Hartford Business Journal

14 Hartford Business Journal • November 28, 2016 www.HartfordBusiness.com 860.871.1111 Toll Free: 800.741.6367 nemsi.com License #'s: E1-104939 • S1-302974 • P1-203519 • F1-10498 • SM1-192 • MC-1134 MECHANICAL • ELECTRICAL • PLUMBING • SHEET METAL • BUILDING AUTOMATION • FACILITIES SERVICES SERVICE SOLUTIONS…ONE SOURCE The company that builds and installs the critical systems in virtually every type of facility is the same company you can rely on to maintain them. For 50 years, our clients have trusted us to deliver end-to-end facilities solutions, so they can focus on their core business. We are experts in: Facilities Services Preventive Maintenance Programs Onsite Operations & Maintenance 196 6-2016 196 6-2016 from page 1 Fuel-cell projects lose out on price The Department of Energy and Environmen- tal Protection (DEEP) last month notified win- ning bidders in the state-run energy programs, which are expected to lead to the purchase of nearly 800 megawatts of clean-power genera- tion by utilities in Connecticut, Massachusetts and Rhode Island, helping each state reach toward their renewable-energy goals. Solar developers that bid into the request for proposals (RFP) were the main winners in the selection process, while about a dozen proposed fuel-cell projects were left on the sidelines. That includes bids involving South Windsor's Doosan Fuel Cell, Danbury's Fuel - Cell Energy and California's Bloom Energy — some of the largest manufacturers of station- ary fuel cells in the world. State officials said the fuel-cell bids were more expensive compared to other proposals, and could have led to higher energy prices for individual and business consumers at a time when the state's high energy prices are already a major concern. The results represent a blow for an industry that has steadily gained traction, particularly in Connecticut, California and New York, but has struggled to turn a profit. Connecticut fuel-cell manufacturers viewed the state procurements as unique opportuni- ties to capture significant new business and revenues. The RFPs offered the rare chance to build large fuel-cell plants, whose power could be sold to utilities under long-term contracts. Traditionally, Connecticut incentives have focused on smaller fuel-cell projects with gen- erating capacities of only several megawatts. FuelCell Energy, to which the state has pledged as much as $30 million in loans and tax credits to expand its Torrington factory, hoped to sell and service 63 megawatts of its fuel cells to a proposed development in Beacon Falls. Instead, FuelCell's share price plummeted 28 percent when it announced Oct. 25 that the project had not been selected as part of the RFP process. Its shares have not recovered since, and the Beacon Falls project's viability now remains in question. "If you want a clean-energy economy, you've got to focus on the economy side of it, as well as clean energy," FuelCell Vice President Frank Wolak said during a panel discussion this month in Hartford hosted by the Northeast Electro- chemical Energy Storage Cluster (NEESC). Meanwhile, four bids involving privately- held Doosan could have grown the South Windsor company's Connecticut installations to more than 50 megawatts, an increase of approximately five-fold. None were selected. "Connecticut saying 'we're the world capi- tal of fuel cells and not supporting fuel cells is very disappointing,' " Sathya Motupally, Doosan's chief operating officer, said at the NEESC conference. Motupally's comments came shortly after Gov. Dannel P. Malloy addressed attendees at the Nov. 17 event, explaining that DEEP's evaluation team determined the fuel-cell bids were simply too expensive when compared with other technologies, mainly solar. Since DEEP will direct utilities to purchase electricity from chosen projects, awarding contracts to fuel-cell developments could have translated to higher energy bills for businesses and consumers. "One of the things you don't want to do is burden the people of Connecticut with higher long-term energy costs, because that's actually something we've worked very hard at combat- ting and made substantial progress on," Malloy said in an interview after his speech. The governor said he is open to a discus- sion of how the state evaluates and compares such bids. In the recent procurements, 75 per- cent of the scoring was based solely on price, which put fuel-cell projects at a disadvantage. Other benefits, such as positive impacts to the state's economy, were less relevant in the selection