Navigant Research Blog

GEI Fuel Cell Plant Marks New Phase for the Industry

Kerry-Ann Adamson — September 24, 2013

GEI Global Energy Corp. (GEI) announced on Monday an agreement with Owl Eco Group to build a 100 MW fuel cell power plant, located in Pennsylvania, amid the Marcellus shale natural gas fields.  Not only would this be the largest fuel cell installation in the world, but also, in terms of revenue, it would represent nearly 45% of global revenue from the fuel cell stationary sector in 2012.

The value of the deal, the companies said, is $470 million, equating $470,000 per 100 kW system, assuming 1,000 100 kW systems.  This 100 MW deal, if installed, represents a step forward not only for GEI but also for the industry as a whole.

Significant challenges remain.  In June, GEI launched a fundraising round to raise $1.5 million to complete a series of field tests of a 50 kW fuel cell “generator.”  It is unclear from the announcement if this new 100 kW base unit system is a scaled up version of the 50 kW X5 generator, which in itself is projected to cost up to $10,000 per 50 kW system, at an unspecified production volume.

A Few Hiccups

Also, the systems that would be deployed in this project are high temperature polymer electrolyte membrane fuel cells (HT PEM FCs).  To date, these have represented a niche market for fuel cells with a limited supply chain.  With BASF recently exiting from the production MEAs, a core component in HT PEM fuel cells, this leaves the supply chain potentially without a large corporate, low risk, component manufacturer.  The volumes of components needed to service this deal are likely to also represent a supply chain bottleneck, as suppliers are likely to be required to increase volumes – assuming that they have access to the finance to undertake this.

What’s more, to date no large-scale deployment of HT PEMs in the stationary fuel cell market has been successful.  In 2012, ClearEdge Power announced a 50 MW HT PEM deal, with systems to be deployed in Gussing, Austria.  Following that announcement, ClearEdge Power stopped all shipments of its 5 kW HT PEM units because, in the words of the company’s CEO, “Mechanically, we needed to think of a better plant. We stopped shipping not because we didn’t have a good product. We wanted to make sure we delighted the customers.”

The program has since resumed with a single 5 kW system installed in August 2012, but the full impact of the hiccup on the HT PEM system development program is still very unclear.

Non-Binding

To fulfill this deal GEI will need to undertake some significant steps forward. These are likely to include:

  • Additional fundraising
  • Moving to a third-party contract manufacturing structure or developing in-house manufacturing capacity
  • Accelerated testing of systems
  • Working with the HT PEM supply chain to ensure a reliable supply of high-quality components

GEI CEO K. Joel Berry has shown some calculated bravery in announcing this deal so early on, but the industry and the finance community have had their expectations raised before.  So GEI should expect some very tough questions before this deal is taken as anything more than a non-legally binding long-term goal.

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