to sponsor R&D to reduce the cost of the commercialized systems? It is often thought that the government can be an early adopter of technology to enable initial volumes to be manufactured and sold. For PAFC, DOD subsidized three-quarters of those produced. Should the government (e.g., the General Services Administration or DOD) make larger purchases of new technologies? Even if costs had been reduced, there are market and regulatory barriers that apply not only to fuel cells, but also to other new DG technologies, such as microturbines.

The proton exchange membrane fuel cell, which is the fuel cell being considered for vehicle transportation applications, can also be used in DG applications, particularly for small-scale residential and commercial purposes. The PEMFC operating temperature of 150°F is lower than that of the PAFC and much lower than the operating temperatures of the other fuel cell systems in development: the solid oxide fuel cell and the molten carbonate fuel cell. This means that the PEMFC could be used for residential hot water, but not for high-quality steam or combined heat and power (CHP) applications. Many companies (Plug Power, Avista, Ballard, H Power) have been exploring the use of the PEMFC for the 1 to 25 kW market—which would involve residential buildings, including some small multifamily homes. The PEMFC is also being considered in the 50 to 250 kW range. Ballard’s first commercial fuel cell product, the 1.2 kW Nexa^® power module, was introduced in the market in 2001. Ballard has introduced the Air Gen Unit at 1.2 kW for backup and intermittent-duty applications; this unit has both hydrogen cylinders and cartridges to supply the hydrogen. Ballard’s first continuous stationary fuel cell will be introduced in Japan in limited volume by the end of 2004 as a 1 kW CHP unit. PEMFC applications can be considered as a niche market, particularly in the under-25-kW size, because in this size range the PEMFC must compete with existing DG technologies that have heating and cooling system applications and are reliable, durable, and low-cost. If there were a sizable market, DG could provide PEMFC manufacturing experience, enhancing the learning curve for PEMFC and hastening its automotive application, which has much more stringent volume and cost requirements. DG applications require longer life than automotive applications do.

The DOE issued a solicitation in January 2003 for the development of stationary PEMFC for buildings, with the target cost of $1500/kW, design life of 40,000 hours with less than 10 percent degradation, and market entry within the next 3 to 5 years.⁵ Recently UTC Fuel Cells announced that it will introduce 150 kW PEMFC units at $1500/kW in early 2004.⁶ The company is currently beta testing these units. The Electric Power Research Institute (EPRI) and UTC are currently cofunding a 750 kW PEMFC demonstration that will consist of five 150 kW modules, each with its own processing system, for a projected installed cost of $2600/kW and expected efficiency of 31 percent. The intent is to gain manufacturing experience that would be applicable for PEM automotive fuel cell systems to meet the $50/kW automotive cost target in the 2010 to 2020 time frame. By 2010, UTC expects to have developed an SOFC system, which would be more attractive for DG applications. PEMFCs for stationary applications have similar R&D needs to those for automotive applications, with additional technical challenges related to higher durability (at 40,000 to 50,000 hours), heat utilization (a higher-temperature membrane is needed), power electronics, rapid start-up time for backup power, fuel processing, and development of non-precious-metal catalysts and thermal and water management technologies.

Solid oxide fuel cells have an electrolyte that is solid ceramic and can operate at up to 1000°C. Unlike PEMFC and PAFC systems, there are no noble metals in the anode or cathode. SOFCs can be configured in a tubular or planar configuration and can be operated at high enough temperatures to eliminate a fuel reformer. SOFCs reject high-value waste heat useful for a steam bottoming cycle or available for CHP. These fuel cells can operate on a variety of fuels, including H₂, but current SOFCs are being designed for natural gas as the fuel. There is potentially a broad spectrum of power-generation applications, from small, lightweight, compact devices in the range of watts to kilowatts to larger SOFC/turbine hybrid systems in the megawatt range.

In 2001, the DOE Office of Fossil Energy and industry jointly initiated a Solid State Energy Conversion Alliance (SECA) Program for further SOFC development; the program currently involves six industrial teams. In addition, a parallel core technology program is under way at national laboratories and universities. This effort is to be a $500 million, 10-year program to produce modular, mass-produced fuel cells for stationary, transportation (APUs), and military markets. By 2010, the goal is for the SOFC to have 40 to 50 percent efficiencies and to cost less than $400/kW. The SOFC stack represents 30 percent of projected costs; fuel and air handling are another 30 percent.⁷

In addition to the SOFC as a stand-alone DG or in a CHP system, SOFCs are being developed in an SOFC/gas turbine