Fuel Cells for a Sustainable Future?

Jane Powell, Michael Peters,

Alan Ruddell and Jim Halliday

March 2004

Tyndall Centre for Climate Change Research Working Paper 50

 Fuel Cells for a
Sustainable Future?
A review of the opportunities and
barriers to the development of
fuel cell technology

Powell, J.C.1, Peters, M.D.,1Ruddell, A.2 & Halliday, J2.

1
Centre for Social and Economic Research on the Global Environment (CSERGE)
University of East Anglia, Norwich NR4 7TJ
tel: 01603 592970 email: m.peters@uea.ac.uk
2
Rutherford Appleton Laboratory, Chilton, Didcot, OX11 0QX England
tel: 01235 445551 email: alan.ruddell@rl.ac.uk

Tyndall Centre Working Paper No. 50

March 2004

This report is part of a Tyndall Centre project ‘Fuel Cells: Providing Heat and Power in the Urban
Environment’ (IUD: TC1/IT1.36), being carried out jointly by the Energy Research Unit, Rutherford
Appleton Laboratory and the Centre for Social and Economic Research on the Global Environment,
University of East Anglia.
Summary
Fuel cells are often perceived as being part of the future solution to the 'energy crisis', providing
'clean' electricity with virtually no emissions. The development of fuel cells is considered to be an
integral part of a sustainable ‘hydrogen economy’, in which hydrogen gas is produced using
renewable sources of energy, and which offers the possibility of abundant energy with negligible
emissions. However, hydrogen does not occur naturally but has to be produced, usually by the
reformation of hydrocarbons or electrolysed from water. Currently fuel cells are nearly always fuelled
by natural gas or by hydrogen produced from natural gas and therefore, in terms of climate change,
still have significant impacts on the environment.

This paper explores whether the stationary fuel cell is one of the technologies that will lead us to the
cleaner production of energy despite the question mark over some of their environmental benefits and
their financial cost. In particular we examine the current technology and environmental benefits of
combined heat and power (CHP) fuel cells.

It is found that there are both technical and non technical barriers to the development of stationary
fuel cells as a major component towards sustainable energy. For some emissions the environmental
benefits of fuel cells are not clear. When fuelled by natural gas carbon emissions may only be
marginally different from conventional technologies. However for other emissions there may be more
significant environment benefits, plus the advantages of low maintenance, reliability and quiet
operation. Combined heat and power applications increase the overall efficiency but this can apply
equally to conventional technology. The suitability of fuel cells for CHP applications depends
crucially on the heat power ratio required by the user and on how variable demands for heat and
power are met.

The overall environmental benefits of stationary fuel cells depend on a complex interaction between
efficiency, type of fuel supply, end-user requirements, availability of links with grid networks and the
technologies with which they are being compared. A lifecycle assessment comparing stationary fuel
cell and conventional CHP technologies for a residential application has been undertaken and will be
reported in a subsequent paper.

Non-technical barriers have also been identified framed in the underlying economic realities of supply
and demand, the cultural acceptance of integrating new technologies into existing and proposed
projects, the prevailing legislative framework and the subsequent propagation of currently under-
developed market niches.

This report shows that although fuel cells provide an attractive proposition for a contribution towards
more sustainable energy supplies in various applications, there needs firstly to be a more complete
assessment and understanding of the attainable benefits (environmentally, socially and economically).
In addition there needs to be a more detailed recognition of the circumstances under which the
development of realistic markets for their expansion and integration is likely to occur.

To further identify the opportunities and barriers to fuel cell development a series of semi-structured
interviews have been carried out with stakeholders in this technology. This will be the subject of a
subsequent working paper in this series.

2
1 Introduction

Fuel cells are often perceived as being part of the future solution to the 'energy crisis', providing
'clean' electricity with virtually no emissions. The development and deployment of fuel cells are
considered to be an integral part of a sustainable ‘hydrogen economy’, in which hydrogen gas is
produced using renewable sources of energy, and which offers the possibility of abundant energy with
negligible emissions (Dunn, 2002; Conte at al, 2001). Indeed when fuel cells are supplied with pure
hydrogen the only by-product is water vapour and thus is clearly attractive from an environmental
standpoint.

However, hydrogen does not occur naturally in significant quantities and therefore has to be
produced, usually by the reformation of hydrocarbons or electrolysed from water. Currently fuel cells
are nearly always fuelled by natural gas, or by hydrogen produced from natural gas, and thus still have
significant impacts on the environment. When hydrocarbons are used, for reformation or as an energy
source, the environmental advantages are not as positive as is sometimes claimed (Watkiss & Hill,
2002). Where renewable energy is used to produce hydrogen the emissions are much lower but there
is a question as to whether it is better for those renewables to be used to produce electricity directly
rather than first being used to produce hydrogen.

The environmental advantages of fuel cells also vary with their application (Evers, 2003). In the case
of mobile applications, transport, the reduction of local pollution is convincing, and for micro
applications the replacement of heavy batteries could have many beneficial effects, but are there the
same clear advantages for stationary applications?

At the point of use, and where supplied by hydrogen, fuel cells produce no particulate emissions, are
extremely quiet and can operate in the same room as people with almost no detrimental impact on the
local environment (Hart, 2000). Therefore fuel cells appear to be ideally suited for use in micro
Combined Heat and Power (CHP) applications in the home. In these applications 3 to 10kW
electricity can be generated by a fuel cell, and the heat produced can be used to heat, or even to air-
condition the building. The ability to utilise the heat greatly increases the efficiency of the fuel cell
system and provides greater environmental benefits than electricity generated by centralised fossil
fuelled power stations transmitted over long distance power lines (Bauen & Hart, 2000; Jones, 2002).
However many of these advantages apply equally to conventional micro-CHP.

This paper explores whether fuel cells are one of the technologies that will lead us to the cleaner
production of energy. In particular we examine stationary applications that include combined heat and
power (CHP). Are they only suitable for niche applications such as for uninterruptible power supplies
(UPS) and isolated communities, where the savings for not having to provide the infrastructure for
importing centrally generated electricity will balance against the higher capital cost, or do they have
wider applications? We examine both the technical and non technical barriers to the continuing
development and deployment of fuel cells.

In order to set into context the development of fuel cell technology in the UK, this paper initially
outlines some key aspects of the energy supply situation in the European Union today (section 2).
This is followed by a summary of fuel cell technology (section 3) including the historical context
(section 3.1) methods of hydrogen production (section 3.3) and the different types of fuel cells
systems (section 4). Section 5 explores fuel cell research and development, followed by fuel cell
combined heat and power systems (section 6). The environmental costs and benefits are examined in
section 7. It has been suggested that the slow development of fuel cells is linked to non technical
barriers in addition to those associated with technical development. This is explored in section 8
followed by an examination of the UK sole application of fuel cell CHP (section 9).

3
2. Energy Supply in the European Union

Following the Kyoto Protocol the power industry in Europe has had to re-think its methods of energy
generation. New concepts and approaches have been advanced to encompass concern over increasing
greenhouse gas emissions in addition to the increasing SOx and NOx emissions and damage caused
by acid rain. Other drivers for more sustainable energy production have stemmed from concern
regarding the possibility of adverse effects on health caused by high voltage transmission lines,
environmental restrictions to the expansion of hydroelectric schemes and public disenchantment with
nuclear power (ETDE, 2002). Security of supply is also an issue that has taken on increased
prominence following recent international events including the Gulf crisis and the Iraq war.
Avoidance of dependence on imported oil and a desire for fuel flexibility remains a firmly embedded
European goal. The following expands on these issues outlining some of the major energy challenges
faced by the UK in its EU context (ETDE, 2002).

As we continue to consume increasing amounts of energy, the challenge of ensuring that sufficient
energy is available at all times is taking on greater importance. The safety and sustainability of
society, the economy and the environment depend largely on the ability to supply necessary amounts
of energy in the most appropriate ways (Flavin & Lenssen, 1995). There are three important themes
that should be borne in mind when considering the basis of the security of energy supply for the
European Union: the increase in Europe's dependence on external energy sources, climate change and
the liberalisation of energy markets.

The following sections briefly consider the important issues of climate change and security of supply
for the UK in a European context.

2.1 Climate change

Current policy on energy in Europe and the UK is driven by the Kyoto commitment to reduce
emissions of greenhouse gases, in particular carbon dioxide (CO2) from burning fossil fuels. Under
the Kyoto protocol, the EU is committed to an 8% reduction in CO2 emissions from a 1990 baseline,
while the UK government has committed to a 12.5% reduction in emissions of greenhouse gases
during the first Kyoto period (2008-2012) as its share of the EU commitment. The UK has also
positioned itself as a global leader in climate action, by voluntarily adopting a higher, non-binding,
CO2 reduction target of 20% by 2010, and 60% by 2050 (DTI, 2003b).

The UK government has outlined its policies to achieve the 20% target in the Climate Change
Programme (DETR, 2000), which recommends the measures to be taken to achieve the 10MtC1 per
year reduction needed. About half of the savings are anticipated to come from the domestic sector,
and much of that will come about through improvements in the energy efficiency of our homes and
appliances. The current debate on energy policy in the UK is structured around two recent
government publications, the PIU Energy Policy Review (2002) and the Energy White Paper (DTI,
2003b). Both publications stress the importance of energy efficiency, stating that ‘the immediate
priorities of energy policy are likely to be most cost-effectively served by promoting energy
efficiency and expanding the role of renewables.

One of the problems of increasing the contribution of renewable energy is the intermittency of supply
and matching this to energy demand. Hydrogen is one of a number of energy storage options that can
be used to overcome this.

2.2 Security of supply and liberalisation

A major environmental challenge faced by the whole world today is the depletion of natural energy
resources. For many countries – including the UK – this has substantial consequences for energy
trading policy and the balance between the amounts of energy exported and imported. It has been
estimated by the Energy Technology Data exchange that the European Union's dependence on
external energy sources will increase to 70% by 2030 (90% in the case of oil – ETDE, 2002) unless

4
action is taken. In the UK we already import nearly half the coal we use and the decline of indigenous
energy supplies - oil, gas, nuclear and coal – is a critical issue requiring careful consideration (DTI,
2003). By 2020 the UK could be dependent on imported energy for three quarters of its total primary
energy needs as economically viable coal reserves are exhausted and gas and oil requirements
necessitate a vastly higher level of imports.

This shift from being a net energy exporter to being (once again) a net energy importer may lead to a
higher vulnerability with regard to price fluctuations and interruptions to supply caused by regulatory
failures, political instability or conflict in other parts of the world. It is this point concerning security
of supply that has spawned debate among energy experts. Some scientists predict that this reliance on
imported energy from unstable states by vulnerable pipelines through other unstable states will result
in blackouts and shutdowns reminiscent of the Winter of Discontent (ICE, 2003). However others
argue that being an energy importer does not necessarily make it harder to achieve energy reliability
(DTI, 2003). For example the Energy White Paper points out that Canada and the UK are the only two
net energy exporters among the world’s leading industrial nations. The others have all achieved
economic growth as energy importers. It is argued that the UK will be able to do the same, as was the
case before the discovery and utilization of North Sea oil and gas.

The best way of maintaining energy reliability will be through energy diversity (DTI, 2003). The
Energy White Paper states that the UK needs many sources of energy, many suppliers and many
supply routes. Renewables should help to avoid over-dependence on imports and reduce vulnerability
to security threats, while small-scale, distributed energy converters – e.g. micro-CHP and fuel cells –
should increase flexibility and improve efficiency and the utilisation of energy. .

Trade in energy involves relationships of mutual dependence:.. For the UK this evolving
interdependence also means that securing reliable energy supplies will need to be an increasingly
important part of European and foreign policy (DTI, 2003). The Government has pledged to work
internationally to promote regional stability, economic reform, open and competitive markets and
appropriate environmental policies in the regions that supply most of the world’s oil and gas - Russia,
the Middle East, North Africa and Latin America. The UK has secured a commitment to energy
liberalisation in the European Union for industrial customers by 2004 and overall by 2007 (DTI,
2003). It is intended that this will improve the UK’s own access to diverse sources of supply and will
allow UK companies to compete in wider markets.

