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PROPOSAL:

Amend the Contract with City of Palm Desert to Cost Share Year Three of Palm Desert Renewable Hydrogen Transportation Project

SYNOPSIS:

In 1995 the Board authorized $550,000 for the first two years of the Palm Desert Renewable Hydrogen Transportation Project to develop and demonstrate small vehicles powered by proton exchange membrane fuel cells (PEMFCs). Staff noted that an additional $275,000 might later be recommended for the third, final year. The Department of Energy is providing $1.44 million over three years; Palm Desert and industry are also providing funding. The first two years have been successful; three PEMFC-powered utility vehicles have been completed. Scope changes were made, including adding safety work and reducing the total number of vehicles. A third-year cost share for AQMD of $275,000 is proposed, bringing the total over three years to $825,000.

COMMITTEE:

Technology, January 16, 1998, Recommended for Approval

RECOMMENDED ACTION:

Authorize the Chairman to execute an amendment to the contract with the City of Palm Desert to cost share year three of the Renewable Hydrogen Transportation Project, in an amount not to exceed $275,000.

Barry Wallerstein, D.Env.
Acting Executive Officer

Background

The AQMP relies on significant penetration of zero- and near-zero-emission technologies in the Basin to attain federal and state clean air standards by 2010. Fuel cells produce electricity without combustion and are emerging as a leading technology to help meet AQMP emission reduction targets. These ultra-clean electrochemical engines have the potential to work in virtually every mobile and stationary application currently powered by internal combustion engines (ICEs). When fuel cell vehicles are powered by hydrogen generated from solar energy, they are truly "cradle-to-grave" zero-emission vehicles.

Fuel cell technologies are being advanced steadily and hold strong promise to match or exceed ICEs in power density, durability, fuel efficiency, range, etc. However, major additional efforts are still needed by government and industry to overcome the many remaining barriers before fuel cells can compete in the market with ICEs and other conventional technologies. These include the need to expand fuel infrastructures; devise low-cost components and manufacturing processes; conduct prototype testing; verify durability and ruggedness; devise codes and standards; enhance safety systems; and educate the public, end users and regulators.

In 1995, The City of Palm Desert (the City), a model electric transportation community, submitted a proposal for AQMD cosponsorship of a three-year project to develop and demonstrate renewable-hydrogen-fueled PEMFCs in small passenger and utility vehicle applications. The City provided more than $300,000 in its own cost sharing for the project and was able to procure approximately $1.44 million from the U.S. Department of Energy (DOE) over a three-year contract, as well as substantial cost sharing from the private sector. The City then submitted a proposal to AQMD for a cost share of $825,000 over three years. Staff recommended, and the Board approved, $550,000 for the first two years of the project, with the intention to consider recommending the final $275,000 for the third year if promising results were achieved during the first two years.

Progress to Date

In the first two years of the project, significant work was completed, and the overall objectives were achieved. Specifically, 1) three fuel cell powered personal utility vehicles (PUVs) were designed, built, and delivered and are now in day-to-day use by City and State employees; 2) a site for the solar hydrogen refueling station was located on the campus of the College of the Desert and a design package for the station was submitted to the appropriate authorities; 3) a temporary hydrogen refueling station was built in the City’s maintenance area to serve until the permanent facility is completed; and 4) a neighborhood electric vehicle (NEV) was purchased, and work was initiated to convert it to fuel cell power.

During the performance of the project’s first two years, substantial additional work was required to address issues that were originally unanticipated. Extra engineering hours and material resources were needed to refine the design of the first PUV for on-road use and address safety considerations related to on-board storage of hydrogen. In addition, safety and risk management issues for siting of the hydrogen refueling station led to extensive activities to address liability and insurance issues. Siting of hydrogen stations and use of hydrogen fuel are essentially uncharted territory; standards and protocols for risk management often vary widely from city to city. To address the specific concerns of local officials about the project’s hydrogen station, it has been necessary for the City and its technical subcontractor to expend many engineering hours and hold numerous unbudgeted public and private meetings. While originally underestimated, these problems reflect important barriers that must be overcome to commercialize emerging, environmentally benign technologies.

One result of the increased activities to address safety issues was that a new task was added to the project, entitled Perform Safety Analysis and Implement Safety Measures. Part of this task has been conducted in the project’s first two years with the balance to be completed during the third year, if funding is approved.

As a result of the unbudgeted engineering work and added material costs during years one and two, and the addition of a new task on safety, the project scope and deliverables were recently modified. At the request of DOE and in consultation with AQMD, the City, and its subcontractor, the number of prototype PEMFC vehicles has been reduced, from 5 PUVs to 3 and from 3 NEVs to 1. A second change involves the elimination of the wind-powered hydrogen generation station--a portion of the project not being funded by AQMD. Under the new scope, all renewable hydrogen for refueling the prototype PEMFC vehicles will be generated at the solar hydrogen station on the College of the Desert campus. Despite these changes, the first two years have been very successful in achieving their objectives, and the project has received international attention as the world’s first day-to-day use of fuel cell vehicles in this particular application.

Proposal

The proposed funding from AQMD of $275,000 for the third and final year of the project will supplement funding from DOE, the City, and other cosponsors, and is needed to complete the work program. AQMD’s funding will be used primarily for labor hours of the project’s primary technical subcontractor, the Schatz Energy Research Center (SERC), an affiliate of Humboldt State University. The project shall be completed through the following work:

• Complete the design and fabrication of vehicle #4, a fuel cell powered NEV.

• Operate and maintain the fleet of three PUVs and one NEV powered by hydrogen-fueled PEMFCs.

• Operate the temporary hydrogen refueling facility in the City’s maintenance area to serve until the permanent facility is completed.

• Build and operate a zero-emission hydrogen refueling station on the College of the Desert campus or another suitable site if necessary. Facility designs have been completed by project engineers and the City’s architect and forwarded to the Office of the State Architect for approval.

• Design and construct a PEMFC service and diagnostic center and train service personnel. The center will be located in a refurbished building in the City’s corporation yard.

• Complete the incorporation of safety certification into the project as delineated in the new Task 4. This element of the project will include ongoing hazard analyses and professional advice from a certified safety engineer about individual system components. This information will be transferable to other future efforts to site and operate hydrogen fueling stations.

This project addresses technologies that are included in the September 1997 update of the Technology Advancement Plan under: 97M3-3, Development of Fuel Cell Technologies for On- and Off-Road Vehicle Applications. The major anticipated benefit of the proposed year three funding is that it will allow the project to be completed, ultimately assisting to overcome commercialization barriers for fuel cell technologies. This, in turn, will help accelerate widescale deployment of fuel cells within both mobile and stationary sectors, leading to substantial reductions of criteria and toxic air pollutants. Such reductions would assist the Basin in meeting federal and state air quality standards by year 2010. In addition, deployment of fuel cells can lead to major multi-media environmental benefits such as improved water quality and reductions in the release of carbon dioxide, a global-warming gas.

Sole Source Justification

Section VIII, (B)(2) of the Procurement policy and Procedure identifies four major provisions under which a sole-source award may be justified. This request for a sole source award is made under provision B.2.d.: Other circumstances exist which in the determination of the Executive Officer require such waiver in the best interests of the AQMD. Specifically, these circumstances are: B.2.d.(1) projects involving cost sharing by multiple cosponsors; and B.2.d.(6) projects requiring compatibility with existing specialized equipment.

The consortium established for this project consists of a unique technical, administrative, and cost-sharing team. The City of Palm Desert has exhibited an unusually strong commitment to zero-emission transportation and the advancement of renewable energy. In December 1994 the City’s Redevelopment Agency voted unanimously to support this project over the entire three years by: 1) committing $300,000 in matching funds 2) providing use of a 6,000 square foot building and adjacent corporation yard, and 3) contributing approximately 60% annually of the City’s Economic Development Manager’s time. Palm Desert is an ideal host site for the use of small PEMFC-powered vehicles, because it has been established by the California Legislature as a test locale for the street-legal use of golf carts. It has a legitimate potential to become one of America’s first cities to widely deploy such vehicles. Used in everyday errands, these vehicles displace conventional, higher-emitting gasoline vehicles.

Each additional member of the team also brings unique expertise and/or cost sharing for a particular part of the project, as noted below:

• SERC is the project’s primary technical subcontractor and, through its founding endowment, has provided major in-kind cost sharing in the form of project labor. SERC is responsible for fuel cell vehicle design, fabrication, and testing as well as design and oversight of the solar-hydrogen refueling station and fuel cell service/diagnostic center, including personnel training. SERC’s parent entity, Humboldt State University, is also donating labor hours of certain employees to the project.

• DOE is the federal government’s lead agency for the development of fuel cell technologies and demonstration of renewable hydrogen fuel, and has identified this project as a high priority for funding and completion through the entire three years. DOE is providing technical oversight and approximately 40% of the project’s cash funding.

• DuPont has contributed all the proton exchange membrane material necessary to build the fuel cell engines for PUVs 1,2, and 3. W.L. Gore & Associates has contributed membrane material for the NEV’s fuel cell engine, and is providing technical expertise.

• Teledyne-Brown Engineering has provided cost sharing and engineering expertise for the 6 kW electrolyzer that will be used at the solar hydrogen refueling station. ASE Americas will provide cost sharing and expertise for the 11.7 kW photovoltaic array.

• Hoes Engineering, a safety engineering firm, has provided cost sharing and extensive guidance related to safety reviews, hazards analyses, and code compliance issues which arose during vehicle and refueling station design phases.

Resource Impacts

Originally, the total cost of this project was estimated to be $4,228,440 over three years, including direct and in-kind funding contributions. Since the project began in January 1996, there have been changes in the scope and deliverables, and corresponding adjustments to the amounts funded by various entities. The main change is that DOE’s cost share over three years has been reduced from $1,859,300 to the current amount of $1,440,192, while additional in-kind cost sharing is being provided by Humboldt State University and its affiliate, SERC. The total cost of the project over all three years is now estimated to be $3,818,405. Table 1 shows a breakdown of the anticipated cost sharing for the third year as well as the entire project.

The City of Palm Desert originally requested AQMD to contribute a total of $825,000 over three years. As noted, AQMD has already provided $550,000 in funding for the first two years of the project. Staff recommends an AQMD cost share of $275,000 for the third and final year of the project. Sufficient funds are available in the FY 1997-98 Budget.

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