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Can FCEL's Tri-gen Platform Expand Its Hydrogen Business?

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Key Takeaways

  • FCEL's Tri-gen system produces hydrogen, electricity and water using natural gas or renewable biogas.
  • FuelCell Energy's 2.3-MW Toyota plant can produce 1.3 tons of hydrogen daily and export surplus power.
  • FCEL is testing on-site hydrogen production and heat recovery to reduce manufacturing operating costs.

FuelCell Energy (FCEL - Free Report) is developing its hydrogen business through its Tri-gen platform, which produces hydrogen, electricity and water from a single fuel cell system. The technology uses natural gas or renewable biogas to produce hydrogen while generating electricity and useful heat. According to FCEL, this approach has the potential to lower costs and reduce environmental impacts compared with existing alternatives. The water produced during the process can also be recycled for other uses. These features allow customers to obtain hydrogen and power from the same facility while making better use of available fuel.

One application is hydrogen production for transportation. At Toyota's Port of Long Beach site, FuelCell Energy's 2.3-megawatt Tri-gen plant is designed to use renewable biogas to produce hydrogen, electricity and water. The facility has a stated hydrogen production capacity of 1.3 tons daily, intended to fuel Toyota's zero-emission passenger vehicles and Class 8 trucks.

The system is also designed to supply electricity to Toyota's operations and export surplus power to the Southern California grid. Its fuel cell process produces virtually no nitrogen oxides, sulfur oxides or particulate emissions, helping limit local air pollution.

FuelCell Energy is also testing Tri-gen for manufacturing applications at its North American facility. Electricity generated by the system powers manufacturing operations, while recovered heat is used throughout the plant. Hydrogen produced on-site is used in process ovens, reducing the need to purchase and transport hydrogen from outside suppliers.

The technology can also supply useful heat for metal processing, glass manufacturing and petrochemical operations. For industrial customers that need hydrogen alongside electricity and heat, producing these resources at one location may help reduce operating expenses. This gives FCEL another potential market for its hydrogen technology beyond vehicle fueling.

As hydrogen adoption expands, the focus will increasingly shift from individual projects to broader ecosystems that can support production, storage, transportation and end use. Companies with infrastructure and technology spanning multiple parts of the value chain are therefore becoming increasingly important to the development of the hydrogen economy.

Building a More Integrated Hydrogen Ecosystem

Linde plc (LIN - Free Report) has built a broad hydrogen presence spanning production, processing, storage, distribution and applications. Linde operates the world’s largest liquid hydrogen capacity and distribution system, along with roughly 1,000 kilometers of hydrogen pipelines. Linde also has close to 200 hydrogen refueling stations and 80 hydrogen electrolysis plants worldwide, supporting customers across the hydrogen value chain.

Meanwhile, Plug Power (PLUG - Free Report) is building an end-to-end green hydrogen ecosystem. Plug Power provides electrolyzers and capabilities needed to liquefy, store, transport, dispense and convert hydrogen into carbon-free electricity. Plug Power also offers hydrogen liquefiers and mobile cryogenic solutions, while its Georgia plant has completed its first customer fill of liquid green hydrogen, demonstrating progress toward operational hydrogen supply.

The Zacks Rundown on FCEL

Shares of FuelCell Energy have gained 45% over the past year, contrary to the industry's decline.

Zacks Investment Research Image Source: Zacks Investment Research

FCEL currently has an average brokerage recommendation of 2.27 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 11 brokerage firms.

Zacks Investment Research Image Source: Zacks Investment Research

The chart below shows FCEL’s earnings over the past four quarters.

Zacks Investment Research Image Source: Zacks Investment Research

The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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