2.2.1 Security of grid supply

The recent US grid failure has highlighted the problems of grid dependence making security of supply
within a country an important issue. The financial cost of power supply failure are very high for some
companies making it essential that some type of back up system is available to them. An
Uninterruptible Power Supply (UPS) system based on a fuel cell could give them the confidence to
ride through grid or other supply problems. UPS fuel cells that are generally in the 1-5 kWh range are
designed to provide DC back up power for critical equipment.

3. Fuel Cell Technology

3.1 Historical context and identification of early problem areas

The principle of the fuel cell has been understood for almost one hundred and fifty years, with the first
kilowatt-scale fuel cells being developed some forty years ago (FC, 2000). By contrast, the heat
engine has been in full use for more than three hundred years. Theoretically, however, the potential
efficiency offered by fuel cells can exceed the maximum efficiency of heat engine technology by a
factor of about two. This is because in a fuel cell, the free energy of a fuel (e.g. gaseous hydrogen) is
converted into direct current (DC) electricity without going through a thermodynamic cycle (Appleby
and Foulkes, 1993).

5
There is some debate over the invention of fuel cells. In 1802 Sir Humphrey Davy created a simple
fuel cell but the discovery of the principle of the fuel cell is attributed to Christian Frederick
Schonbeim, professor at the University of Bate (1829 – 1868) (Stambouli & Traversa, 2001).
Following this Sir William Grove a barrister, who practiced patent law and also studied chemistry or
"natural science" as it was known at the time, realized that if electrolysis, using electricity, could split
water into hydrogen and oxygen then the opposite would also be true (FCS, 2004). Combining
hydrogen and oxygen, with the correct method, would produce electricity. To test his reasoning, Sir
William Robert Grove in 1839 built a device that would combine hydrogen and oxygen to produce
electricity, the world's first gas battery, later renamed the fuel cell. His invention was a success, and
Grove's work advanced the understanding of the idea of conservation of energy and reversibility
(FCS, 2004). Interest in Grove's "gas battery" diminished as the dawn of cheap fossil fuels approached
and the soon to be discovered steam engine captivated the present day society.

Serious interest in the fuel cell as a practical energy carrier was rekindled in the 1960's, when a new
US government agency was about to undertake the first step in maturing fuel cell technology. The
National Aeronautics and Space Administration (NASA) was developing the mission’s critical
systems for the first prolonged manned flight into space (FCS, 2004). Once in space, the orbiter
needed a source of power for the extended space mission. Batteries were ruled out due to the size,
weight and toxicity necessary to support a mission of eight days in space. Nuclear power was
considered too risky and photovoltaics were not practical at the time, due to the size and weight of the
solar panels. Therefore the once obscure fuel cell became the technological solution to NASA's
dilemma. The earlier problems of cost and fuel supplies that had plagued fuel cells became irrelevant
as the spacecraft was already carrying liquid hydrogen and oxygen. An additional benefit of fuel cells
over other technology was that the astronauts could consume the fuel cell's water by-product. Fuel
cells furnished power for the Gemini and Apollo spacecraft, and today NASA’s space shuttle relies on
fuel cells for electricity and drinking water once in orbit (FCS, 2004).

NASA and the space program provided fuel cells with the initial research and development the
technology required. Since their adoption by the space program, fuel cell technology has achieved
widespread recognition by industry and government as a clean energy source for the future. With this
in mind, the amount of interest in fuel cells has expanded to point where many of the world’s largest
companies are involved with fuel cells in some respect. Today, billions of dollars have been spent on
research and the commercialisation of fuel cell products. Megawatt-sized demonstrators have already
been operated successfully (FC, 2000; Brandon & Hart, 1999; DTI, 2001) and a strong research base
has continued to be established in the UK, US and Europe (section 6). Over the next couple of years,
the products that have been in the commercialisation process will start to become available to
consumers.

From a less positive stance – and in terms of developing markets for other forms of fuel cell
application - various problem areas had become reasonably well defined by the 1970s that to a large
extent remain relevant today. These included the limitations of hydrogen as a fuel, the only effective
catalysts being expensive metals, the limited lifetime of the catalysts and the need for long term
investment (Appleby & Foulkes, 1993; Brandon & Hart, 1999). The UK’s own track record on
working examples of fuel cell applications (currently there is only one, at Woking Park in Surrey, see
section 9) serves to show that, in reality, fuel cell technology is not emerging as a fast growth product
in the UK’s energy supply market.

In the light of this a major question that needs to be asked is “Why are fuel cells not more widely
used?” It is a question that is explored from various standpoints in this report, but the basic answer is
that the commercial application of fuel cell technology as a practical energy conservation device is
still in its early stages.

6
3.2 Technical operation
A fuel cell is an electrochemical engine that converts the energy of a chemical reaction (a fuel and an
oxidant) directly into low voltage direct current electricity (Brandon & Hart, 1999). Hydrogen and
oxygen are combined over a catalyst to produce electricity and water (Fig. 1). Pure hydrogen is
supplied externally or (in high temperature cell stacks) can be reformed internally from hydrocarbon
fuels. Unlike a conventional battery a fuel cell does not run down or require recharging. It will
produce energy in the form of electricity and heat as long as fuel (hydrogen and oxygen) is supplied
(Hart, 2000).

A fuel cell stack consists of two electrodes sandwiched around an electrolyte Hydrogen and oxygen
(or air) are fed into the anode and cathode of the fuel cell. Encouraged by a catalyst, the hydrogen
atom splits into a proton and an electron, which take different paths to the cathode. The proton passes
through the electrolyte, while the electron creates a current in an external circuit before it returns to
the cathode, to react with the hydrogen and oxygen to produce a molecule of water (H20) (Stambouli
& Traversa, 2001).

Fuel cell systems that use natural gas are typically grouped into three main functions, the gas
processor to reform natural gas (methane) to hydrogen, the fuel cell stack producing useful heat and
d.c. electricity, and the power conditioner to convert d.c. to a.c. power compatible with the electricity
distribution network. In some fuel cell technologies such as the molten carbonate fuel cell (MCFC)
and solid oxide fuel cell (SOFC) that operate at high temperatures, reforming takes place within the
fuel cell itself (table 1). Hydrogen can also be produced by other means, including the electrolysis of
water. The main methods are discussed below in section 3.3.

Fig.1: Simplified diagram showing the basic working of a fuel cell

(based on Stambouli & Traversa, 2001)

H2O/Natural Gas O (from air)

REFORMER
Energy (or electrolysis H2 FUEL CELL Electricity
system for splitting
water)

O • Useable Heat
• H2O

3.3 Hydrogen gas production

As discussed earlier the introduction of hydrogen to displace conventional fuels for heating and
transport has been identified as a possible strategy for moving the UK towards its target of reducing
carbon dioxide emissions to 60% of current levels by 2050. Although there are a range of processes
by which hydrogen can be produced, some emissions of carbon dioxide are still likely to result from
the principal contenders for large scale production (Dutton et al, 2003). For example, using grid
electricity to enable the process of electrolysis will result in emissions elsewhere in the electricity
supply network, and steam methane reforming, unless implemented together with a carbon dioxide
sequestration strategy, will result in the emission of large quantities of carbon dioxide (personal
communication Jean Aldous, owner of Fuel Cell Power, 2002; Dutton et al, 2003).

In order to determine the immediate priority that might be attached to hydrogen within the overall
carbon reduction strategy it is necessary to estimate the likely level of these emissions over time with
7
parallel estimations of the long term prospects for the hydrogen economy to deliver sustainable
reductions in the time frame beyond 2050. Dutton et al (2003) highlight four main factors upon which
the carbon reduction potential of introducing hydrogen into the energy supply infrastructure depends:

• the type of conventional capacity displaced

• the new plant required to supply and distribute the hydrogen
• the measures (if any) taken to limit harmful emissions associated with the hydrogen production
• the end-use efficiency of hydrogen use.

Currently large quantities of hydrogen are produced for a number of industrial applications, the main
ones being ammonia production (62.4% world production), oil refineries (24.3%) and methanol
production (8.7%). However the future demand for hydrogen may also require smaller on-site
facilities (Watkiss & Hill, 2002). The principle technologies for current and future hydrogen
production are steam reformation of natural gas, partial oxidation of heavy hydrocarbons or coal and
electrolysis. Other, currently less prominent technologies include pyrolysis and the production of
hydrogen from biomass and enzymes (Appleby, 1992; Ogden & Nitsch, 1993; FC, 2000; Watkiss &
Hill, 2002). More detailed descriptions of the various technologies to produce hydrogen can be found
in Dutton (2002).

3.3.1 Steam Reformation

The main method currently used to produce hydrogen is the steam reformation of natural gas also
referred to as Steam Methane Reforming (Watkiss & Hill, 2002). Natural gas is combined with high-
temperature steam and a catalyst to firstly produce hydrogen and carbon monoxide and secondly to
separate the carbon monoxide plus water into hydrogen and carbon dioxide. Industrial scale processes
are usually carried out at temperatures of 850oC and pressures of 2.5 MPa (363psi). Currently this
process is the most cost-effective method to recover hydrogen, but it relies on fossil fuels to produce
the process feedstock and the high-temperature steam.

There are also other reforming processes that enable the production of hydrogen such as the
gasification of coal (Watkiss & Hill, 2002).

A fuel reformer can extract the hydrogen from any hydrocarbon fuel - from natural gas to methanol,
and even gasoline (DTI, 2001). Since the fuel cell relies on chemistry and not combustion, emissions
from this type of a system would still be much smaller than emissions from the cleanest fuel
combustion processes. Alternatively energy to operate the reformer could be supplied by biomass,
wind, solar power or other renewable sources. Fuel cells today run on many different fuels, even gas
from landfills and wastewater treatment plants (FC, 2000). When hydrogen is produced centrally in
large quantities it could provide the opportunity for CO2 capture and sequestration (Tillemans & de
Groot, 2002).

The efficiency of hydrogen production using gas reformation varies according to the size and type of
the production process. Spath & Mann (2001) estimate that for every 0.66 MJ of hydrogen produced,
1 MJ of fossil energy must be consumed (LHV), while Tillman & de Groot (2002) found efficiencies
varied between 62% and 89%, and Pehnt (in press) reported an efficiency of 81% (LHV). Industrial
scale production is carried out in steam reforming plants with typical capacity of 100, 000 Nm3 H2/h
(960GJ/h) (Watkiss & Hill, 2002).

3.3.2 Partial Oxidation of Heavy Hydrocarbons and Coal

Partial oxidation (POX) refers to the exothermic or autothermal conversion of heavy hydrocarbons
such as residual oil from the treatment of crude oil with oxygen and steam (Watkiss & Hill, 2002).
This is carried out - on an industrial scale - in partial oxidisers with capacities in the order of 100,000
Nm3 H2/h (960GJ/h) and operating efficiencies of 75-86% (Watkiss & Hill, 2002).

8
The partial oxidation of coal is well established commercially in the coal rich countries of South
Africa and China. It uses a similar process to that described above for POX other than the special
preparation of the coal which involves it being ground into a fine powder and mixed with water to
create a 50-70% solid content suspension suitable for pumping (Watkiss & Hill, 2002). On-going
trials continue in Germany but operating efficiencies so far lie within the 45-50% range (Watkiss &
Hill, 2002).

3.3.3 Electrolysis
Water can easily be separated into hydrogen and oxygen by charging the water with an electrical
current. The addition of an electrolyte such as salt to the water increases the conductivity of the water
thus increasing the efficiency of the process. The commercial production of this process achieves an
efficiency of about 70-75% (Dutton, 2002). When renewable energy is used to 'fuel' the process it is
essentially carbon free (Dutton, 2002). The hydrogen could be an energy carrier for renewables,
providing storage capacity to assist in matching energy supply and demand. However due to the high
energy requirements of about 4.5-5kWh/mn3H2 the cost of hydrogen produced in this way is high
(Stoji et al, 2003)

Steam electrolysis differs in that it uses heat, instead of electricity to provide some of the energy
needed thus making the process more energy efficient (US Dept of Energy, 2003).

