Officials with American Honda Motor Company had two goals at their Torrance, CA, campus. They wanted to reduce their carbon footprint. But they also wanted to shrink their yearly energy costs. Fuel cells manufactured by Sunnyvale, CA-based Bloom Energy allowed them to accomplish both of these missions.
“We are always looking for new or proven technologies that can allow us to hit one or both of these targets,” says Garth Sellers, national facilities manager for American Honda. “Several years ago, we began looking at fuel cells. We found that this technology-really a proven technology even though it’s just now getting out into the public sector-was able to help us hit our targets better than others.”
The fuel cells have been providing 25% of Honda’s electricity needs at its 101-acre Torrance campus for a little less than half a year. So far, the cells haven’t performed as advertised: they’ve done better, dramatically reducing Honda’s energy costs and carbon footprint at the campus.
Honda, of course, is far from the only company that has discovered the benefits of fuel cells. These power generators can provide main and backup power for a wide range of users, everything from data centers that need constant reliable power to hospitals, office towers, and factories.
Building owners choose fuel cells for several reasons: They are reliable, providing guaranteed backup power. Data centers, hospitals, financial services companies, and others can’t be without power for even seconds. Fuel cells offer peace of mind to these businesses, providing them with a reliable supplement to sometimes shaky public power grids.
A growing number of municipalities across the country are providing financial incentives to companies that reduce their greenhouse gas emissions. Because of this, more business owners are exploring fuel cells.
Owners with a long-term vision might see that the fuel cell will save them 20 to 50% a year on energy costs.
Fuel cells are efficient, too. Building owners can dramatically shave their yearly energy costs by relying on them to generate at least a portion of their facility’s power. In today’s still-struggling economy, a growing number of business owners are looking for innovative ways to reduce their expenses. Fuel cells can play an important role in these efforts.
Finally, fuel cells are environmentally friendly. Building owners can turn to them to reduce their carbon footprint. This isn’t only a good thing to do; it might bring considerable savings, too. A growing number of municipalities across the country are providing financial incentives to companies that reduce their greenhouse gas emissions. Companies can increase their odds of qualifying for these lucrative incentives by turning to fuel cells.
Because of these factors, more business owners are exploring fuel cells, says Robin Shaffer, vice president of sales with ClearEdge Power, a fuel cell manufacturer based in Hillsboro, OR.
“This is still a new tech to so many people,” says Shaffer. “But as people continually become more aware of greenhouse gas emissions and they become increasingly sensitive to what they’re paying for energy, they are becoming more interested in fuel cells. As they hear more and more about the stability of natural gas pricing, they become aware of this technology that has been around for 40 years and provides some pretty significant benefits. Then, they start to explore it. They realize that this can reduce their operating expenses for energy costs that it can reduce their carbon footprint. That is driving the increased demand.”
Clean Energy in California
Unlike the officials at some companies, those at American Honda didn’t have to be convinced of the benefits of fuel cell technology. The company was already familiar with fuel cells and how they work, thanks to the FCX Clarity.
The Clarity is a fuel-cell-based electric vehicle that produces zero emissions and is powered by hydrogen. It’s true that the fuel-cell car that Honda manufactures has nothing to do with American Honda’s fuel-cell project at its Torrance, CA, site. But the fact that the company was comfortable with fuel cells certainly didn’t hurt when it came time to determine how the company would provide reliable onsite power at the campus.
It also made convincing Honda officials that fuel cells were the right choice for its Torrance facility an easier task on the part of Clear Edge.
“We wanted something that would not only reduce our carbon footprint but reduce our energy costs, too,” says Sellers. “We knew that fuel cells could do that for us.”
The fuel cell system, powered by natural gas, at American Honda Motor Co.’s Torrance campus will produce 1 MW of energy. It consists of five energy servers that each produces 200 kW of power. In all, the system will produce 25% of the company’s energy needs at a campus that includes 1.13 million square feet of office space, research space, design and development facilities, and a parts distribution center.
According to Honda, the energy generated by the onsite fuel cells is enough to power about 750 average-sized homes each day. The fuel cells are also kind to the environment. Honda says that for each megawatt-hour of power that the system generates, emissions of carbon dioxide from the site will be reduced by 18 to 25%.
This means that during a decade of use, the Honda system will drop the company’s carbon dioxide emissions by about 16 million pounds.
Honda will also save water, thanks to the fuel cell system. That’s because fuel cells require no water after an initial injection of 240 gallons at their startup phase. That’s a dramatic savings when compared to California power plants. Honda officials estimate that they’ll save more than 3.25 million gallons of equivalent water used per year.
Of course, as impressive as the environmental benefits of fuel cells are, what really convinces companies to make the commitment are cost savings. Building and company owners need to know that by relying on fuel cells to provide all or some of their facilities’ power, they’ll be reducing their yearly energy costs.
Fortunately, that’s exactly what’s happened for American Honda.
