US Fuel Cell and Hydrogen PolicyTrends and Challenges

F-cell 2011

Stuttgart, 26 Sept. 2011

Robert Rose

The Bottom Line

Fuel cell markets in the U.S. are growing

• Third party financial support is crucial in power markets

• Business case is driving forklift markets

Federal policy focus remains on batteries, but

• Growing recognition of the realities of the battery pathway and value of fuel cells

• New openness in the Obama Administration

Strong support in some states

Divided political leadership makes national policy progress difficult

U.S. Markets

U.S. Fuel Cell Market

50 MW+ of power installed in the past year

Substantial demand: nearly 100 MW applied for California “self generation” support

Repeat customers for power generation, forklifts, backup power

High-quality, visible customers

“Green” sells

Major Share of Power Gen. Market

Fuel Cell Today 2011

Repeat Customers

Coca-Cola

Forklifts at two warehouses , Plug Power

CHP at two production facilities ,UTC

Primary power in CA (Bloom Energy), uses redirected biogas

FCEVs in CA and Germany

Repeat Customers

Walmart

Uses FC power at 17 retail sites

Forklifts deployed in three warehouses

• 71 FC forklifts at Balzac, Alberta warehouse operate in refrigerator and freezer areas

Repeat Customers

Health Care: Kaiser -Permanente

Grocers: Price Chopper, Whole Foods, Albertsons

• Whole Foods (CT) and Albertsons (CA) remained open during recent widespread grid failures

Telecom – primary power: AT&T, Cox

Warehouses: Central Grocers, U.S. Foodservice,

Sysco (268 units, 315 more planned)

Telecom

Using fuel cells for primary power/CHP and backup power

500+ backup power units deployed with federal help so far

Biogas – a New “Growth” Market

ADG generated onsite

• Gills Onions, wineries, breweries (Sierra Nevada)

• Wastewater treatment plants (CA, NY)

Redirected biogas

• Bloom Energy servers at Coca-Cola, NTT America’s data center and Kaiser Permanente operate using redirected biogas

• Cox Enterprises: UTC FCs at two sites are powered by a blend of biogas and natural gas

Fresh & Easy

• 5 Unit Install• 2 locations• Part of the DOE

Program

Hampstead Lafayette Hotel Village Lindo Paseo Dormitory (SDSU)

Irvine Unified School District Cambrian Center

• City of San Diego Historic Landmark

• 8 Unit Install• Tax advantages for

historical remodel

• $1M savings in construction costs

• 9 Unit Install• Solar/fuel cell hybrid

installation

• (2) High school facilities / pools

• 12 Unit Install• Model schools

program

• Low Income Senior Living (HUD)

• 4 Unit Install• System providing

power to public areas and heat to pool

NextEra Energy

• $23B Energy Service Provider

• Installed at wind farm• 1 unit install

Residential-Small Commercial

Business Case

Lower cost than grid: LCOE as low as $0.09 per commercial kWh and $0.12 per residential kWh

Cleaner than grid: 37% less CO2 with negligible levels of NOx and Sox

Continuous base-load power: Clean, uninterrupted power 24x7

High efficiency: Up to 90% CHP energy efficiency and designed for 40% electrical efficiency

ClearEdge Power

Financing Fuel Cell Installations

Federal incentives• Federal Industrial Tax Credit and Payment in Lieu of

FITC (1603 grant)

Market incentives• Net metering, renewable energy credits

State incentives• Calif. Self-Generation Incentive Program (SGIP)

• New York State Energy Research and Development Authority (NYSERDA)

Manufacturer (or third party) financing • UTC Power – Energy Service Agreement (ESA)

• Bloom Energy – Bloom Electrons

Creative Financing

Tax and direct cash support from federal and state government and from the marketplace

• Financing often involves “monetizing” environmental or system benefits

Fuel cell manufacturers (FuelCell Energy, UTC Power, Bloom) and middle-men (Logan Energy) offering innovative financing arrangements

• Selling electrons, not units

• Tax credits can be packaged and re-sold

Federal Policy

New Visibility for Hydrogen

“…rapid development in fuel cells, we still need a clean source of hydrogen, but these are examples of things where technology can really give us much better choices to the internal combustion engine and oil.”