3.3.4 Pyrolysis
Pyrolyis involves the decomposition of a hydrocarbon such as methane at high temperature into
hydrogen and carbon (Dutton, 2002). The carbon can be stored to prevent the release of carbon
dioxide into the atmosphere, although the energy used in powering the process will generate
additional carbon emissions. One potential catalyst for the methane cracking reaction is carbon felt. In
theory, more complex hydrocarbons, biomass and municipal solid waste can also be pyrolysed
(Watkiss & Hill, 2002).

It is potentially easier to store carbon than to sequester carbon dioxide. The carbon black can either be
sequestered or used in a number of industries, including battery, plastics and tyre manufacturing.
Commercial carbon black production from the pyrolysis of hydrocarbons is now being undertaken in
Sweden using an industrial scale plasma reactor. Currently the hydrogen produced is disposed of as an
unwanted by-product (Lakeman & Browning, 2001). Another example of this area is the Kvaerner
Carbon Black and Hydrogen Process Process (KCB&H). A pilot plant has been operating since 1992
and a commercial plant producing 50 million Nm3/year of hydrogen and 20,000 tonnes/year of carbon
black was established during mid 1999 in Canada (Dutton, 2002). If revenues from carbon black are
taken into account it has been estimated that the process may be cheaper to run than steam methane
reforming (Dutton, 2002).

3.3.5 Hydrogen from Biomass

There are three principle methods for hydrogen production from biomass although none currently are
commercially available. These are steam gasification, pyrolysis and biological hydration. Gasification
is a thermochemical process that can be used to breakdown biomass, such as forestry residues, into
carbon monoxide and hydrogen. The process requires high temperatures (800-1000oC) plus a
restricted oxygen supply (less than for combustion) produces hydrogen, carbon dioxide and methane.
Steam reformation, as described in section 3.3.1, can then be used to break down the carbon
monoxide into hydrogen and carbon dioxide.

Pyrolysis of biomass is a similar process to that used in methane/hydrocarbon pyrolysis but more
difficult owing to the complexity and variable nature of biomass (Watkiss & Hill, 2002). There are a
number of biological processes by which hydrogen appears as an immediate product from biomass or
is released (Watkiss & Hill, 2002). Investigations into the generation of hydrogen from algae-bacteria-
systems indicate that hydrogen production costs of £24/GJ or less are achievable (Watkiss & Hill,
2002). Cyanobacteria, an abundant single-celled organism, produce hydrogen through its normal
metabolic function. It can grow in the air or water, and contains enzymes that absorb sunlight for
9
energy and split molecules of water, thus producing hydrogen. Since cyanobacteria take water and
synthesise it to hydrogen, the waste emitted is more water, which is utilized for the next metabolism.

4. Fuel Cell Systems

The main distinguishing factors between different types of fuel cells are:
• the electrolyte that is used to separate the anode and the cathode and;
• the internal or external provision for reforming hydrogen (DTI, 2001).

In practical terms the match between the requirements of the system application and the features of
the type of fuel cell is very important. For example, in a residential CHP application it is important
for the fuel cell to be able to respond to changes in the electrical and heat load. With the current PEM
technology rapid load following is difficult to achieve mainly due to the slow response of the gas
reforming unit. To improve the response time a reformate buffer can be included in the system. The
internal reforming SOFC does not have this problem being able to follow demand almost
instantaneously (Sammes & Boersma, 2000).

Several types of fuel cell technologies are being developed for different applications. Details of the
four types that are most frequently employed are shown in Table 1.

Table 1: Features of the four main fuel cell technologies

(DoD,2003; Pehnt & Ramesohl, 2003; Pehnt, in press)

PAFC MCFC SOFC PEMFC/PEFC

Phospheric acid Molten carbonate Solid oxide Proton exchange
fuel cell Fuel cell fuel cell (membrane) fuel cell
electrolyte phosphoric acid molten carbonate salt ceramic polymer

operating 190-210°C 650°C 800-1000°C 60-90°C

temperature

reforming external external/internal external/internal external

oxidant O2/Air CO2/O2/Air O2/Air O2/Air

electrical eff
natural gas 38-42 50-55 30-55, 572,653 301-42 , 28-354
hydrogen 47-50 na 38-50
(%) na
Thermal 232 37
efficiency
Favoured CHP stationary power & CHP mobile, portable,
application CHP CHP
Power range 50-10,000 200-100,000 2-100,000 200
KWhe
Status? commercial demo demo commercial
1
for micro CHP
2
3 MW industrial CHP
3
20 MW no CHP Pehnt (in press)
4
house heating systems

10
4.1 Phosphoric Acid Fuel Cell (PAFC)
The PAFC is the most mature fuel cell technology in terms of system development and
commercialisation activities (Pennycook, 2001). It has been under development for more than 20
years and has received a total worldwide investment in the development and demonstration of the
technology in excess of $500 million. The PAFC was selected for substantial development a number
of years ago because of the belief that, among the low temperature fuel cells, it was the only
technology which showed relative tolerance for reformed hydrocarbon fuels and thus could have
widespread applicability in the near term. Almost 400 pre-commercial systems have been sold
worldwide (total capacity ~44MW). Demonstrated in buses, it has also been pursued as a candidate
for CHP and distributed power applications. Increasingly it is being marketed as a technology for
uninterruptible power supplies (UPS) and premium power applications.

Phosphoric Acid Fuel Cells can withstand exposure to CO2 and small amounts of CO, the implication
being that the fuel does not have to be reduced to pure hydrogen. This greatly reduces the fuel cell
running costs and, with minor modifications to the fuel processing system, enables it to run on gases
from sewage treatment plants and landfill sites.

Demonstrations
Although after 25 years, the phosphoric acid fuel cell is approaching commercialisation the current
capital cost resulting from limited production remains an issue. Nevertheless, cell stack assemblies
continue to exhibit convincingly low degradation and reliability (Evers, 2003). The primary
developer in the USA (International Fuel Cells, IFC) has only manufactured 40 MW of phosphoric
acid fuel cell components to date. CHP phosphoric acid fuel cell systems were available in 1995 at
US$ 3000/kW. However to compete effectively in the marketplace with diesel generators, the
cogeneration phosphoric acid fuel cell need to cost approximately US$ 1550/kW (NETL, 2003).

In contrast to the IFC system ONSI (now GTC Fuel cells) have produced more than 225 phosphoric
acid PC25 fuel cell systems for customers in 19 countries, accumulating 4.5 million hours of
operational experience (Pennycook, 2001). The service of such systems is estimated at approximately
40,000 hours, the system price being around 4000 $/kW. However the development potential of
phosphoric acid fuel cells is now believed to be reaching its limits, as well as the electrical efficiency.
The overall efficiency in a CHP application is around 80%.

4.2 Molten Carbonate Fuel Cell (MCFC)

The MCFC evolved from work in the 1960's aimed at producing a fuel cell which would operate
directly on coal (Huijsmans et al., 2000; Pennycook, 2001). While direct operation on coal seems less
likely today, operation on coal-derived fuel gases or natural gas is viable. The MCFC is a candidate
for stationary power and CHP applications and has been demonstrated at 2MW scale.

If a reforming catalyst is provided, MCFC allow for internal fuel reformation, which enables a
relatively lower capital cost per kW hour. They provide high electrical efficiency and high power
densities thus making MAFC an attractive option in this respect. However, there are disadvantages
that include the requirement for stainless steel hardware material, a very corrosive electrolyte and
lower mechanical stability due to high operating temperatures (around 6500C), potentially reducing
cell life.

The cell reaction occurs with nickel catalysts rather than with expensive precious metals; a gas turbine
and/or a steam turbine could be driven with the excess heat; efficient operation with CO2 containing
gases such as bio-fuel derived gases; the cell can be made using less costly sheet metals.

Demonstrations
The Dutch energy research centre ECN first started work on molten carbonate technology in 1986
which included assessment studies for small molten carbonate fuel cell systems (500 kW) in
11
decentralised applications including commercial and industrial CHP (Jansen & Mozaffarian, 1997).
ECN built molten carbonate systems with good operating performance and low degradation up to
5000 hours (Jollie, 2003). Since then ECN has also become involved in work on solid oxide and
proton exchange membrane fuel cells as well as the processing of fuels to produce hydrogen. In
August 2003 ECN decided to sell its portfolio of patents relating to molten carbonate fuel cells (Jollie,
2003).
MCFC technology has shown a good rate of progress over the last two years with FuelCell Energy
and MTU Friedrichshafen in particular putting units out into the field for real-world testing. The
technology seems to be best-suited to large scale units that can be used for combined heat and power
generation (Jollie, 2003). This allows them to reach high overall efficiencies, giving them an
advantage (at this size) over other fuel cell types. Internal reforming of hydrocarbon fuels, such as
natural gas, can also be carried out.

4.3 Solid Oxide Fuel Cell (SOFC)

The SOFC uses a ceramic, solid-phase electrolyte, which reduces corrosion and eliminates the
electrolyte management problems associated with the liquid electrolyte fuel cells (Pennycook, 2001).
To achieve adequate ionic conductivity in such a ceramic, however, the system must operate at about
1000°C. At that temperature, internal reforming of carbonaceous fuels should be possible, and the
waste heat from such a device would be easily utilized by conventional thermal electricity generating
plants to yield excellent fuel efficiency.

The principle problems associated with liquid electrolyte fuel cells (i.e. cell hardware corrosion and
electrolyte movement/flooding in the electrodes) are overcome by SOFC. High operating
temperatures enable the reformation of natural gas to take place internally thus reducing operating
costs. Gas turbines could be powered with the waste heat. Other difficulties include a considerable
start-up time for the high operating temperature required,

The key qualities of Solid Oxide Fuel Cells relate to the nature of the cell hardware – it is not
corrosive and impervious to gas crossover between electrodes.

Demonstrations
Siemens Westinghouse dominates the development of solid oxide fuel cells concentrating primarily
on decentralised power and combined heat and power plants fuelled by natural gas. Recently
emphasis has shifted from basic technology development to cost reduction, scale-up and
demonstration of pre-commercial power systems at customer sites. Achieving a cost advantage over
competitive technologies is seen to be the driving force behind all efforts (Evers, 2003). However the
falling prices and increasing efficiencies of gas/steam turbine combined cycles have put tough goals
on the cost targets of SOFC systems (Sammes & Boersma, 2000).

The demonstration 100 kW SOFC CHP system, developed in 1997, was the world's longest running
high temperature fuel cell, accumulating 16,612 hours of operation. Towards the end of its operating
period it was providing 110 kW of electric power into the local grid at an efficiency of more than 46
percent, with high levels of reliability and low levels of air emissions. Commercial versions of the
technology are expected to be ready for market penetration in 2004 (NETL, 2001).
As part of the US Energy Department's fuel cell program, a 220-kilowatt Siemens Westinghouse solid
oxide fuel cell-microturbine 'hybrid' system was developed at the University of California-Irvine in
2001. A hybrid system couples a high temperature fuel cell with a gas turbine. This gives greater
flexibility and consequently improves the overall system efficiency (>70%) at a capital cost that is
between the two technologies (Arthur D. Little, 2000). The development of this system is aimed at
generators with a capacity of up to 60 MW, which in combination with a gas turbine is projected to be
60% efficient. In addition 1-megawatt systems are being planned for Maryland (US) and Europe
(NETL, 2001).

12
4.4 Proton Exchange Membrane, Polymer Electrolyte Membrane (PEMFC),
& Solid Polymer Fuel Cell (SPFC)
These systems provide an order of magnitude higher power density than any other fuel cell system,
with the exception of the advanced aerospace Alkaline Fuel Cell (AFC), which has a comparable
performance (Pennycook, 2001; Pokojski, 2000). The PEMFC can operate on reformed hydrocarbon
fuels, with pre-treatment, and on air. The use of a solid polymer electrolyte eliminates the corrosion
and safety concerns associated with liquid electrolyte fuel cells. Its low operating temperature of 80ºC
provides instant start-up and requires no thermal shielding to protect personnel. Recent advances in
performance and design offer the possibility of lower cost than any other fuel cell system. The
PEMFC has a high power density, and is very promising for mass market applications such as
automotive and stationary small scale CHP applications. There is a massive global effort to develop
commercial systems.

