DISTRIBUTED GENERATION AND FUEL CELLS

WALLACE EDWARD BRAND

Coming soon, to a neighborhood near you?

Electricity production and distribution in America may be on the cusp of some major changes. In the future, distributed generation, or generation from relatively tiny generators with a capacity of only 3 kilowatts (kW) to 300 kW, a few perhaps as large as 3,000 kW,may relocate the power source at or very near the site of each electric load.

For over a century, we’ve relied on giant central power plants to meet our needs; plants with a generating capacity growing over time from very small generators, initially, to giant generators of 500,000 to 1,400,000 kW. These plants distribute the electricity to large numbers of industrial, commercial, and residential consumers over a vast grid of power lines. Currently, large central station power plants may be located hundreds of miles from the customer. They are also connected to other plants for backup.

The story on a sea-change in how electric power will be supplied—distributed generation (DG) replacing the giant central generating stations and the wire grid—is beginning to get around. Several types of small-scale generators can be used for distributed generation. These include the diesel generator, which burns #2 distillate oil or can switch to natural gas. There are very tiny microturbines, also fueled by either diesel oil or natural gas. There are generators driven by the wind, and photovoltaics energized by the sun. And there is the fuel cell, which is much like a battery. Instead of recharging it, you simply add more fuel, either hydrogen or a hydrocarbon from which hydrogen can be extracted.

The fuel cell has been around for about 140 years as a laboratory curiosity. The work of Francis Bacon in the United Kingdom, a descendent of Sir Francis Bacon, before and after World War II brought fuel cell technology up to the point where NASA latched on to it to power space vehicles in the early 1960s. Today, fuel cells are being developed to run the next generation of automobiles; power up a single residence or a few hundred households, a large apartment house, or office building; and provide clean energy for industrial facilities and even small towns. You may find them one day powering your cell phone and other electronic devices. In the last four or five years, several types of fuel cells have been brought close to the point where they can enter the market competitively.

Six principal types of fuel cells exist, their names stemming from the makeup of their electrolyte. These are: (1) the PAFC, or Phosphoric Acid fuel cell, which is the only one now commercially available (with a small subsidy from the Department of Defense); (2) the AFC, or Alkaline fuel cell; (3) the Proton Exchange Membrane, or PEM fuel cell; (4) the MCFC, or Molten Carbonate fuel cell; (5) the SOFC Solid Oxide fuel cell; and (6) the Direct Methanol Fuel Cell (DMFC). This last type is an extremely small fuel cell that consumes methanol without having first to reform it into hydrogen.

Fuel cells also can be categorized by their operating temperatures. The MCFC and the SOFC are high-temperature fuel cells now on the brink of commercialization. These fuel cells reform hydrocarbons into hydrogen in their stack and, therefore, have much higher efficiency. They can start with natural gas, methanol, ethanol, propane, diesel oil, and even coal gas from a coal gasifier, coal mine methane, or digester gas from a municipal biomass facility. The SOFCs come in two cell configurations: the tubular cell and the planar cell.

The other fuel cells are low-temperature fuel cells that require external reformers to convert the hydrocarbon fuel into hydrogen and other byproducts, since it is not easy to find gaseous or liquid hydrogen for sale in your neighborhood—at least not yet. The external reformers use about one-third of the energy to be converted just to operate the reformer. Low-temperature fuel cells fueled with gaseous hydrogen do not need a reformer. They have a much higher efficiency and have some good operating characteristics for use in a car, such as quick starting and rapid change in output. But you can’t stuff much hydrogen in a car’s fuel tank.

Fuel cells can generate clean energy at or very near where the electricity is needed. In addition, fuel cells also will be used for clean transportation. The first fuel cell car and bus trials have started in California and soon may be starting in Japan. Already, there are two fuel cell buses in commercial operation at Georgetown University, and several others operating in some municipalities.

PEM fuel cells in cars and trucks are likely to replace the automotive internal combustion engine, but this change is farther down the road. Currently, the German government uses PEM fuel cells to power a submarine. The internal combustion engine, developed over the last 100 years and currently in mass production, costs only about $35 per horsepower to manufacture—about $50 per kW—and will take a little longer to displace than the more expensive stationary electric generator. In the not-too-distant future, however, fuel cells may replace the alternator in your car to provide the growing amount of electric power used in the car, and to let you run the vehicle’s air conditioner and radio while the engine is not running.

A number of technical and other factors are now helping to make distributed generation from on-site fuel cells economically competitive and also more desirable for reasons other than cost.

Yet another future use of this technology is in portable fuel cells to power cell phones, laptops, and handheld electronics. The manufacturers are promising these cutting-edge technologies will keep your electronic devices going about ten times longer than the batteries currently available. Typically, these will be DMFCs that run on unreformed methanol.

