Costs and Market Penetration Issues

Similar to PVs, the largest barrier to wide-scale market penetration for fuel cells is high capital cost requirement. Unproven long-term reliability of most designs and relatively high life-cycle maintenance, repair and overhaul costs, notably the cost of stack replacement, are also significant obstacles. With power generation efficiencies that are currently comparable to conventional prime movers applied, either as simple or cogeneration cycles, and installed costs that can be double or even higher per unit of capacity, project economic performance will likely be inferior to conventional prime mover technology applications. Mitigating conditions include availability of financial incentives from utilities and federal and state agencies (notably the DoE) and unique application conditions under which fuel cells can provide significant collateral value to a facility.

Fuel cells provide the advantages of high-quality

power output, quiet operation and very low environmentally harmful air emissions. Modular configurations and non-combustion/low emissions characteristics make siting and permitting much easier than fuel-burning plants.

Fuel cells also offer the potential for very high fuel efficiency in electric generation since power is generated directly and not subject to Carnot cycle limitations. High conversion efficiencies can also be obtained in smaller capacity modular units, where thermal efficiency is lower in smaller capacity conventional prime movers. While still not proven over time, fuel cells do have the potential for very high reliability, low routine maintenance, unattended operation and long periods between outages. Stack replacement periods (which are somewhat analogous to time between overhaul for conventional prime movers) continues to be extended with technology advances, but will likely remain a significant life-cycle cost.

While fuel cells already have a somewhat established niche market, wider spread market penetration is expected to increase over time, largely from decreased capital costs and increased electric conversion efficiencies. Capital cost reductions are expected to result from technology advancements and increased production volumes. Conversion efficiencies are expected to continue to increase with the potential to reach a level that is nearly double the simple cycle thermal efficiency of most conventional prime movers. Hence, despite limited current market penetration, the potential for electric generation efficiencies of as high as 70%, with relatively benign air emissions characteristics, may make fuel cells a compelling attractive near-term technology.

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