The corrosion issues associated with liquid electrolyte fuel cells are eliminated with the use of a solid
polymer electrolyte. This commercial attraction is bolstered by low operating temperatures (800C),
enabling fast start-up times and low thermal insulation requirements. However, the waste heat
generated is not suitable for gas turbines or bottoming cycles due to the low operating temperature.

Rapid energy availability is one of the key qualities. Approximately 50% of maximum power is
available immediately at room temperature and within three hours full operating power is available. A
substantial pressure differential can be maintained across the electrolyte allowing the fuel cell to
operate with low-pressure fuel and high-pressure air, thus optimising performance.

PEMFCs are currently being demonstrated in a range of commercial applications including buses,
cars, small-scale CHP and distributed power.

5. Research and Development

The UK’s Department of Trade and Industry (DTI) have developed a wide-ranging fuel cell
programme (DTI, 2001). They consider fuel cells could make a major contribution to the
sustainability of energy use in the UK and recognise the growing interest in the UK for their
development and application. They present a significant potential opportunity for industry. However,
the commercial prospects are still unclear and the timing and value of future markets, and the energy
and environmental benefits that would result are still uncertain (DTI, 2001). The Department has
funded an Advanced Fuel Cells Programme since 1992, initially focussing on solid oxide and solid
polymer fuel cells. Recently the programme has widened to allow other fuel cell types to be included
in projects that contribute towards an assessment of the technologies.

The DTI assert that an on-going UK Programme is required to encourage greater investment in fuel
cells, particularly in regard of longer-term developments. It can also be a catalyst for encouraging
innovation that might, in the longer-term lead to a competitive advantage for the UK. In addition, to
help nurture ideas in all technology areas, facilitate greater co-ordination of activities in the UK,
support generation of IPR and assist in the exploitation of this IPR whether into manufacturing, joint
ventures or licensing agreements.

In February 2003 the DTI, together with the Carbon Trust, commissioned a study of the ‘Commercial
Potential of Fuel Cells in the UK’ (DTI, 2003a). One of the key findings of the report was that there
was a need for a unified ‘vision’ for the UK fuel cell sector. The Energy White Paper (DTI, 2003b)
included the development of such a vision as a key objective, together with the establishment of an
industry body Fuel Cells UK (fcUK). fcUK was launched in May 2003 with initial funding from the
DTI and its first objectives were to produce a ‘Capabilities Guide’ detailing all UK activity in the

13
development of fuel cell technologies. The aim of the guide is to raise the profile of the UK fuel cell
industry and facilitate the establishment of partnerships and collaborations (fcUK, 2003).

Fuel cells UK is guided by a steering group which provides guidance on the short medium and long
term evolution of fcUK with special emphasis on engagement with key stakeholders and the
identification of appropriate routes for development which have the support of the UK industry.

EU Research programmes have recognised the potential of fuel cells as a key technology for meeting
the challenge of sustainable energy, providing an essential bridge between today's fossil-fuel based
energy economy and a future economy based on greater use of renewable energy sources. There has
been strong growth in EU support for fuel cell R&D, rising from 8M€ in the 2nd Framework
Programme (1988-92), 54M€ in the 4th Framework Programme (1994-98) and 120M€ for hydrogen
and fuel cells in the 5th Framework Programme. The EU 6th Framework work programme in the area
of Sustainable Energy Systems has identified fuel cells as one of eight research activities having an
impact in the medium and longer term. The funding for fuel cells and hydrogen has a total budget of
2.7 billion Euros.

The present fuel cell strategy in the context of CHP includes recommendations for research and
demonstration of low temperature fuel cells (which have the potential for low specific cost and small-
scale applications), and currently expensive high temperature fuel cells (which have potential for
industrial and large-scale systems).

Major support for fuel cells has also come from the European Commission in its initiation in October
2002 of the High Level Group for Hydrogen and Fuel Cells Technologies. The High Level Group
comprises 19 stakeholders representing the research community, industry, public authorities and end-
users (EC, 2003). The group was invited to formulate a collective vision on the contribution that
hydrogen and fuel cells could make to the realisation of sustainable energy systems in future. This
included improving energy security of supply and air quality, whilst mitigating climate change.

The key recommendation of the Group, was to set up a “European Hydrogen and Fuel Cell
Technology Partnership” (commonly referred to as the ‘Technology Platform’) that would contribute
to developing an integrated strategy for a sustainable hydrogen economy in Europe. The Group also
recommended the need to develop world-class European hydrogen technologies and to foster their
commercial exploitation. The establishment of an Advisory Council to give guidance on initiating,
structuring, implementing and monitoring this process was also suggested.

The European Commission endorsed the concept of a Hydrogen and Fuel Cell Technology Platform
(EC, 2003a) and has taken the necessary steps to set up the Technology Platform, notably to define its
objectives, scope, operational structure and timelines (EC, 2004). A critical task has been the
establishment of an Advisory Council. Through a website (http://europa.eu.int/comm/research/energy/
nn/nn_rt_htp1_en.html) the Commission invited individuals and organisations to register their interest
to participate in the activities of the Technology Platform. The high level of interest led to the
Hydrogen and Fuel Cell Technology Platform 1st General Assembly, held in January 2004. Outcomes
of this assembly include awareness raising of the Technology Platform concept, structures and
objectives; the alignment of on-going and new activities with the Technology Platform objectives; and
recommendations for follow-up actions and the implementation of steering panels and initiative
groups.

Parallel to these advances, 2.7b€ expenditure on hydrogen and fuel cells was recently announced by
the EC (Europa, 2004). Wider international developments include the formation of the IPHE
(International Partnership for Hydrogen Energy).

In the USA, fuel cell development programs include the US Department of Energy Stationary Power
Fuel Cell Program, and the Fuel Cells for Buildings Program. The DOE's fuel cell research includes
higher efficiency systems, including molten carbonate and solid oxide fuel cells and fuel cell-
14
microturbine hybrids. In 2003 a new phase of fuel cell research aimed at resolving obstacles to fuel-
cell use was initiated by the US Department of Energy (DOE) (2003). 10 grants were made available
totalling $4.2 million to be matched by another $1.2 million from university and private sector
participants for research.

The grant-winning projects focus on developing improvements in fuel cell materials and performance
as well as attaining target capital costs of less than $400 per kilowatt in order to try and improve the
competitiveness of fuel cells compared with conventional power generation. The projects include
research designed to advance understanding of mixed ionic-electronic conductor electrodes to
improve their performance in solid oxide fuel cells; the development of methods to reduce production
cost of powders used in solid oxide fuel cell components and the development of software modules
for incorporating an electrochemical model into solid oxide fuel cells

For all types of fuel cell, research is needed to develop and evaluate materials and fuel cell systems
components that offer the prospect for low-cost mass production, whilst meeting the demanding
targets for commercial competitiveness. It is vital that components are developed from an integrated
systems perspective driven by the application requirements. In addition there is a great need to gain
experience in systems integration, installation, maintenance and operation, to establish system
durability, and to demonstrate the potential benefits of fuel cells to operators and the public.
Prototypes, demonstrations and field trials are required to provide essential information on the
performance of fuel cell systems under conditions representative of commercial applications.

6. Combined Heat and Power (CHP)

Fuel cells for stationary applications produce heat as well as power making them ideal candidates for
CHP. In contrast to conventional electricity-only generating plant, that are designed to maximise
electrical efficiency, CHP systems are designed to also produce heat at a high enough temperature to
be used for industrial processes or district heating. Given the correct design and operation, CHP
systems with or without fuel cells, are capable of high standards of environmental performance. By
optimising the supply to the electricity and heat demand, efficiencies of more than 80% can be
achieved (Webb & Gossop, 1995), thus contributing to the Government's objectives to reduce CO2
and other emissions (DTI, 2001). The environmental benefits are significant. For small-scale gas-
turbine and gas-engine CHP emission reductions of in the region of 350g/kWhe CO2 are achievable as
compared with emissions from conventional gas-fired boilers and power stations (DTI, 2002).

The installation of a CHP plant can reduce energy costs but the economics depend on the relative
costs of fuel (mainly natural gas) and the price that can be obtained for electricity (DTI, 2003).
Currently the costs of both are low enough to make the savings from CHP marginal. However the
potential savings from ‘good quality’ CHP schemes can, depending on the fuel being used, be
improved by exemption from the Climate Change Levy. To achieve exemption from the CCL, a CHP
scheme has to be certified as achieving a Quality Index target, and an electrical efficiency of greater
than 20% (CHPQA). Thus the climate Change Levy (CCL) is already having an impact on CHP
system design.

Conventional CHP units either use reciprocating internal combustion gas engines or gas turbines.
Most small-scale CHP units use reciprocating internal combustion gas engines that can achieve high
levels of reliability, and a heat to power ratio of about 1.5:1. Heat can be recovered from the engine
exhaust (at around 400ºC) and from the engine cooling system (at around 80ºC). Gas turbines are
widely used in larger-scale CHP systems, and are now becoming available for small-scale systems.
Although gas turbine systems have a lower electrical efficiency, they have a high temperature exhaust
(up to 600ºC) that can be used for raising steam. Alternatively small-scale gas turbines can use a
recuperator to improve the electrical efficiency, but with a lower exhaust temperature. Heat to power

15
ratios of 1.5:1 - 3:1 can be expected. Gas turbines offer benefits in certain applications, as they require
less frequent maintenance than gas engines (Rastler, 2000).

In the UK, by the end of 2002, there were 1539 CHP plants with 4742 MWe capacity. Over 83% are
small-scale (<1MWe), typically hotels, leisure centres, hospitals, universities, horticulture, community
heating, and airports. However the 68 installations that are larger than 10MWe are 80% of the
electrical capacity. The main CHP fuel is natural gas (68%) while renewables are used for 2% (DTI,
2003). Most small-scale CHP systems are operated in parallel with the utility supply, and are
normally designed to meet only part of the site electrical load. It is not common practice to export
power to the utility network because the cost of export metering and contracting may outweigh the
export revenue. Systems can also be designed to operate in isolation (in the event of a utility supply
failure), and may be used together with conventional standby generators.

CHP coupled with district heating is particularly prevalent in Scandinavia, with one of the most
extensive schemes occurring in the Danish city of Odense, where some 95% of homes are heated
directly through the city’s CHP plant (Webb & Gossop, 1995). A feature of such whole city schemes
is their immense variety and flexibility. In Sweden, for example, the heat produced from CHP
stations, generally coal or refuse fired, is often supplemented by waste heat from industry. Heat is also
extracted from municipal sewage and lakes.

Such local schemes, tailored to meet specific needs of a city or town, contribute significantly to
meeting Sweden’s national energy objectives. They provided a model for the distributive network
established recently by Woking Borough Council in the UK (Jones, 2002). This project, which
incorporated the first working fuel cell system in the UK, is discussed in section 9. It highlights the
type of changes that will be needed in order for fuel cells and other new and renewable energy sources
to gain more impact in real production and service terms.

CHP has considerable potential for contributing to the redevelopment of urban areas and could form
part of an integrated approach to tackling urban problems as well as the reduction of CO2 and other
emissions (ETDE, 2002). For smaller communities the establishment of such green energy initiatives
can form a useful part of the important process of cultural change, both at the decision-making and
household level, encouraging the development of a community conscience that is geared more
towards sustainability (Jones, 2002).

However, installing a CHP/district heating scheme from scratch in the heart of an existing city or
town is an expensive and complex process demanding very close co-ordination between the
developer, the local authorities and the energy utilities (Webb & Gossop, 1995). Long-term contracts
have to be negotiated and together with inevitable difficulties regarding the co-ordination described
above represent some of the main obstacles that have prevented CHP from taking on a more
prominent position in the provision of pro-environmental energy for the UK. This has clear negative
knock-on effects for the potential up-take of fuel cell CHP. Other key barriers involve financial
considerations and the regulatory regime. Both of these have contributed to the evolution of an energy
policy framework that reduces the extent to which renewable energy production – including provision
for fuel cell supply – is able to emerge viably on an appreciable scale (Flavin & Lenssen, 1995).