COMING FULL CIRCLE

These technological developments may sound like science fiction, but distributed generation actually harkens back to the very early years of the electric power industry in this country, when small generators provided electricity to nearby users. But for 100 years, we’ve relied on an integrated power grid linking central stations at ever-increasing distances to deliver electric power. This arrangement has been the most economical and reliable means of delivering electricity. An occasional exception was where there was also a large need for thermal energy, such as process steam, at a single site, where the efficiencies of cogeneration would apply. In such cases, the fuel could serve two purposes, with the thermal energy put to productive use, rather than vented off into the atmosphere. If the thermal energy could be used locally, the plant was added to the grid to dispose of the surplus electricity.

The first central power station came on line in 1879. Prior to that, electric power was supplied from small generators at the user’s location, such as those manufactured by the Thompson Huston Co.As an interesting historical aside, the first central station was not Edison’s 1882 Pearl Street Station in New York, but rather one operated by the California Electric Co. in San Francisco. That company later became the Pacific Gas & Electric Co. Thomas Edison was so good at public relations that history remembers his company as being at the forefront of the electric power industry.

The advent of Nikola Tesla’s polyphase alternating current (AC) system, promoted by George Westinghouse, replaced the direct current (DC) system Edison used, but not until after a “War of the Currents.” The superior economics of polyphase transmission was first demonstrated at Niagara Falls in 1896 and in Germany, in a 100-mile transmission line from Laufen to Frankfurt. In an unsuccessful effort to forestall AC competition, Edison staged widely publicized, cruel demonstrations in which dogs, cats, horses, and even elephants were electrocuted by high-voltage AC. In a final ploy to demonstrate that AC transmission was dangerous, Edison bought some AC apparatus from Westinghouse without telling him how he intended to use it, wired up the first electric chair in Auburn Prison in New York, and explained to the media that AC could be used to kill.

All this adverse publicity on AC being unsafe did not win the day for Edison. It is somewhat ironic that in the United States Edison is considered the father of the electric power industry, which by the 1930s had pretty much abandoned the DC system he fought so hard to preserve.With polyphase alternating current, electrical loads could be served throughout a whole municipality, including electric motor loads, in contrast to the one-mile diameter load centers served by Edison. You could sell both power and light; not just light as with singlephase AC. Soon the loads of several municipalities over a region of a state, then several states, could be tied together to be served by giant central stations. Worldwide, the polyphase alternating current system now reigns supreme.

So, after 1896, instead of multiple stations, each serving customers within a half-mile of the plant, a single generating system using Tesla’s AC technology could serve an entire municipality, or even two of them. The larger central station was typically a coal-fired boiler powering a steam turbine generator.After 1920, as highvoltage transmission technologies evolved, many load centers could be linked into a regional power supply system supplied by a single or several regional generating stations with even larger-scale generators with lower unit investment costs, and much higher efficiency. The small central station in the load center was replaced by a distribution transformer, its power supplied by highvoltage transmission lines.

Until now, power from the central stations transmitted through the grid has been less expensive than onsite generation. A number of technical and other factors are now helping to make distributed generation from on-site fuel cells economically competitive and also more desirable for reasons other than cost.

Increased efficiency. There is no longer the great gap in efficiency between giant generators and small ones. Tiny fuel cells can be just as efficient as gigantic central stations in converting energy in hydrocarbons to electric energy. In fact, the next generation of hybrid fuel cells will be more efficient than central stations. The reason the efficiency gap has closed is because the conventional reciprocating engine-generator or turbine-generator have Carnot cycle “heat engines” as their prime movers. These heat engine-generators require four transformations in the form of energy to get from the Gibbs energy in hydrocarbons to electrical energy. This process begins with combustion (at high temperatures, resulting in the formation of toxic pollution), which changes the chemical energy to thermal energy. The thermal energy is applied to expand water or air, converting it to kinetic energy. The kinetic energy then pushes a piston or a turbine blade, changing it to mechanical energy. The mechanical energy turns a rotating shaft, pushing a copper wire through a magnetic field. Finally, after four energy conversions, and large energy losses at each conversion, you have electric energy.

In contrast, the simple cycle fuel cell converts chemical energy directly to electrical energy using an electrochemical process like that of a battery. Only one transformation is necessary. A small low-temperature fuel cell can have an efficiency of 35-40 percent at the site of the load. A small high-temperature fuel cell can have a simple cycle efficiency of up to 60 percent. The electrical efficiency of a hybrid fuel cell, supplying its waste heat to a turbine, can reach an amazing 80 percent, far greater than can be attained by the highest efficiency combined cycle heat engines. And because they are small and, therefore, designed to be installed at or near the site where the electricity will be used, fuel cells eliminate energy losses from transmission over long distances and, when installed on-site or nearby, eliminate most or all distribution losses as well.