Sellers says that Honda has seen its energy bills at the Torrance facility fall by about 25% since installing the fuel cell system. “The savings that Bloom Energy projected have been accurate. We’ve seen them, plus a little more,” he says. “The fuel cells have done real well for us; that’s important. Anything we present to the executive level has to have a solid return on investment. After our analysis by the financial departments, we were confident that this would turn out to provide a good financial return for us.”
Return on Investment
Sellers’ comments are important: For manufacturers to convince building owners to invest in fuel cells, they have to be able to show them, too, just how quickly these cells can pay for themselves in reduced energy costs.
Few companies, school districts, or governmental agencies have budget room today. The country’s continued economic challenges mean that building owners, government officials, and facility managers have to constantly look for savings. If manufacturers can prove to these decision-makers that fuel cells can help bring these needed savings, the demand for fuel cells should steadily rise.
“Fuel cells have to make economic sense for enterprises,” says P. H. Bhatt, vice president of engineering for Bellingham, WA-based Alpha Technologies. “Smart investors and owners will analyze the payback period and the upfront costs to determine how quickly they can pay off the costs of investing in fuel cells.”
The challenge is that computing the cost savings from a fuel cell can be complicated. Here’s how Bhatt looks at it: Say a business owner needs 5,000 W of backup power. A fuel cell providing that much power might cost about $25,000 in upfront costs, higher than a generator or the combination of a generator and a battery backup.
Owners with a long-term vision might see that the fuel cell will save them 20 to 50% a year on energy costs. Over a long-term period, say eight to 10 years, the fuel cell would eventually pay back the initial upfront investment and begin returning yearly savings, making it the more financially prudent purchase.
The challenge, of course, is convincing building and company owners to take that long-term view.
“If you are dealing with someone who is only looking at a short-term horizon, only looking at the upfront costs, then the generator or battery backup would win out because the initial investment is not as high as it is with a fuel cell,” says Bhatt. “But if you work with someone who is taking a long-term view, the fuel cell will win out.”
If manufacturers can show these owners hard numbers proving that the payback period is a short one, they’ll have a far easier time selling their fuel cells, Bhatt says.
“Fuel cells are not only an attractive feature because they are reliable and environmentally friendly, but they can be economical, too,” says Bhatt. “If you can show owners and managers that in a period of seven to 10 years, they can keep their energy costs stable and pay off their investment, fuel cells make sense. And if these owners can take advantage of a government incentive upfront, it makes your justification of a fuel cell system even easier to make.”
The idea of government incentives is an important one. Governments want companies to invest in technology that reduces the amount of greenhouse gases that they pump into the air. They also want companies to reduce the strain they place on the sometimes-overburdened public grid.
Fuel cells can help with both of these challenges. It’s why a growing number of governments are providing financial incentives to encourage business owners and public bodies to invest in onsite energy systems.
Bhatt hopes to see even more incentives. It’s one way-an effective way-for the government to encourage growth in the onsite power industry, he says.
Bhatt points to the fact that the fuel cell industry reached a new milestone in 2012, exceeding 100 MW shipped worldwide, as proof that the industry is growing. Anything that can help boost that growth, though, would be welcome, Bhatt says.
“If you look at the trends, you can see how this industry has progressed so far,” says Bhatt. “We hit a significant milestone in 2012. That seems to offer some evidence that demand for fuel cells is increasing.”
The fuel cell industry reached a new milestone in 2012, exceeding 100 MW shipped worldwide.
The good news for the manufacturers of fuel cells is that such a wide range of companies and facilities can benefit from the energy savings and efficiency of these products.
Another challenge that fuel cell makers face is that the savings that companies, governments and building owners realize from them can vary widely.
“How much money can building owners realize by installing a fuel cell system? The real answer is “˜it depends,'” says Shaffer from ClearEdge Power.
The annual energy costs of companies and public agencies vary depending on the regions from which they do business. These costs vary, too, according to what kind of energy needs these users have. Some clients, for instance, might need heat for an onsite pool or for domestic hot water
“The reduction in energy costs depends on particular customers’ circumstances,” says Shaffer. “It’s tough to put an absolute number on it if you don’t look at each client’s individual circumstances first. You really have to get into the details before coming up with a number.”
In addition to making a strong financial case, fuel cell makers need to clearly articulate just what type of businesses and municipal agencies can best benefit from fuel cells, Shaffer says. This is another way for manufacturers to increase their potential client pool and their yearly business, he says.
As Shaffer says, there are certain questions that owners should ask before investing in fuel cells. First, do these owners need secure, reliable power? If so, a backup fuel cell system can provide it, something important to data centers, hospitals, and other users who can’t afford even a momentary blip in their power.
Owners should ask, too, whether they need thermal power on a 24/7 basis. If so, fuel cells, specifically combined heat and power (CHP) systems, can help.
Do businesses need to reduce their carbon footprints? Will they qualify for lucrative financial incentives from their local taxing bodies if they do so?
The answers to all of these questions can play an important role in helping businesses, and public agencies determine if a fuel cell system is right for them. The questions, too, show just how many businesses can realize important benefits from a fuel cell system.