System capital costs targets are typically £100/kWe for residential CHP, £500/kWe for distributed
power and £800/kWe for commercial-scale CHP. System life time targets ranges are 100,000 hours
for large stationary power applications (DTI, 2001).

6.1 Fuel cell combined heat and power (CHP)

The combination of CHP with the potential efficiencies of energy produced via fuel cells provides an
engaging picture for sustainable energy supply, with both societal and environmental benefits
(Colella, 2002, Doelmann.1992). However the attractiveness of fuel cell CHP depends firstly on the

16
efficiency and reliability of CHP fuel cells in general and secondly on the competitiveness of fuel
cells in the markets considered versus, for example, gas engine and gas turbine based CHP.

Currently fuel cell CHP is not financially competitive compared with conventional systems. However
this could change if, for example, the lifetime of fuel cell stacks increased and the capital costs
reduced (Lokurlu et al, 2003). Lower local emissions and reliable and quiet operating performance
could also be an advantage.

One of the main benefits of fuel cells is their high levels of availability (>98%), reliability and low
maintenance. The efficiency of fuel cell CHP is also high with claims of 80 - 90%. However there
are several factors that effect overall levels of efficiency, including the type and size of the
applications. Applications for domestic and small-scale commercial properties have two specific
problems relating the heat to power ratio and meeting the variable demands. On average households
require more heat than electricity (80% of the electrical and gas usage in UK households) while fuel
cells produce more electricity than heat. The fluctuations in the daily and seasonal load demands
provide additional demands on the overall efficiency of fuel cell systems. Matching the daily demand
is a "formidable task" as the heat-to-power ratio can vary "rapidly and sporadically over a large range"
(Colella, 2002b).

To meet the heat demand it is necessary to either use conventional plant or to oversize the fuel cell
and to import or export the balance of power required, or alternatively to transform the surplus
electricity to heat (Graham et al, 2002). However both methods have consequences for the efficiency
and economics of the system. Greater savings of CO2 emissions can be achieved by using larger fuel
cells (Tillmans & de Groot, 2002) but this has to be balanced with any additional capital cost and the
value of excess electricity sold to the grid.

The future is likely to include developing engineering solutions to achieving a variable heat-to-power
ratio (Colella, 2002b). Also the recently developed hybrid systems, called microCHP, that combine
fuel cells and gas turbines, (or possibly Stirling engines) may overcome these problems. However the
high capital cost of these systems is likely to result in them being marketed and leased by Energy
Service Companies (ESCos) (Pehnt & Ramesohl, 2003). The leasing of domestic energy units is
unusual in the UK but occurs more frequently in other countries particularly Canada (Graham et al,
2002).

7. Environmental Impacts

It is important when determining the environmental costs and benefits of fuel cells to take into
account the complete lifecycle including hydrogen production and end use efficiency, and not just the
fuel cell technology. In their present-day configurations fuel cells are likely to be fuelled by natural
gas for most applications, however long term applications are likely to include renewables for more
sustainable energy production. Distinguishing the effects due to a strategic shift in primary fuels from
those linked to the use of the particular technology is therefore essential for a complete analysis of
fuel cells (Hart & Hormandinger, 1997).

When exploring the environmental impacts of fuel cells compared with conventional technologies one
of the key factors is the relative efficiencies of the technologies and the efficiency of the application.

7.1 Efficiency
The efficiency of fuel cells varies with the type and size of the system and its application. For
example Brauen et al (2003) consider the electrical efficiency will increase with the size of the plant
with 40% for 1-100kW, 50% for 100kW- 1MW, and 60% for 1 - 10 MW. However Bauen & Hart
(2000) assume the system efficiency for large commercial (200kWe SOFC) and industrial CHP (few
MW) to be the same (85%) for fuel cell and base case applications, thus providing similar levels of

17
energy recovery and CO2 emissions. For distributive power generation (1-10MWe) they compare two
SOFC systems (single and combined cycle) with grid electricity generated by a combined cycle gas
turbine (CCGT) using natural gas. The SOFC systems are assumed to have efficiencies of 55% and
70%. The efficiency of the CCGT plant is not given but the energy requirement is 21% and 38%
lower for the SOFC systems leading to CO2 emissions of 81% and 64% compared with the CCGT
system.

Although these efficiencies seem high they need to be compared with conventional systems that are
also based on natural gas. Combined cycle plants already have efficiencies of 58-60% with 65%
being predicted. Combined cycle CHP plants can have thermal efficiencies of 50% resulting in total
efficiencies of nearly 90%, while gas engines can reach total efficiencies of above 90% (Pehnt, 2003).

As discussed earlier the heat power ratio of the application demand will also have a considerable
impact on the overall efficiency of the fuel cell system. This was demonstrated by Tillmans & de
Groot (2002) in their comparison of a conventional system, that supplies heat and electricity to a
residential district using natural gas heating and the electricity grid, with two CHP fuel cell systems
(an internal reforming SOFC and a PEM fuel cell that uses hydrogen that had been centrally reformed
from natural gas) and a heat pump system. The authors found the production of hydrogen using a
steam reformer to be only 75% efficient (LHV) putting the hydrogen system at a clear disadvantage. It
is generally considered that the high theoretical efficiency of the PEM fuel cell (55-60%) will
compensate but this is not necessarily the case as the heat to power ratio achieved by the fuel cell is
not equal to that required by the housing district.

7.2 Environmental emissions

As discussed above fuel cell emissions vary according to their primary energy source. With most
current systems fuelled by natural gas the majority of the research is based on this application.
However the potential environmental benefits of using fuel cells in stationary combined heat and
power (CHP) plants have not been widely researched. Nevertheless there are some generally accepted
environmental benefits that do appear in the literature including low levels of emissions of pollutants
such as SOX, NOX, and particulates. A lifecycle assessment (Pehnt, 2003) found acidification,
eutrophication, summer smog and carcinogenic emissions from fuel cell systems were all lower than
comparable conventional systems.

Some research also considers that the deployment of fuel cells can help the UK (post 2010) to meet its
greenhouse gas commitments (DTI, 2001), but other research indicates that CO2 emissions are of a
similar order to gas turbines (Dones & Heck, 2000). The varying levels of CO2 emissions reported
are mainly due to the range of efficiencies assumed for different fuel cell and conventional
technologies and their applications. One of the problems is that only a few types of fuel cell are in
commercial production and so much of data are only available from the manufacturers. It has been
claimed that the only accurate emission data available is for the PAFC (Pehnt, 2003), presumably
because it is the only fuel cell in commercial production.

Environmental benefits also vary according to the conventional technologies being used in the
comparison. For example fuel cell CHP applications (fuelled by natural gas) were found to have
similar levels of CO2 emissions where the technology used for comparison was grid electricity (and
gas heaters) rather than CCGT (Hart & Hormandinger, 1998). Pehnt (2003) found the global
warming impact to be slightly higher for a PEFC CHP 200kW plant (natural gas) when compared
with a similar sized CHP gas engine, but slightly lower for a CHP SOFC (3 MW plant) compared
with a CHP gas turbine.

In addition to fuel cells of various types being compared with conventional technologies comparisons
have also been made between the primary energy source such as natural gas and renewable energy. In
a comparison between hydrogen produced by the central steam methane reforming plant (SMR) and
by wind turbines Spath & Mann (2001) find the resource requirement is higher for the

18
wind/electrolysis system, while the air emissions and fossil energy consumption were higher for the
SMR system.

Another consideration is in what part of the process the emissions occur. Where the production of
hydrogen (from the reformation of natural gas) is considered separately (Spath & Mann, 2001)
greenhouse gas emissions mainly result from hydrogen plant operation, whilst other gaseous
emissions result from natural gas production and transport. However if the hydrogen is produced via
electrolysis using wind turbines to provide the power, the environmental impacts almost entirely
occur during the manufacturing stage of the wind turbines (Spath & Mann, 2001).

One of the best techniques for comparing the resource requirements and environmental emissions
from alternative technologies is lifecycle assessment. Many comprehensive studies have been
undertaken on fuel cell applications for the automotive sector (eg Contadini & Moore, 2003;
Karlstrom, M., 2002) but relatively few for stationary CHP fuel cell applications. Also the
assumptions used in these studies are sometimes rather general whilst others are not relevant to the
UK situation. In addition most do not include the manufacture of the fuel cell system.

8. Non-technical barriers

Although there remain many technical problems to be overcome, most of the barriers to the further
development of the fuel cell market are considered to be non-technical (Pehnt, 2003). The UK has a
regulatory regime that currently promotes the grid system and large-scale generators but restricts the
extent to which renewable energy suppliers in general are able to produce and provide electricity
(Jones, 2002). As such, the basic economic principle of supply and demand, coupled with the
complications of producing sufficient gaseous hydrogen in acceptable and economically efficient
ways, mean that fuel cell technology has yet to enter the arena of economic viability alongside
already-established (and viable) technologies (Stambouli & Traversa, 2001).

8.1 Distributed generation

By 2010 the UK government aim to generate 10% of electricity supplies from renewable sources
(DTI, 2003b) and to develop 10,000MWe of installed CHP capacity. In order to meet these targets it
will be necessary to add 8,000MWe of renewable capacity and 5,500MWe of CHP capacity to the
network (Ofgem, 2003). This could mean that where a Distribution Network Operator (DNO) might
now have 300 generators in total on its network it could by 2010 have 300 at every substation. This
would need a fundamental change to our current system for power distribution.
Distributed generation (also known as embedded or dispersed generation) is electricity generation
connected to a distribution network rather than the high voltage transmission network (Ofgem, 2003).
Distributed generators are mostly, though not exclusively those generating power from renewable
energy sources (including small hydro, wind and solar power) or from combined heat and power
(CHP) plants.
Proponents of the distributed generation industry argue that a system of interconnected private wire
networks would be capable of providing all of the UK’s energy needs (Jones, 2002). The liberalisation
of the power industry should provide the fuel cell industry and other small energy technologies with
increased opportunities (MacKerron, 2000). However, the nature of distribution networks today
means that many smaller generators find it difficult and expensive to connect to networks that were
not designed to accommodate them.
Historically, distribution networks have been designed to take electricity from the high voltage
transmission system and to deliver it to customers. The management of this one-way flow of energy
has been termed 'passive' (Ofgem, 2003). In order for the networks to accommodate increased levels
of distributed generation, energy flow in both directions will have to be managed, both to the
customer and from the distributed generator, i.e. 'active' management. This move to 'active'
management presents a significant challenge. One problem is the large number of generation units of
19
1-5kW that would need to be operated in parallel to the distribution grid. The current system of low
voltage grids are not ideally suited to the broad integration of distributed generation and beyond a
certain threshold will suffer critical impacts on grid operation unless modifications for grid adaptation
take place (EPRI, 2000). If we are to see significant moves towards distributed generation in the near
future it will therefore be essential that these critical impacts are fully investigated in order to arrive at
technical and institutional solutions (Pehnt and Ramesohl, 2003).
The Government’s New Electricity Trading Arrangements (NETA) (introduced March 2001) and the
regulatory regime are both problematic to the proper market development of CHP, fuel cells and the
move towards distributed generation (Bathurst & Strbac, 2001; Jones, 2002). One of the design
characteristics of NETA is that generators have to predict in advance how much energy they will
contract to produce and to penalise generators that do not meet their advance contract commitments. If
a generator has a shortfall in contracted generation, it must pay for that shortfall at the System Buy
Price. Since the implementation of NETA, these prices have proved to be volatile and considerably
higher than expected. When a generator produces more energy than it has contracted, it is paid for this
excess at the System Sell Price. These prices have been very low and often negative. As intermittent
renewable sources are intrinsically difficult to forecast, the effect of these penalty costs has at times
made renewable energy difficult to justify as a viable generation system. Indeed some research shows
that at certain periods these imbalance penalties have forced CHP and renewable energy owners to
switch their systems off (Bathurst & Strbac, 2001).
Technical and tariff issues are addressed by the DTI working group on network issues for embedded
generation (DTI, 2001a). The report calls for a fundamental change in regulation to provide new
opportunities for small generators and network operators alike to encourage the growth of local
generation. In particular they identify the need for transparent and fair access for smaller generators to
the electricity network, and rewards for the competitive benefits that local generation brings to
consumers and the environment.