process. Malloy said he wants state government to work more closely with the industry — which claimed 3,400 direct, indirect and induced jobs in 2015 — to figure out ways the state can help boost both the major manufacturers and the hundreds of firms that supply them with parts. "We've got to find ways to work together beyond the grants the state's made to some of you, beyond the investments we've made with some of you," Malloy told industry executives. "I think we have to put our heads together to figure out how we can drive more acquisition of fuel-cell and hydrogen technology." Discussions about new ways to boost the industry could start in January, as DEEP begins to update the state's overall ener- gy strategy. Joel Rinebold, chair of NEESC, which is administered by the Connecticut Center for Advanced Technology, said he would support a different methodology for evaluating fuel cells. "We do need to take into consideration price, but we also have to take into consid- eration the value these machines bring in for clean, reliable energy and also the job cre- ation aspects of it here," Rinebold said. Malloy highlighted the state's financial incentives for fuel-cell-powered "microgrids" launched after major storm-related power outages in 2011. An 800-kilowatt microgrid went live in Hartford's Parkville neighbor- hood this year, which will provide power to select buildings if the grid fails. In addition, Malloy said there may be ways for the state to encourage pairing fuel cells with wind or solar technology. Rinebold said he was "pleased the gover- nor is thinking in those terms." DEEP Commissioner Rob Klee, whose agency has overseen three clean-power RFPs since 2013, said he was struck by the competi- tive pricing in the recent rounds. "The pricing, particularly for folks who made the cut, was really dramatic and contin- ues to demonstrate there is plenty of cheaper and cleaner [power] out there," Klee said. Klee declined to disclose how much more expensive fuel-cell power would have been, but said DEEP is determined to help find "the right fit" for fuel cells and a variety of other energy technologies, from anaerobic digest- ers to battery storage. More than price Fuel-cell company executives acknowl- edge that their technology remains more expensive than other clean-energy options, even though prices have been dropping. That gap could be exacerbated in the com- ing year, since solar energy will have a federal tax credit and fuel cells may not. Congress has not renewed the investment tax credit for fuel cells, which expires next month. Manufacturers argue that fuel cells — which use natural gas or biogas to produce electricity through an electrochemical pro- cess — have unique benefits that should be weighted more heavily by DEEP. They say fuel cells are one of the cleanest and most efficient ways to produce constant power using fossil fuels. Solar and wind are cleaner energy sources, but produce energy intermit- tently because they rely on sunny or windy days. "Fuel cells will not catch solar on a level- ized cost of energy basis," predicted Adam Forni, a senior research analyst at market research firm Navigant, who covers the sec- tor. "Where they do have an advantage is they can operate 24-seven." Forni said fuel cells may have a sweet spot between 200 kilowatts and 2 megawatts. Mas- sive projects, such as the Beacon Falls park, have steeper (and often cheaper) competition. "The 63-megawatt park sounds nice, but at that size you're butting up against large natural gas turbines," Forni said. Besides hoping state officials will score future procurements differently, fuel-cell manufacturers also called for the state to renew one of its marquee industry-incentive programs, known as LREC, or Low Emission Renewable Energy Credit. Headed into its fifth and penultimate year, LREC has approved incentives for approximate- ly 50 megawatts worth of fuel cells, according to reports submitted by Eversource and Avangrid to the Public Utilities Regulatory Authority. While there is uncertainty ahead at both the state and federal levels, Doosan's Sathya said Connecticut still feels like a good home for fuel-cell makers. "Connecticut has prob- ably been the best state for fuel cells over the past few years," he said. "Our hope is it will continue to be a very good state." n Fuel-cell company execs discussed their industry outlooks this month in Hartford. (Right) A Doosan fuel cell in Hartford. P H O T O | H B J F I L E H B J P H O T O | M A T T P I L O N

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