual growth rate of greater than 27 percent over the next 5 years. These production level increases, coupled with the expected low price of natural gas, indicate the economic payback period will move to less than 5 years over the course of the next 5 years. To better understand the benefits of micro-CHP-FCSs, The U.S. Department of Energy worked with ClearEdge Power to install fifteen 5-kWe fuel cells in the commercial markets of California and Oregon. Pacific Northwest National Laboratory is evaluating these systems in terms of economics, operations, and their environmental impact in real-world applications. As expected, the economic analysis has indicated that the high capital cost of the micro-CHP-FCSs results in a longer payback period than typically is acceptable for all but early-adopter market segments. However, a payback period of less than 3 years may be expected as increased production brings system cost down, and CHP incentives are maintained or improved.« less
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Publication Date:
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Report Number(s):
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Resource Type:
Technical Report
Research Org:
Pacific Northwest National Laboratory (PNNL), Richland, WA (US)
Sponsoring Org:
Country of Publication:
United States
fuel cell; CHP, business case; combined heat and power