In July 2003 the first step forward to meeting the challenge of ‘rewiring’ Britain was taken by energy
regulator Ofgem as it began work to set new price controls for the local electricity networks from
2005 (Ofgem 2003a). Price controls are the main way in which Ofgem protects consumers on price,
quality of service and security of supply provided by the companies that run Britain’s fourteen local
electricity distribution networks. This 4th price control review for the electricity distribution
companies raises important new challenges for the regulator and the industry including providing
incentives for the distribution companies to connect to distributed generators, in a way that is efficient
and at least cost to consumers and to the environment (Ofgem 2003a).

Another very important factor to consider when contemplating the future for distributed generation is
the investment costs involved in the upgrading of grid infrastructures (Jones, 2002). Grid operators
would probably need assurances in the form of institutional and regulatory arrangements ensuring a
fair and discrimination-free allocation of these costs before agreeing to advance the upgrades needed
to enable distributed generation to become a reality. It has been suggested that grid access and grid
management will become a major problem for the wide scale diffusion of stationary fuel cells (Pehnt
and Ramesohl, 2003).

8.2 Economics of fuel cells

In order for fuel cells to succeed as a commercially viable energy source, a functioning and fully
developed market is clearly a necessity. The issue of cost is generally held to be the main barrier to
market entry with estimates of stationary fuel cells currently being 2.5 to 20 times too expensive
(Pehnt & Ramesohl, 2003). When comparing the costs and benefits of fuel cells with conventional
technologies many factors need to be taken into consideration including the: cost of grid electricity,
cost of natural gas, operational mode, lifetime of the system, load factor, heat power ratio, demand
patterns (Pehnt, 2003).

Fuel cell CHP systems are not yet competitive with conventional systems (Lokurlu, 2003) with
stationary fuel cells being 2.5 to 20 times more expensive. Small, domestic systems are 10,000 to
20
50,000 EUR/kWe, and larger systems between 5,500 and 18,000 EUR/kWh (Pehnt, 2003). However
the available data do not give a clear indication as to the current costs from a capital or operating
perspective (Brandon & Hart, 1999). The high cost is mainly due to the lack of commercial scale
production, most fuel cell production still being at the demonstration stage. What is clear is that the
type and size of fuel cell and associated market area application will impact on the eventual cost.

In a comparison the capital costs of CCGT are thought to be $400 – 600/kW (336-504 EUR/kW)
compared to fuel cell capital costs estimated to be between $500-10,000/kW (4198-8396 EUR/kW)
(Environmental and Energy Study Institute, 2000). It is believed that mass production of fuel cells
will reduce these costs but this would obviously require a growing and sustained market demand (see
section 8.3). For low temperature applications it is predicted that this could result in costs as low as
$300/kW (252 EUR/kW) for stationary power (MacKerron, 2000). For high temperature fuel cell
systems substantial investment is still required. However, it is estimated that there is potential for
these to be manufactured for sale at around $600/kW (504 EUR/kW), which does not greatly exceed
the current price for a gas engine or turbine (Pennycook, 2001). Gas engine based CHP units have a
current capital cost of $600-900/kWe, diesel generators 350-600kWe, while microturbines are
estimated to be 500-800kWe (Alstrom, 2000).

Operating costs are difficult to estimate until a number of monitored systems are in operation (Dutton,
personal communication). According to several studies (Hart & Hormandinger, 1997 & 1998a; Little,
1994) operating costs for a fuel cell CHP unit will be slightly higher than the standard boiler but with
overall costs lower than buying the two services separately. With a standard natural gas price of
2p/kWh electricity could be generated at 4p/kWh undercutting domestic charges in the UK by about
three pence. Industrial examples also reflect these competitive generation projections (Brandon &
Hart, 1999). Table 2 gives an indication of current fuel cell technology costs and those predicted for
mature systems (Brandon & Hart, 1999).

Table 2: Current and projected fuel cell costs for stationary systems

Costs AFC SPFC PAFC MCFC SOFC PEFC

(EUR/kW)
Stationary
Current 1741 478 2610 4352 8703
cost
(1999)1
Current 5000 8000 20,000 10,000
costs
(2003)2
Predicted 44-87 26 870 522 522
cost1
1
Brandon & Hart (1999) converted from $ (1 EUR = $1.149)
2
Lokurlu et al (2003)

The economics of fuel cell systems are different in different market niches (Brandon & Hart, 1999).
The fuel cell has the potential to usurp many traditional technologies in a variety of markets, from
very small batteries and sensors to multi-megawatt power plants. Each system has very different
characteristics and will accept very different prices. For example, a laptop battery substitute that could
run for 20 hours instead of two could command a high price, especially if it could be ‘refuelled’ in
seconds from a canister rather than recharged over several hours. At the other end of the scale the
potential for building modular power plants in which maintenance can be carried out on each module
without shutting down the system is worth a significant amount of money to the owner.

21
A potentially economically feasible residential application of small-scale fuel cells is given by
Sammes & Boersma (2000). They focus on the 1 to 10 kW range and explore the features of the New
Zealand situation, with its specific energy resources and demands. It is shown that various
technologies could be applied, with proton exchange membrane, solid oxide, phosphoric acid and
alkaline fuel cells competing on almost equal terms, with cost targets of 500 to 700 EUR/kW.
However this application is only likely to be financially comparable with conventional systems in
rural New Zealand where grid connection is expensive.

8.3 Markets
Fuel cells are being developed for several different applications including large and small-scale
electricity generation, combined heat and power (CHP), transport of all types and as a battery
replacement for portable power applications such as power tools, laptop computers and mobile
phones. The principal potential markets for each technology type are shown in table 1 (page 11).

In terms of technology applicability lower temperature fuel cells are generally better suited to mobile
and portable applications, whereas the high temperature fuel cells are more suited to stationary power
and CHP (Stambouli & Traversa, 2001). The solid polymer fuel cell is a strong candidate for transport
and portable power applications, due to its high power density and rapid start-up and load following
characteristics; it is also a candidate for distributed power generation. The alkaline fuel cell is being
developed as a range extender for battery powered vehicles. The direct methanol fuel cell is a long-
term option for transport, as it would remove the need for a reformer on-board the vehicle; it is also of
interest in niche markets for portable power applications. The phosphoric acid fuel cell has been
demonstrated in both CHP and in buses (Nyomen, 1994; Colella, 2002).

The high temperature solid oxide and molten carbonate fuel cells, possibly in conjunction with small
gas-turbines, are best suited to stationary power and CHP applications, where rapid start-up and load-
following are less important and where the waste heat can be effectively utilised. For large-scale
power generation, high temperature fuel cells would most likely be used in combination with
gas/steam turbines (Pennycook, 2001). Markets for high-temperature fuel cell systems are still in their
infancy compared with proton exchange membrane and phosphoric acid fuel cell markets. The high
efficiency of high temperature systems combined with high-quality waste heat should make them
attractive if the major barriers of technical progress and cost are overcome (Hart, 2000).

Currently fuel cells are commercially competitive only in narrow 'premium power' niches where
reliability and quality of electricity are of primary concern, or where no other technology is
appropriate (Hart & Hormandinger, 1997). For organisations that require reliable back up power,
Uninterruptible Power Supply systems based on a fuel cell are one such niche market. It has been
estimated that US organisations needing highly reliable, digital quality power will grow from 0.6%s
of current consumption to nearly 10% by 2020 (Pehnt & Ramesohl, 2003). Amidst the more
mainstream markets, fuel cells are beginning to make minor inroads into the distributed power/CHP
sector, again largely where no other technology is appropriate (Colella, 2002).

Hart (2000) has conceptualised the development of the fuel cell market in terms of the “confluence of
drivers” that are most likely to propel their acceptability and centrality as a viable source of alternative
energy production (Fig. 2).

22
Fig.2: Fuel cell market potential: key driving forces (D. Hart personal communication, 2003)

De-regulation changing
requirements
Greenhouse gas
reduction
(high efficiency)
Technology now Fuel Cell
mature enough market
for manufacture potential

Urban pollution worries:

zero emission vehicles

De-carbonisation of fuels Integration of intermittent

leads to hydrogen – and renewables
fuel cells

While fuel cells have already been supplied into some specific sectors (e.g. space), and
demonstrations are either under way or planned in almost all market sectors, these do not in any way
constitute significant market penetration. Initial market entry is widely expected to be in applications
that can stand a higher cost of energy, such as portable applications and battery replacement.
However, some academics consider there to be a strong and growing market pull for fuel cells (Hart,
2000).

Distributed power generation and CHP have a weaker market pull than in the automotive sectors but
the cost and performance requirements are less demanding. Solider polymer fuel cell systems could
find early commercial applications in these sectors and sales to the distributed power generation
sector have already begun. The high temperature fuel cells are not expected to win significant market
penetration for some time. Overall, the stationary heat and power markets are forecast to grow to
around US$3 billion per year by 2020 (IFC, 2000).

Whatever the market, fuel cells must compete with conventional technologies where performance and
value for money expectations are extremely high, and where lack of experience and familiarity is a
significant barrier (DTI, 2001). Ideally they must be capable of matching the cost of energy (a
combination of capital and operating costs and lifetime) of existing conventional technologies.
However if in the future the external environmental costs and benefits of energy systems are included
in the equation then, particularly for local pollution fuel cells will be considered more favourably,
especially for systems that include the use of renewable energy for hydrogen production (Dutton,
personal communication).

However, currently the perceived advantages of fuel cell technologies (e.g. low emissions) are not
strong selling points compared with more conventional generators. The ultimate criterion is cost, and
therefore fuel cell cost reduction is the key to market penetration (Evers, 2003; Rastler, 2000). This
barrier to market entry is substantial with current estimates of stationary fuel cells being 2.5 to 20
times too expensive (Pehnt & Ramesohl, 2003).

Another factor that influences investment and subsequent development is the uncertainty surrounding
the size and time scale of market entry. More positively, however, investment in complimentary
technologies that already have a commercial foothold - such as CHP - indicates that niche market
opportunities for fuel cells may well be realisable (Brandon & Hart, 1999). Also the development of
23
the market for specific fuel cell applications will not happen in isolation. Once one application has
reached commercialisation the market is likely to have more confidence for other applications to
develop more rapidly.

There are also a number of technical determinants that will play a part in the timing of fuel cell market
entry. These include enhancing the reliability of balance of plant, reaching performance targets,
increasing longevity and adapting micro turbine and gas reformer balance of plant components to fuel
cell systems.

Easy grid connection will be very important to the market success of fuel cells, which many believe
would be well placed to provide localised power in a future embedded distribution arrangement
(Jones, 2002; Pehnt & Ramesohl, 2003). The UK’s current distribution grids are not designed for the
large scale integration of fuel cells. From a technical standpoint however these problems can be
overcome provided institutional measures are established to allow for an equitable allocation of costs
for the upgrading, investment and management of grids (Jones, 2002).

Some areas of the literature suggest that success for fuel cells in the domestic sector will depend on a
‘supply push’ requiring pro-active manufacturers and others involved (e.g. Pehnt & Ramesohl, 2003).
It has been argued that the key to the market success of fuel cell heating systems is seen in “one stop
solutions”, providing a complete energy service package to the customer. This is likely to be provided
by utilities or Energy Services Companies (ESCOs) that will provide heat, power and hot water for a
fixed term possibly at a lower cost than customers are currently paying for their energy (Graham et al,
2002). Alongside this emerging market for new energy services (micro-contracting) fuel cells also
present new business opportunities. These include, for example, opportunities for utilities that aim to
provide a wide range of supply services (multi-utility approach).