Sec. Chu, APEC, 13 Sept.

Intense Congressional Debate

Politically divided Congress

2012 campaign begun

Budget woes

Serious divisions over energy policy /financing

Cut energy funding for disaster relief?

Dialogue, U.S. House, 1856

DOE Fuel Cell Program

($ millions)2010

Approved2011

Approved2012

PossibleEERE $170 $98 $98

H2 Turbines $31 $31 $14.5 SOFC $50 $50 $25

TOTAL $255 $179 $137.5

Federal Tax Support for Fuel Cells

Hydrogen Fueling Facility Credit

30% up to $30,000

Investment Tax Credit for Fuel Cells – to 2016

30% to $3,000 /kW

Grants in Lieu of Tax Credits – through 2011

Allows grants for businesses with insufficient tax liability

Fuel Cell Vehicles $4,000

Residential Energy Efficiency Credit

Up to $1,000, or $3,334 for multi-family

Analysis

Powertrains Report for H2Mobility

FCEVs are ready for commercialization

FCEVs “are the lowest carbon solution for medium/larger cars and longer trips” which produce 70% of CO2 emissions

BEV’s “are ideally suited to smaller vehicles and shorter trips”

H2Mobility Report Converted to US Ownership & Use Patterns

Even if BEVs replace all small cars, all small vans, all small wagons, all small pickup trucks, all small SUVs and 50% of midsize sedans, BEVs will still account for less than:

40% of all vehicles on the road

30% of all vehicle miles traveled

Reduce GHGs from LDVs by only 10% compared to 2015 (less than 30% with a carbon-free electrical grid

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GHG Emissions and Petroleum Consumption by Vehicle Technology

GHG Emissions (g CO2-eq / mi) Petroleum Consumption (gal gas-eq / mi)

50% reductionfrom reference

vehicle GHG emissions:

215 g CO2eq /mi

Referencevehicle GHG emissions:

430 g CO2eq /mi

DOE Consensus View In 2030

Success case

-- Assumes

both battery

and fuel cell

technologies

achieve DOE

goals

NREL/Argonne analysis for DOE

Autonomie Report

“Potential of Technologies for Displacing Gasoline Consumption by Light-Duty Vehicles through 2045”

FCEVs Compete on Efficiency

Vehicle Costs Converge

“Status and Outlook for the U.S. Non-Automotive Fuel Cell Industry: Impacts of Government Policies and Assessment of Future Opportunities” (Green II)

Reductions Exceeding Projections

U.S. State Activity

Strong State-Level Interest

CA: $15 M for infrastructure

OH: $8 M for research

SC: Cost-shared research program

NY: Continuing NYSERDA program

CT: Substantial deployment support

2011 Policy Activity

Ohio: Qualified Energy Project Tax Exemption.

California: CAEATFA (California Alternative Energy and Advanced Transportation Financing Authority)

Louisiana: renewable energy pilot program

Oklahoma: alternative fuel vehicle and infrastructure tax credits, & renewable energy goal

Maryland: fuel cells eligible for net metering

Florida: fuel cells target industry for development

Delaware: FCs renewable

Hydrogen Infrastructure

~50 Operating Fueling Stations 30 at forklift sites

California Snapshot

About 20 stations installed or funded

About 20 more needed for first wave

33% renewable being achieved

Costs are coming down: CARB: $0.6 to $3 million+ (renewable are at the high end)

Profitability may need as few as 25,000 cars

300 kg/day station might be profitable

Station Costs Are Declining

Cheaper compression / no compression at stations

Modular station designs

Lower delivery costs

Higher efficiency for distributed generation

Standardization

Some entrepreneurial interest

CAFCP/Industry Sales Estimates

ZEV Regulation

California Air Resources Board to vote in January

Staff Report out soon

Continued support for FCEV pathway

“Likely Compliance Scenario”

Other State-Level Programs

20-25 H2 fueling stations 5,000 – 25,000 cars

Hawaii: H2waii

Other State-Level ProgramsNew York: NYH2

Final Thoughts

Starting to see some market pull though price is still a critical issue

• Systems and fuel infrastructure

Policy leadership shifting to the States

Opinion is shifting subtly in government and among opinion leaders

• Key interest groups still need educating

Questions?

brose@fuelcells.org