Conventional power plants range widely in efficiency, though none come anywhere near this 80 percent mark. Until the 1970s, the most efficient generators in the United States using the lowest-cost fuel was the coal- fired steam turbine generator, which burned pulverized coal to make steam in a boiler to power a steam turbine. In the United States, their top efficiency, when they reached about 500,000 kW in size, was about 38 percent, though the average efficiency of all sizes has been estimated at only 33 percent (in Europe, where higher fuel costs justified “supercritical” units, top efficiency reached 42 percent). After electrical losses from transmission and distribution, the electrical efficiency at the US customer’s meter during peak hours may only average 28 or 29 percent. Before the 1970s, gas combustion turbines used for a small amount of peaking power were even less efficient—25 percent at the busbar, or point of production; and perhaps only 21 percent at the customer’s meter. These turbines also ran on natural gas, which cost more than coal for an equal amount of BTUs.

Plagued by the high cost of jet fuel in the 1970s, after the 1973 Arab oil embargo, the airlines put pressure on turbine manufacturers to develop more efficient combustion turbines than the 25 percent efficient jet engine available at the time. The manufacturers succeeded in raising the efficiency of the combustion turbine up to 42 percent and sold the same turbines combined with generators to electric utilities to be used for base load generation, calling them “aeroderivative” turbine-generators. Conserving the waste heat from the aeroderivative turbines in a bottoming cycle would recover some of the waste thermal energy. This could be accomplished with an HRSG, a heat recovery steam generator, and the energy could be used to power a steam turbine, resulting in a system that was at first 50 percent and, just last year, 60 percent efficient. Since the 1970s, the electric utilities and a new breed of independent power producers have been installing gas-fired combustion turbines and combined cycle turbines almost exclusively. As of 2001, however, the older, lower efficiency coal-fired steam turbines still generate more than half our electric energy needs.

And even the most efficient turbines can’t eliminate transmission/distribution losses. As an example, one of the highest efficiency combined cycle turbines on the market today claims to have a nominal efficiency of 60 percent at its output terminals. (When operated partially loaded or when the ambient temperature is high, the efficiency and output is significantly lower.) This is a big turbine, requiring a load of at least 400,000 kW, which it must then distribute over a large region, incurring substantial losses as the electricity travels over transmission, subtransmission, and distribution lines, and through many transformers to get to a residential load.

An added advantage of distributed generation is the opportunity for small-scale cogeneration. With smaller- scale fuel cells that can be located right at the site of the thermal load, the combined heat and power (CHP) efficiencies of cogeneration can be used to supply thermal energy for domestic hot water and space heating. The thermal energy from high-temperature fuel cells also can be used for air conditioning. As thermal energy can travel only four or five miles with acceptable losses, this is energy that ordinarily would be thrown away at giant central stations. CHP efficiencies can reach 85-90 percent.

High cost of transmission and distribution lines. The investment cost of the wires is rising rapidly, currently averaging almost $1,500 per kW at today’s prices for transmission, distribution, and substations. The operating cost in energy losses has always been great, especially for customers served from low-voltage primary distribution facilities. According to one electric utility, large central plants typically lose 13-16 percent of their energy getting the electricity to the residential customer’s meter during peak hours. This level of losses means more fuel must be used, but also means that more plants have to be built to meet peak-load generating needs. Distributed generation can compete with energy from the grid once the investment and operations cost gap between giant and small generators disappears entirely, or the cost of the delivery wires exceeds any generation cost gap.

High cost of adding new large-scale generating capacity. Integrated power systems now use large generators because their cost advantages over small ones now exceed the cost of the wires necessary to deliver electric energy to the load and provide backup. But these large generators are “lumpy” in the economic sense. When the electric utility needs to expand, if it wants to use large generators it must install more capacity than can be used fully in the short term.Many comparisons between grid and DG fuel cells are static comparisons, ignoring the reality that load is constantly growing. For very small-scale modular generation, there is the reduced cost of serving growing load.

Lower cost fuel cells. Mass production and a learning curve will soon bring the investment cost of fuel cell generation below the cost of integrating a load with other loads, i.e., the cost of the wires and substations necessary to connect giant generators to many small loads.Analysts may be tempted to compare the unit investment cost of fuel cell generators, the installed cost per kW,with that of central station generators to see if all DG will win out. That comparison is invalid because it ignores the full costs of central station-produced power, which also must factor in the high cost of building and maintaining the transmission and distribution grid. On average, after ignoring the cost of the generating plants, the cost solely of the transmission and distribution grid has in the past required investments of about $500 per kW.