Whichever fuel cell applications are the first to become properly established, during the initial stages
of market introduction there will need to be additional incentives to close the cost gap compared with
competing technologies. Energy policy can provide direct incentives for those prepared to purchase
and adopt the new technology. These incentives might include:

• investment subsidies, grants, tax deduction, etc;

• stabilised market prospects for distributed generation by enhancing market entries and
competition together with a removal of regulatory barriers; and
• increased allowable costs for the competing (fossil) options by creating general incentives for
an efficient use of energy. This could involve the use of fiscal instruments including, for
example energy and/or GHG taxes, emissions trading, air quality standards and noise pollution
regulation (Pehnt & Ramesohl, 2003).

9. Fuel cell CHP case study

The potential for fuel cell CHP plants to provide energy in the UK is currently being demonstrated in
the London Borough of Woking. In December 2001 the Council became the first local authority to
install a full scale fuel cell CHP system. The scheme is part funded by the Department of Trade and
Industry, AEA Technology Environment, Advantica Technologies Ltd, the Energy Saving Trust and
the US Department of Defence through the US Climate Change Program.

The 200kWe CHP fuel cell is part of a larger project that also includes an 800kWe reciprocating
engine, an existing 150KWe CHP, solar shading photovoltaic system and heat fired absorption
cooling and thermal store, making a total CHP capacity of 1.15MWe. The individual components are
connected by heat and chilled water mains and local distributive electricity. The project produces
sufficient heat and power to supply the swimming pool and leisure centre at Woking Park, plus is a
net exporter of electricity (Jones, 2002). The fuel cell CHP system supplies electricity, low grade heat
to the swimming pool water, high grade heat to the heating systems, chilled water to cooling and air

24
conditioning systems via the heat fired absorption chillers, and pure water via a water recovery system
(Jones, 2003). Woking Park has the potential to become self sufficient in electricity and a net exporter
of electricity all year round.

The project will include a public display area to provide technology information and a viewing area
for education purposes and to demonstrate how renewable energy can be integrated with other
sustainable technologies.

This project forms part of a broader energy efficiency and environmental policy implemented by
Woking Borough Council over the last 11 years. In 1999 Woking incorporated the UK’s first Energy
and Environmental Services Company (EESCO), Thameswey Ltd, that is wholly owned by Woking,
and a public/private joint venture Energy Services Company (ESCO) Thameswey Energy Ltd.
Thameswey Ltd facilitates the delivery of the Councils environmental strategies and targets including
green energy schemes, fuel poverty, water, waste and green transport (Jones, 2002).

In addition to the Woking Park project the council and now Thameswey have developed the Woking
Town Centre project, seven residential CHP schemes, a condensing boiler scheme, an energy
conservation scheme and an integrated CHP and photovoltaics system.

The Thameswey Energy Woking Town Centre CHP project includes a new 1.35MWe CHP, an
existing 110kWe CHP, 163, 000 litres of thermal storage,1.4 MW of heat fired absorption cooling, 2.5
MW of standby and top up boilers, 11kV/400V distributive electricity network, and a heat and chilled
water distributed system. This interconnected system provides heat, electricity and chilled water to the
Civic Offices, two sizeable hotels, a conference centre, leisure complex, nightclub and multi-storey
car park.

Surplus electricity from this scheme and the Woking Park scheme is exported to other Council sites
including sheltered housing and local businesses. This provides the potential to pass on affordable
energy benefits to more residents in addition to those residents already served by residential CHP
distributive networks (Jones, 2002). Residents connected to these schemes pay, on average, 6-7% of
the state benefit for their energy (heating, hot water and electricity) compared with the Governments
affordable warmth target of 10% of income for heating only. Also as the system is self sufficient it
means that in the event of a prolonged external power cut energy services can still be provided. An
agreement for exempt supplier operation gives the council the benefit of exemption from the Climate
Change Levy.

The Thameswey Condensing Boiler Scheme is a public/private partnership established with British
Gas as part of an energy conservation package to householders. Under the scheme householders are
offered a condensing boiler for the same or a lower price than a conventional boiler with a further £50
discount offer.

In nine years (1990/91 – 2000/01) Woking Council achieved an energy saving target of 40.9% (142
GWh) with a carbon dioxide saving of 66.8% (78,605 tonnes) Jones, 2002).

10. Discussion

Although stationary fuel cells, as part of a future hydrogen economy, have been identified as a step
towards a sustainable energy future there appears to be many technical and non technical barriers to
their introduction in the UK. The incorporation of fuel cells into the UK energy supply will require
considerable investment and resources as well as a wide range of legislative and technological
developments.

25
The overall environmental benefits of fuel cells for stationary applications, in particular CHP, depend
on a complex interaction of several variables including types of fuel supply, efficiency and end-user
requirements. If a sustainable energy future primarily relates to a low carbon future then there is a
question mark over the deployment of stationary fuel cells based on natural gas. Although study
results vary there does not seem to be a clear benefit, from a climate change perspective, to displace
the current best conventional technology for generating electricity from natural gas.

However for other pollutants such as such as acid gases and particulates, the benefits are clear as are
the reported gains of low maintenance, reliability and quiet operation. This is particularly important
for transport applications small scale domestic applications where the reduction of local pollution is
more critical. It is also likely that technological improvements will improve the overall efficiency.
The introduction of hybrid systems, and fuel cells that can vary the ratio of heat to power they
produce will go a long way to overcoming some of the technical barriers particularly for domestic
CHP applications. However while these gradual improvements are being developed the conventional
technology is also being improved.

When hydrogen for fuel cells is produced from renewable energy using electrolysis or based on
biomass there are clear benefits as the carbon emissions are far lower. There is a question, however,
as to whether it is preferable to use renewable energy directly rather than use it to produce hydrogen.
One of the advantages of a hydrogen energy infrastructure is its capacity to store hydrogen thus
overcoming some of the problems of intermittent energy flow from renewable sources. In the situation
where renewables form a large proportion of the energy used, for example in a small distributed
network, the production of hydrogen from excess renewable energy will be environmentally
beneficial. However currently, and in the near future, this is an unlikely scenario. If the infrastructure
is available excess electricity can be sold to the grid, rather than causing the system losses that will
occur from using electricity to produce hydrogen which is then used to make electricity. These
inefficiencies can be mitigated to some extent by the use of CHP but a balance has to be made with
the potential inefficiencies caused by the fuel cell heat: power ratio and the issues surrounding how
the variable load demands are met, particularly for small scale applications.

Climate change and the future security of supply have been identified as important drivers to changing
the UK energy supply (DTI, 2003b). To some extent this leads to a need for increased renewables but
it does not lead necessarily to the hydrogen economy or fuel cells in particular. In the same way the
environmental benefits of CHP and distributive networks are well established but do not point to the
necessary development of fuel cells. However for some companies energy security, or even self
sufficiency, within a country or region is important, with some companies being prepared to pay extra
for a secure supply.

One technique that can be used to explore the complexity of the environmental implications of energy
supply systems is lifecycle assessment (LCA). It is used to determine the environmental costs and
benefits of a product or service, such as energy production, by quantifying the resource inputs and
environmental emissions throughout its lifecycle. An LCA can be used to compare alternative
methods of meeting a specific demand for heat and energy. Only a relatively few lifecycle
assessments have been undertaken on stationary CHP fuel cells, therefore some of the potential
situations, where stationary fuel cells could replace conventional energy generation, particularly in the
UK, have yet to be explored. Therefore arising from this review a stationary fuel cell lifecycle
assessment has been undertaken and will be the subject of a subsequent paper.

From a commercial point of view fuel cells do not currently seem able to compete with conventional
power plants in providing electricity to the bulk power market. However costs are reducing and it is
considered that some applications will become competitive between 2015 and 2020 (High Level
Group, 2003). Meanwhile it may be possible for smaller, high-value market segments, “niche
markets,” to be identified where fuel cells may be economical, with the anticipation that, with time,
manufacturing economies will reduce the fuel cell cost to where it can compete on a broader scale.
Stationary applications will not develop in isolation. Major reductions in the cost of transport or
26
micro applications are likely to have significant repercussions on the cost of stationary applications
(personal communication, Dutton, 2004).

A gradual shift from the current centralised power generation distributed across a national grid to
more distributive networks may provide fuel cells with a niche market, particularly in the long term
when a greater proportion of the energy supply originates from renewable sources. The integration of
the local community into the concept of sustainable energy production is important for the promotion
and continued integration of fuel cell CHP and more traditional forms of renewable energy. The
Woking Park example has tested this argument to some extent showing that with a mixed
technologies approach there may well be a niche for fuel cell market penetration as part of an
embedded system of interconnected distributive electricity generation. However, the fact that Woking
Park is the only commercial application of fuel cells in the UK, and that it was subsidised, would
seem to indicate that this is only likely to occur in the medium to long term.

The widespread establishment of fuel cell systems would require an effective framework of
legislation, standards and codes of practice governing commercial manufacture, planning, and safe
operation and maintenance. This report has highlighted some of the obstacles to be overcome and
major challenge areas that need addressing if this theoretical framework is to become a reality in the
UK.

To further identify the opportunities and barriers to fuel cell development a series of semi-structured
interviews have been carried out with stakeholders in this technology. This will be the subject of a
subsequent working paper in this series.

Acknowledgments

This review of fuel cell literature was undertaken as part of the Tyndall Project “Fuel Cells:
Providing Heat and Power in the Urban Environment”, funded by the Tyndall Centre for Climate
Change. Special thanks go to Geoff Dutton who provided very helpful and detailed comments on an
earlier draft of this paper.

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IFC (2000). Data from The International Fuel Cells, A United Technology Company. Fuel cells
Review.
Jansen, D. & Mozaffarian, M., (1997). Advanced fuel cell energy conversion systems, Energy
Conversion and Management 38 (10-13) pp. 957-967
Jollie, 2003. ECN to sell its molton carbonate fuel cell patents. Fuel Cell Today, August 2003.
http://www.fuelcelltoday.com
Jones, A. (2002). Woking: Local Sustainable Community Energy. A focus report by Woking Borough
Council, UK.
Jones, A. (2003) Woking: Local Sustainable Community Energy: Progress Report. Woking Borough
Council, Woking, UK.
Karlstrom, M. (2002) Environmental technology assessment of introducing fuel cell city buses,
Chalmers University of Technology, ESA report 2002:10, ISSN 1404-8167.
Lakeman, J.B. and Browning, D.J. 2001. Global Status of Hydrogen Research. Defence, Evaluation
and Research Agency for the DTI Advanced Fuel Cells Programme. Published as DTI report
ETSU F/03/00239/REP.
Larminie, J. & Dicks, A. (2000) Fuel cell systems explained. Wiley ISBN 0 471 49026 1
Lokurlu, A., Grube, T., Hohlein, B. & Stolten, D. (2003) Fuel cells for mobile and stationary
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MacKerron, G. (2000) Financial considerations of exploiting fuel cell technology. Journal of Power
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APPENDIX I: SOURCES OF USEFUL INFORMATION

i) National Research centres and demonstration programmes:

DTI New & Renewable Energy Programme

http://www.dti.gov.uk/renewable/index.html
http://www.dti.gov.uk/NewReview/
http://www.dti.gov.uk/renewable/site/publications.html
http://www.dti.gov.uk/renewable/site/pdf.html#fuel

Fuel Cells 2000. On-line Fuel Cell Information Center. http://www.fuelcells.org

National Fuel Cell Research Center http://www.nfcrc.uci.edu

US Fuel Cell Council http://www.usfcc.com

30
National Energy Technology Laboratory http://www.netl.gov

US Department of Defense. Fuel Cell Demonstration Programme

http://www.dodfuelcell.com
http://www.dodfuelcell.com/index.html
http://www.dodfuelcell.com/helpfulsites.html

US Department of Energy Stationary Power Fuel Cell Program

http://www.fe.doe.gov/coal_power/fuelcells/index.shtml

Electric Power Research Institute (EPRI) http://www.epri.com

ii) Networks:

UK Fuel Cell Network http://www.fuelcellnetwork.bham.ac.uk

European Fuel Cell Forum http://www.efcf.com/

Hydrogen Energy Network http://www.h2net.org.uk/

Hydrogen and Fuel Cell letter http://www.hfcletter.com

Fuel Cell World http://www.fuelcellworld.org/

Fuel Cell Online http://www.fuelcellonline.com/

HyWeb: Hydrogen and Fuel Cell Information System http://www.hydrogen.org/index-e.html