“Once we get into those overall high-level questions, then we can get more specific,” says Shaffer. “We can get more into application-specific questions about how fuel cells and combined heat and power can help businesses meet their needs.”
The good news for the manufacturers of fuel cells is that such a wide range of companies and facilities can benefit from the energy savings and efficiency of these products.
And that’s something that should help the industry grow steadily as more companies and government agencies learn just how valuable fuel cells can be to their bottom-line budgets each year.
“We have such a wide variety of customers today,” says Shaffer. “It really falls back to what type of end-user values continuous power and what type value energy cost savings. As you can imagine, many types of end users fall into these categories. A list of our marquee customers stands across both small and large organizations and across a variety of industries.”
For instance, Coca Cola relies on fuel cells at a variety of its sites, as does CBS. Shaffer says, too, that large real estate companies, industrial users and grocery stores have all invested in fuel cell systems.
“You can see that the type of customers spans a very wide breadth of markets,” says Shaffer. “That’s a testament to the flexibility and value of this technology. We are offering a dependable, cost-saving, sustainable technology that is attractive to people across a variety of industries.”
Even with their many benefits, though, fuel cells haven’t yet become as popular in the United States as they are in other countries. Fuel cells, for instance, are especially popular choices in Europe.
There has been a long-term move toward distributed generation of power and a continued investment in microgrids.
So what’s preventing US companies and government agencies from fully embracing fuel cells? Partly, it’s a matter of company owners still learning about this technology. Then there’s the matter of financial incentives. In Europe and other countries, governments are more aggressive in providing financial incentives to encourage companies to invest in fuel cell and onsite technology.
Shaffer, though, says that the trends in the US are favoring fuel cells. Demand for this technology will only increase, as these trends grow even more consistent, he says.
First, natural gas is becoming a more secure energy source with stable pricing, something that should increase demand for fuel cells powered by this fuel source. Natural gas, of course, remains abundant, and the pricing of the commodity is favorable.
At the same time, there has been a long-term move toward distributed generation of power and a continued investment in microgrids. As Shaffer says, fuel cells play an important role in this trend.
Finally, companies are also more concerned about the impact they have on the environment. Many might be concerned only so that they can avoid fines or qualify for incentives. Still, that concern is there, and it, too, is helping to boost the demand for fuel cells.
“It’s important to think about these drivers,” says Shaffer. “The stability of natural gas, the popularity of distributed generation, the importance of continuous power and the instability of the public electric grid are all very important, and they all point to more demand for fuel cells. If you look at all these drivers, I think the obvious answer is “˜yes, the demand for fuel cells will continue to rise.'”
Benefits in Connecticut
Officials with Eastern Connecticut State University in Willimantic, CT, no longer have to be sold on the benefits of fuel cells. They’re now believers after the university last summer installed a CHP fuel cell system from Clear Edge Power. The fuel cell produces 400 kW of continuous electric power to the university’s science building. It also generates byproduct heat that the university uses to provide heat to the science lab.
This last point is important, says Nancy Tinker, director of facilities, management and planning at Eastern Connecticut State. The university’s science building is designed to require year-round reheat to maintain the precise temperature control the space needs. The university, though, shuts down its heat plant every June for three to four weeks. During this time, the science building had no access to hot water for the reheat process. This either left the building’s walls covered with condensation or resulted in temperatures so cold-because university officials had to turn the air-conditioning up so high-that people inside the center were frequently calling to complain.
This problem, though, should be eliminated thanks to the fuel cell, which is providing captured waste heat that the science building can use for its required reheat. A portion of the heat generated by the fuel cell is also being used for the building’s high-temperature, hot-water system, Tinker says.
The fuel cell is also providing an unexpected educational benefit at the university, Tinker says. The CHP system comes with an online dashboard system. Teachers can access the dashboard and use it as a teaching tool during classes, with students, too, accessing the system to learn how the fuel cell works and how much energy it is generating at any one time. Eastern Connecticut State University runs an environmental energy studies program, and the fuel cell’s online dashboard helps students learn about how fuel cells and distributed generation work.
Eastern uses 100% of the energy that the fuel cell generates to provide a majority of the power to the science building.
According to Clear Edge Power, the fuel cell system will prevent the release of more than 1,356 metric tons of carbon dioxide each year. That is the equivalent of planting 313 acres of trees. At the same time, the reduction in nitrogen oxide emissions compared to a traditional power plant is equal to the environmental benefit of removing more than 136 cars from the road. The system also saves nearly 3.8 million gallons of water each year.
Tinker says that Eastern had long considered adding a fuel cell to its campus. And so far, she says, university officials are glad that they made the move.
“Eastern is very much a green campus,” says Tinker. “We have a geothermal system. We have LEED [Leadership in Energy and Environmental Design]-certified buildings. A fuel cell is a natural progression on a green campus. The fuel cell worked financially for us. It gives us good clean power for our data center, too, which is located inside our science building. This turned out to be a very good idea for us.”This is the kind of testimony that the makers of fuel cells hope to hear more of. And they’re confident they will once success stories like Eastern Connecticut’s gain more attention.