But current costs are on the order of $1,500/kW, with substations included. Load diversity will bring the cost of installing central station generators down to only 10 percent of the cost of isolated generators, but I think that the high cost of the grid will be the determining factor in comparing central stations with distributed generation, since the fuel cells can be installed without a grid.To look at the cost of the competition for the fuel cell, look at the cost of the wires, rather than the cost of the central station generator. The distribution system will be the biggest cost component of central station generation.

Several fuel cell manufacturers are close to market entry. One US manufacturer estimates that it will be able to lower unit costs for its 300 kW-3,000 kW fuel cells to around $1,200/kW within the next two years. Another US company is aiming to make its PEM fuel cell for single- family residential units ready for the market in 2004. And a major manufacturer of electrical equipment with over 100 years of experience in its field has invested $120 million in a new tubular solid oxide cogeneration fuel cell and SOFC hybrid plant. The company is aiming to reduce its unit cost to about $1,300/kW by 2008.

If these projections are on target, the products should be able to compete with the most efficient aeroderivative gas turbines and combined cycle plants that can deliver energy currently for about 8 cents per kilowatt-hour (kWh), delivered to the customer. Fuel cells may be able to produce electric energy for as low as 5 cents/kWh when their manufacturers reach volume production.

CLEAN ENERGY FOR TOMORROW

There are also other factors to consider. On the aesthetic front, fuel cells win hands down. Using fuel cell technologies means there would an end to relying on smoke-belching, noisy, giant generating stations. And there would be no need for ugly, high-voltage transmission lines snaking across the wilderness. There would be no need for the NIMBY (not in my back yard) call to arms every time new generating capacity is needed.

Fuel cells can eliminate toxic pollution almost entirely. It goes without saying that clean air is something we all want. Hydrogen-powered fuel cells also hold much promise for reducing and eventually eliminating greenhouse gases, which by now seem accepted as causing global warming. Even before gaseous hydrogen is readily available as fuel, greenhouse gases will be reduced since the efficiency of the fuel cell at the customer’s meter will be much higher. Therefore, less CO2 per kWh (or per mile driven with transportation fuel cells) will be added to the atmosphere. If gaseous or liquid hydrogen eventually becomes available from a pipeline, and the hydrogen is obtained from a renewable source or from fusion energy, the fuel cell will produce electricity and emit only pure water and a little heat.

There are other practical reasons to consider fuel cells. Residential and commercial customers alike want “firm,” i.e., almost always there, reliable power. But to provide firm power one must have a system with reserve generating capacity. In the case of fuel cells, each generator forced-outage contingency has a much smaller effect on reliability because the generators are tiny. A system of tiny fuel cell generators, accordingly, would require less investment in reserve generating capacity. In addition, fuel cells offer more reliable electricity for the digital age, with fewer voltage sags or blinks that dump anything in your computer you have not saved to memory, and drive digital clocks crazy.

In a nutshell, fuel cell technologies have many advantages over the current conventional power supplied by large central stations that reach customers though a grid. These small units offer clean, highly efficient, reliable energy to power businesses, homes, cars, and electronic devices. A final consideration, in these days of heightened security, is protecting America’s power supply from terrorist attack. Distributed generation would be far less vulnerable to terrorism simply because each DG unit serves only a single user or a small pool of users.

There are, however, several barriers to market entry. One is the high cost of the hardware with small-scale production. Another is persuading the local utility to permit interconnection. Until volume production drives down the unit cost of fuel cells below the cost of the wires needed for the central station, they won’t be economic for stand-alone service. So you might want to generate 2 or 3 kW at home from a high-efficiency fuel cell to meet your “base load,” i.e., the amount of your load which is on most of the time—actually most of the kilowatt-hours—and use the thermal energy for domestic hot water, while obtaining intermediate and peaking power, and backup service, from your local utility.

At present, the Federal Energy Regulatory Commission (FERC) is asking for comments on a rulemaking for conditions permitting physical interconnection without jeopardizing utility maintenance crews, or imposing costs on the utility’s other customers. Soon after this ruling, FERC or perhaps state utility commissions also will decide on the terms and conditions for operating the interconnection. At issue are determinations on rates, charges for intermediate and peaking power, and the arrangements for backup. Without these standardized rules, the time and cost of negotiating with your utility, which doesn’t want to lose the load, may be lengthy.

I think these barriers will be overcome, however. The fuel cell is coming.

Wallace Edward Brand (CC ’86) is a retired attorney. He formerly was in the private practice of energy law, and before that was a trial attorney for the Federal Power Commission and Department of Justice Antitrust Division.

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