Hydrogen and Fuel Cell Investor http://www.h2fc.com/

Advanced Fuel Technology http://216.25.46.141/advfuel/default.htm

CADDET Centre for Analysis and Dissemination of Demonstrated Energy Technologies

http://www.caddet-re.org/

iii) Consultants:

EA Technology: Clean Power and Transport http://www.eatechnology.com/

Fuel Cell manufacturers

UTC Fuel Cells (formerly International Fuel Cells, manufacturer of ONSI PC25 PAFC)
http://www.internationalfuelcells.com

Johnson Matthey Fuel Cell Technology http://www.matthey.com/environment/fuelcell/index.html

Ballard http://www.ballard.com/

Siemens Westinghouse http://www.pg.siemens.de/en/fuelcells/

Avista Labs http://www.avistalabs.com/

FuelCell Energy http://www.ercc.com/

Plug Power http://www.plugpower.com/

31
GE Power Systems http://www.gepower.com/dhtml/distributed_power/en_us/index.jsp

Hpower (PEM fuel cells) http://www.hpower.com/

TXU http://www.txu-europe.com/

CHP
Digest of energy statistics http://www.dti.gov.uk/energy/inform/dukes/dukes2003/06main.pdf

CHP Club http://www.chpclub.com/

CHP Association http://www.chpa.co.uk/

SBGI The Society of British Gas Engineers http://www.sbgi.org.uk

BG Technology http://www.bgtech.co.uk/

Advantica http://www.advantica.co.uk/

ECOPower (small gas engine CHP) http://www.ecopower.ch/index_en.htm

ENER.G (CHP) http://www.cpsl.co.uk/grp_energ.htm

TRIGEN (electrical power, heat, refrigeration) http://www.trigen.com/

Sigma Elecktroteknisk AS (Stirling engine CHP) http://www.sigma-el.com/default.cfm

Victron Energie (heat and power on board boats) http://www.victronenergie.nl/

32
The trans-disciplinary Tyndall Centre for Climate Change Research undertakes integrated research into the
long-term consequences of climate change for society and into the development of sustainable responses
that governments, business-leaders and decision-makers can evaluate and implement. Achieving these
objectives brings together UK climate scientists, social scientists, engineers and economists in a unique
collaborative research effort.
Research at the Tyndall Centre is organised into four research themes that collectively contribute to all
aspects of the climate change issue: Integrating Frameworks; Decarbonising Modern Societies; Adapting to
Climate Change; and Sustaining the Coastal Zone. All thematic fields address a clear problem posed to
society by climate change, and will generate results to guide the strategic development of climate change
mitigation and adaptation policies at local, national and global scales.
The Tyndall Centre is named after the 19th century UK scientist John Tyndall, who was the first to prove the
Earth’s natural greenhouse effect and suggested that slight changes in atmospheric composition could bring
about climate variations. In addition, he was committed to improving the quality of science education and
knowledge.
The Tyndall Centre is a partnership of the following institutions:
University of East Anglia
UMIST
Southampton Oceanography Centre
University of Southampton
University of Cambridge
Centre for Ecology and Hydrology
SPRU – Science and Technology Policy Research (University of Sussex)
Institute for Transport Studies (University of Leeds)
Complex Systems Management Centre (Cranfield University)
Energy Research Unit (CLRC Rutherford Appleton Laboratory)
The Centre is core funded by the following organisations:
Natural Environmental Research Council (NERC)
Economic and Social Research Council (ESRC)
Engineering and Physical Sciences Research Council (EPSRC)
UK Government Department of Trade and Industry (DTI)

For more information, visit the Tyndall Centre Web site (www.tyndall.ac.uk) or contact:
External Communications Manager
Tyndall Centre for Climate Change Research
University of East Anglia, Norwich NR4 7TJ, UK
Phone: +44 (0) 1603 59 3906; Fax: +44 (0) 1603 59 3901
Email: tyndall@uea.ac.uk
Recent Working Papers

Tyndall Working Papers are available online at

http://www.tyndall.ac.uk/publications/working_papers/working_papers.shtml

Mitchell, T. and Hulme, M. (2000). A Country-by- Shackley, S. and Gough, C., (2002). The Use of
Country Analysis of Past and Future Warming Integrated Assessment: An Institutional
Rates, Tyndall Centre Working Paper 1. Analysis Perspective, Tyndall Centre Working
Paper 14.
Hulme, M. (2001). Integrated Assessment
Models, Tyndall Centre Working Paper 2. Köhler, J.H., (2002). Long run technical change
in an energy-environment-economy (E3)
Berkhout, F, Hertin, J. and Jordan, A. J. (2001).
model for an IA system: A model of
Socio-economic futures in climate change
Kondratiev waves, Tyndall Centre Working Paper
impact assessment: using scenarios as
15.
'learning machines', Tyndall Centre Working
Paper 3. Adger, W.N., Huq, S., Brown, K., Conway, D. and
Hulme, M. (2002). Adaptation to climate
Barker, T. and Ekins, P. (2001). How High are
change: Setting the Agenda for Development
the Costs of Kyoto for the US Economy?,
Policy and Research, Tyndall Centre Working
Tyndall Centre Working Paper 4.
Paper 16.
Barnett, J. (2001). The issue of 'Adverse Effects
Dutton, G., (2002). Hydrogen Energy
and the Impacts of Response Measures' in the
Technology, Tyndall Centre Working Paper 17.
UNFCCC, Tyndall Centre Working Paper 5.
Watson, J. (2002). The development of large
Goodess, C.M., Hulme, M. and Osborn, T. (2001).
technical systems: implications for hydrogen,
The identification and evaluation of suitable
Tyndall Centre Working Paper 18.
scenario development methods for the
estimation of future probabilities of extreme Pridmore, A. and Bristow, A., (2002). The role of
weather events, Tyndall Centre Working Paper 6. hydrogen in powering road transport, Tyndall
Centre Working Paper 19.
Barnett, J. (2001). Security and Climate
Change, Tyndall Centre Working Paper 7. Turnpenny, J. (2002). Reviewing organisational
use of scenarios: Case study - evaluating UK
Adger, W. N. (2001). Social Capital and Climate
energy policy options, Tyndall Centre Working
Change, Tyndall Centre Working Paper 8.
Paper 20.
Barnett, J. and Adger, W. N. (2001). Climate
Watson, W. J. (2002). Renewables and CHP
Dangers and Atoll Countries, Tyndall Centre
Deployment in the UK to 2020, Tyndall Centre
Working Paper 9.
Working Paper 21.
Gough, C., Taylor, I. and Shackley, S. (2001).
Watson, W.J., Hertin, J., Randall, T., Gough, C.
Burying Carbon under the Sea: An Initial
(2002). Renewable Energy and Combined Heat
Exploration of Public Opinions, Tyndall Centre
and Power Resources in the UK, Tyndall Centre
Working Paper 10.
Working Paper 22.
Barker, T. (2001). Representing the Integrated
Paavola, J. and Adger, W.N. (2002). Justice and
Assessment of Climate Change, Adaptation
adaptation to climate change, Tyndall Centre
and Mitigation, Tyndall Centre Working Paper 11.
Working Paper 23.
Dessai, S., (2001). The climate regime from
Xueguang Wu, Jenkins, N. and Strbac, G. (2002).
The Hague to Marrakech: Saving or sinking
Impact of Integrating Renewables and CHP
the Kyoto Protocol?, Tyndall Centre Working
into the UK Transmission Network, Tyndall
Paper 12.
Centre Working Paper 24
Dewick, P., Green K., Miozzo, M., (2002).
Xueguang Wu, Mutale, J., Jenkins, N. and Strbac,
Technological Change, Industry Structure and
G. (2003). An investigation of Network
the Environment, Tyndall Centre Working Paper
Splitting for Fault Level Reduction, Tyndall
13.
Centre Working Paper 25
Brooks, N. and Adger W.N. (2003). Country level
risk measures of climate-related natural
disasters and implications for adaptation to
climate change, Tyndall Centre Working Paper 26
Tompkins, E.L. and Adger, W.N. (2003). Building
resilience to climate change through adaptive
management of natural resources, Tyndall
Centre Working Paper 27
Dessai, S., Adger, W.N., Hulme, M., Köhler, J.H.,
Turnpenny, J. and Warren, R. (2003). Defining
and experiencing dangerous climate change,
Tyndall Centre Working Paper 28
Brown, K. and Corbera, E. (2003). A Multi-
Criteria Assessment Framework for Carbon-
Mitigation Projects: Putting “development” in
the centre of decision-making, Tyndall Centre
Working Paper 29
Hulme, M. (2003). Abrupt climate change: can
society cope?, Tyndall Centre Working Paper 30
Turnpenny, J., Haxeltine A. and O’Riordan, T.
(2003). A scoping study of UK user needs for
managing climate futures. Part 1 of the pilot-
phase interactive integrated assessment
process (Aurion Project), Tyndall Centre
Working Paper 31
Xueguang Wu, Jenkins, N. and Strbac, G. (2003).
Integrating Renewables and CHP into the UK
Electricity System: Investigation of the impact
of network faults on the stability of large
offshore wind farms, Tyndall Centre Working
Paper 32
Pridmore, A., Bristow, A.L., May, A. D. and Tight,
M.R. (2003). Climate Change, Impacts, Future
Scenarios and the Role of Transport, Tyndall
Centre Working Paper 33
Dessai, S., Hulme, M (2003). Does climate policy
need probabilities?, Tyndall Centre Working Paper
34
Tompkins, E. L. and Hurlston, L. (2003). Report to
the Cayman Islands’ Government. Adaptation
lessons learned from responding to tropical
cyclones by the Cayman Islands’ Government,
1988 – 2002, Tyndall Centre Working Paper 35
Kröger, K. Fergusson, M. and Skinner, I. (2003).
Critical Issues in Decarbonising Transport: The
Role of Technologies, Tyndall Centre Working
Paper 36
Ingham, A. and Ulph, A. (2003) Uncertainty,
Irreversibility, Precaution and the Social Cost
of Carbon, Tyndall Centre Working Paper 37
Brooks, N. (2003). Vulnerability, risk and
adaptation: a conceptual framework, Tyndall
Centre Working Paper 38
Tompkins, E.L. and Adger, W.N. (2003).
Defining response capacity to enhance climate
change policy, Tyndall Centre Working Paper 39
Klein, R.J.T., Lisa Schipper, E. and Dessai, S.
(2003), Integrating mitigation and adaptation
into climate and development policy: three
research questions, Tyndall Centre Working Paper
40
Watson, J. (2003), UK Electricity Scenarios for
2050, Tyndall Centre Working Paper 41
Kim, J. A. (2003), Sustainable Development and
the CDM: A South African Case Study, Tyndall
Centre Working Paper 42
Anderson, D. and Winne, S. (2003),
Innovation and Threshold Effects in
Technology Responses to Climate Change,
Tyndall Centre Working Paper 43
Shackley, S., McLachlan, C. and Gough, C. (2004)
The Public Perceptions of Carbon Capture and
Storage, Tyndall Centre Working Paper 44
Purdy, R. and Macrory, R. (2004) Geological
carbon sequestration: critical legal issues,
Tyndall Centre Working Paper 45
Watson, J., Tetteh, A., Dutton, G., Bristow, A.,
Kelly, C., Page, M. and Pridmore, A., (2004) UK
Hydrogen Futures to 2050, Tyndall Centre
Working Paper 46
Berkhout, F., Hertin, J. and Gann, D. M., (2004)
Learning to adapt: Organisational adaptation
to climate change impacts, Tyndall Centre
Working Paper 47
Pan, H. (2004) The evolution of economic
structure under technological development,
Tyndall Centre Working Paper 48
Awerbuch, S. (2004) Restructuring our
electricity networks to promote
decarbonisation, Tyndall Centre Working Paper 49
Powell, J.C., Peters, M.D., Ruddell, A. & Halliday, J.
(2004) Fuel Cells for a Sustainable Future?
Tyndall Centre Working Paper 50