Clean energy major FuelCell Energy Inc. (FCEL - Free Report) continues to strengthen its footprint in the state of Connecticut. The company announced that it will construct a 1.4 megawatt (MW) fuel cell power plant at the University of Bridgeport, CT. The project is a part of the state of Connecticut's Low-emission Renewable Energy Credit (LREC) program.
Fuel cell is a device, which produces electricity through a chemical reaction. Each fuel cell has two electrodes -- one positive (anode) and one negative (cathode), and an electrolyte. Electrolyte carries electrically charged particles from one electrode to the other. The chemical reaction at the electrodes generates electricity.
In addition to oxygen, hydrogen is the basic fuel required for the chemical reaction. Electricity is generated with negligible pollution along with producing water as a by product.
As per the most recent contract, FuelCell Energy will install, operate and maintain the University plant. Post completion, the company will sell the power and heat generated from the plant to the University of Bridgeport under a multi-year power purchase agreement (PPA). The plant will meet roughly 80% of the university’s power requirement. The project is expected to be operational by 2014.
Besides the steady inflow of revenues coming in from the PPA, this nascent technology producing ultra-clean energy is also eligible for tax credits. As the current project is a part of the state of Connecticut's LREC program, FuelCell Energy will receive renewable energy credit payments for each megawatt hour of power generation.
On the other hand, installation of the fuel cell power plant will help the University of Bridgeport to get reliable electricity supply and improve its energy security. In addition, it will help the university to meet its sustainability goals and financial returns. As the fuel-cell plant will operate as a micro-grid, outages or downtimes at the electric-grid will fail to affect the University’s operations, rendering significant energy independence.
Moreover, as this plant will produce electricity without combustion, harmful emissions like carbon dioxide, nitrogen oxide and sulfur dioxide will practically be zero. This is equivalent to taking 1,000 cars off the road.
FuelCell Energy has been in the news lately with a good many contracts won. On Apr 30, 2014, the company inked an agreement with United Illuminating, a unit of UIL Holdings Corp. , to install two 2.8 MW DFC3000 fuel cell power plants. One of these facilities will be based in Bridgeport, CT.
Demand for fuel cell is gaining popularity primarily due to a growing awareness about its ultra-clean nature. In Feb 2014, FuelCell Energy sold 3.7 MW of fuel cell modules to South Korean firm POSCO Energy. Apart from FuelCell Energy, its peers are also winning contracts frequently. Another fuel cell provider Plug Power Inc. (PLUG - Free Report) inked a major contract with Wal-Mart Stores Inc. (WMT - Free Report) in Mar 2014. Per the deal, Plug Power will provide 1,738 GenDrive fuel cell units to Wal-Mart.
FuelCell Energy’s product and service quality as well as delivery timing enable it to win contracts at regular intervals. The company is a strong player in the clean energy domain. We believe the gradual increase in fuel cell demand is expected to play an important role in boosting FuelCell Energy’s future orders.
FuelCell Energy currently has a Zacks Rank #3 (Hold).