AGENDA NO.17
BOARD MEETING DATE: December 8, 1995
SYNOPSIS: The objective of this project is to facilitate the introduction of fuel cells to the residential market. In Phase I of this project, conducted by Polydyne Inc., the AQMD co-sponsored the development of market and technical specifications for residential fuel cells. The Small-Scale Fuel-Cell Commercialization Group (SFCCG), a non-profit consortium consisting of electric and gas utilities, was formed to conduct the Phase II field demonstration of these residential fuel cells in conjunction with Polydyne. Staff recommends funding up to $140,000, out of a total program cost of approximately $1,680,000 for this demonstration.
COMMITTEE: Technology Advancement, November 9, 1995, Approved
RECOMMENDED ACTION:
James M. Lents, Ph.D.
Executive Officer
ACL:ARA:RG:dv
Attachments
BD12:12-95BN
Background
The Air Quality Management Plan (AQMP) relies on the continuous advancement of low-emission and zero-emission technologies to meet its air quality objectives by the year 2010. Given its near zero-emissions and high fuel efficiency characteristics, fuel cell technology has the potential for numerous stationary and mobile applications. It is projected that the world-wide market for small fuel cells in residential applications could match that of the anticipated market in automotive applications.
Moreover, residential fuel cells could also provide an infrastructure for home electric vehicle (EV) recharging. Under the current infrastructure, grid-based recharging of battery-powered electric vehicles generates low but measurable air pollution emissions from central power plants. Although these power plant emissions are very much lower than conventional gasoline vehicle tailpipe emissions, recharging EVs using residential fuel cells could greatly reduce, if not, eliminate associated power-plant emissions. This could make battery-powered EVs true zero emission vehicles (ZEVs).
As an emerging technology, fuel cells are currently a high capital cost technology. The high capital costs can be attributed, primarily, to the low production volumes. These high costs, in turn, inhibit the demand for fuel cells in the competitive electricity generation marketplace. Increasing the production volume of fuel cells is expected to greatly reduce the cost of fuel cells.
Proposal
In 1993, Polydyne Inc. (Polydyne) proposed a three-phase, five-year project to the AQMD. The objective of this proposal was to develop a program to facilitate the wide-scale introduction of fuel cells for residential small-scale and commercial applications. These applications represent a potential volume sufficient to drive down fuel cell prices. The total cost of this three-phase program is estimated at $18 million.
In Phase I, under AQMD Contract R-C94071, Polydyne conducted a feasibility study to develop market and technical specifications for residential fuel cells. The total cost of Phase I, $410,000, was cost-shared by AQMD ($50,000) and a consortium of utilities in the amount of $360,000.
This specifications developed under this phase, were used as the basis for a Market Opportunity Notice issued to solicit fuel cell manufacturers, developers, and system integrators to provide prototype fuel cells for a pilot field demonstration. This demonstration is proposed in Phase II.
Polydyne in conjunction with the Small-Scale Fuel Cell Commercialization Group, Inc. (SFCCG), a non-profit consortium of U.S. utilities, have presented a proposal to the AQMD for Phase II. The objective of Phase II is to demonstrate the technical feasibility of small fuel cells to meet the heating and electricity needs of individual residences. Qualified respondents to the MON released in Phase I will be invited to supply four to six residential fuel cells designed to operate on natural gas. One of these units will be sited in Southern California in cooperation with Southern California Edison, one of the cosponsors and participating utilities in the SFCCG. During the demonstration period of about twenty-four months, the performance of the prototype residential fuel cells will be monitored and evaluated.
Performance evaluation will include measurement of any emissions from the fuel cell and fuel reformer system; determination of fuel efficiency; documentation of load demand and load following performance; quality of the electric current provided; documentation of unit availability and reliability; determination of operation and maintenance requirements; and assessment of any degradation of system performance. Assessments will also be conducted to determine user acceptance of residential fuel cells, in terms of procurement, installation, and operation and maintenance requirements, and utility acceptance of residential fuel cells as a distributed energy resource.
If the Phase II demonstration of residential applications is successful, SFCCG shall pursue the demonstration of several hundred fuel cells in Phase III.
Sole Source Justification
Section II, Step C(3) of the Consultant Selection Policy identifies four provisions under which the Governing Board may award a sole-source bid: (a) cost to prepare bid documents exceeds the cost for consultant, (b) delay would result in the endangerment of public health or property, (c) services are only available from the sole-source, or (d) other circumstances exist identifying sole-source as in the best interest of the AQMD. This request for sole-source award is being made under provision (d).
It is in the best interests of the AQMD to cosponsor Phase II of this residential fuel cell demonstration project. This project is unique both in its approach and in the team of participants. The project team includes Polydyne, Inc. and the SFCCG consortium members identified in Attachment A.
Polydyne has proven itself as a major driving force behind the development of fuel cells for residential and small-scale commercial applications. Polydyne conceived and conducted Phase I of its three-phase proposal. Further, Polydyne developed the market and technical specifications used in the Phase I MON and orchestrated the collaboration of the utilities (See Attachment A) that evolved into the SFCCG.
The SFCCG brings extensive utility industry participation to this project that will directly contribute to the successful completion of the proposed effort. First, and as detailed below, the member utilities are contributing substantial cost-sharing. Additionally, since fuel cells will ultimately have to be procured, installed, operated and serviced by utilities, utility participation brings a collective level of expertise not available elsewhere. Finally the utilities possess key capabilities for the successful completion of the project: specialized knowledge of customer electric loads, methods to satisfy these loads, customer service, customer billing, and access to instrumentation for monitoring, testing and telemetering data on a real-time basis.
Moreover, the member utilities of the SFCCG could facilitate the commercialization of products developed from this demonstration. Given that participating utilities are geographically diverse, a successful demonstration of residential fuel cells could eventually lead to commercial orders from throughout the country rather than from a single region.
Resource Impacts
Staff recommends that the AQMD cosponsor Phase II of this project in an amount not to exceed $140,000. The total cost of Phase II is estimated to be $1,680,000. Co-sponsors shall include the SFCCG members (Attachment A) in the amount of $1,540,000 and District ($140,000). Sufficient funds are available in the Fiscal Year 1995-1996 Budget of Technology Advancement to fund this project.