Coal plants are one of the world’s biggest sources of carbon dioxide emissions and a major contributor to climate change. But capturing the gas they emitted can cost billions of dollars and require years of patience to install the necessary equipment.
One company, FuelCell Energy, has an unusual plan to use fuel cells — devices that generate electricity through a chemical reaction — to capture emissions from power plants. If the company succeeds, there would be a new option to reduce coal plant pollution more cheaply and in a more manageable way.
Lower cost technology could be crucial for the rapidly declining coal industry, which is facing plant shutdowns and massive job losses because of a focus on their environmental impact. With the Obama administration’s newly finalized Clean Power Plan, which requires power plants to reduce greenhouse gas emissions, the coal industry will likely decline even more in the coming years.
The technology could also be important to help FuelCell Energy’s bottom line. The company’s revenue has declined in recent months and its shares have fallen below $1, prompting a warning that its stock may be delisted from Nasdaq.
FuelCell Energy (FCEL) is a decades-old company that makes fuel cells and builds and operates fuel cell power plants. It has built about 50 such plants, including one of the largest in the world, a 59 megawatt project in South Korea that provides electricity and heating. That amount of electricity can power between 45,000 to 55,000 homes.
The company’s fuel cells take natural gas and air, and run then them through a high temperature salt and metal mixture to chemically generate electricity. Carbon dioxide is produced during the process and later re-used.
When using fuel cells to suck up coal plant emissions, engineers add an extra process to chill the carbon dioxide created by the fuel cell. The CO2 turns into a liquid, which is then drained out. To complete its electricity cycle, the fuel cell then needs an additional source of carbon dioxide. That’s where the carbon dioxide from the coal plant comes in.
Over the past couple of years, FuelCell Energy has been testing its carbon capturing fuel cell system on a small scale. It started with a test system at its headquarters in Danbury, Conn. Then last year, the company expanded its experiment to a natural gas plant that emits carbon dioxide in smaller amounts than a typical coal plant.
This week, the company announced that it’s partnered with the Energy Department to build a larger version of its carbon capture fuel cell system. The DOE said it would provide a $15 million grant to help fund the estimated $23.7 million project.
The idea is to create a two megawatt fuel cell system from a yet-to-be-determined power plant. That project would capture 58 tons of carbon dioxide daily from the power plant and generate about 40,000 kilowatt hours daily of additional electricity.
If that initial project goes well, FuelCell Energy says it wants to install another eleven fuel cells across three acres at the same site. The resulting 25 megawatt system would cost $125 million and would capture 700 tons of carbon dioxide daily, while generating an additional 648,000 kilowatt hours of electricity per day. That project would be financed through private investors, says FuelCell Energy.
Larger installations will give a more realistic picture of how cost effective FuelCell’s technology is. The company said it could reduce a power plant’s emission by 90% at an additional electricity cost of 2 cents per kilowatt hour. More conventional techniques can add around 4 cents per kilowatt hour, the company said.
But perhaps the technology’s bigger value is that it can be added in small increments, making it a more manageable investment over time. A fuel cell system could be bolted onto a power plant and capture 5% of the emissions. Then the customer could add more as needed.
The incremental nature of the technology is important because the Environmental Protection Agency’s Clean Power Plan calls for power plant owners to reduce emissions by certain amounts over many years (the actual amounts will be determined by individual states).
Companies don’t have to stop all of their emissions at one time. A system that could be expanded over many years, could be valuable.
In contrast, many of the traditional carbon capture technologies are major billion-dollar upfront investments. Because these types of technologies are so expensive, many coal plant operators are shutting down coal plants instead of cleaning them.
All of these aspirations about the company’s new tech won’t matter if FuelCell Energy can’t get to a better financial state and start trading above at least $1 per share. For the most recent quarter, the company generated $28.6 million in revenue, which was a decline from $38.3 million in revenue for the same period a year earlier. At the same time, FuelCell Energy lost about $10 million for the quarter.
Updated at 11:30 pst on September 9th to clarify that the warning about the potential stock delisting was from Nasdaq not from federal regulators, as was previously stated.
To learn more about coal power in the U.S. watch this Fortune video:
