BOARD MEETING DATE: November 5, 2004
AGENDA NO. 9

Execute Contracts to Cosponsor Demonstration of Natural Gas Stationary Fuel Cells in South Coast Air Basin

SYNOPSIS:

In August 2004, the Board authorized re-issuance of an RFP to demonstrate natural gas stationary fuel cell units in the South Coast basin. Three proposals were received to demonstrate fuel cell units based on three different technologies. This action is to award a contract to Alliance Power, Inc., at a cost not to exceed $565,000 from the Clean Fuels Fund. The California Public Utilities Commission will provide $1,250,000 in cofunding from the Self-generation program. The remainder of the $4,176,325 total project costs will be covered by the proponents.

COMMITTEE:

Technology, October 22, 2004, Recommended for Approval

RECOMMENDED ACTION:

Authorize the Executive Officer to execute a contract with Alliance Power, Inc., to co-sponsor demonstration of two molten carbonate stationary fuel cell systems at the TST-Timco, Inc., facility in Fontana in an amount not to exceed $565,000 from the Clean Fuels Fund.

Barry R. Wallerstein, D.Env.
Executive Officer

Background

As part of an effort to promote the development, demonstration, and commercialization of near-zero emission technologies, the Board approved the re-issuance of RFP #P2003-12 at its August 6, 2004 meeting to solicit cost-shared proposals to design, install, and operate natural gas, stationary fuel cell units within the South Coast basin. The RFP solicited proposals from contractor teams consisting of experts in the field of fuel cell technology, and well-acquainted with the codes, standards, safety, and permitting protocols of delivering, installing, operating, and maintaining natural gas fuel cell systems. The prospective prime contractor is responsible for coordinating all aspects of the project including: (1) obtaining necessary permits and permissions to site the proposed fuel cell units; (2) providing pre-packaged, modular fuel cell units that can dispense electric power, and heat where applicable; (3) providing protection and security for the fuel cell installation: (4) ensuring at least 75% availability of power average over a year, a minimum of 2-year warranty which could include a preventive maintenance contract; and (5) submitting data gathered by a third-independent party to determine, at a minimum, emissions, efficiency, operation data, maintenance data, and durability data.

Outreach

In accordance with AQMD’s Procurement Policy and Procedure, a public notice advertising the RFP/RFQ and inviting bids was published in the following publications:
 

1.	Antelope Valley Press	11.	La Opinio	21.	Rafu Shimpo
2.	Black Voice News	12.	La Prensa Hispana	22.	San Bernardino Sun
3.	Chinese Daily News	13.	La Voz Publications	23.	State of California Contracts
4.	Desert Sun	14.	Los Angeles Daily News		Register
5.	Eastern Group Publications	15.	Los Angeles Sentinel	24.	The Daily Breeze
6.	El Chicano	16.	Los Angeles Times	25.	The Excelsior
7.	El Informador	17.	Orange County Register	26.	The Signal
8.	Inland Empire Hispanic News	18.	Philippine News	27.	Wave Community Newspapers
9.	Inland Valley Daily Bulletin	19.	Precinct Reporter
10.	Korea Central Daily	20	Press Enterprise

Additionally, potential bidders were notified utilizing the Los Angeles County MTA Directory of Certified Firms, the Inland Area Opportunity Pages Ethnic/Women Business & Professional Directory; and AQMD’s own electronic listing of certified minority vendors. Notice of the RFP/RFQ was mailed to the Black and Latino Legislative Caucuses and various minority chambers of commerce and business associations, and placed on the Internet at AQMD’s Web site (http://www.aqmd.gov). Information was also available on AQMD’s bidder’s 24-hour telephone message line (909) 396-2724.

Bid Evaluation

Three proposals were received in response to RFP #P2005-05 by the September 7, 2004 deadline. The proposals were reviewed and evaluated by a five-member panel (Panel) in accordance with established AQMD guidelines, using technical and cost criteria outlined in the RFP. The proposals receiving a score of at least 56 out of 70 points were considered technically qualified and eligible for the contract award. The five-member evaluation panel consisted of one AQMD Manager, one Senior AQMD staff, one Senior Engineer from the CARB, one Senior Analyst from the California Department of General Services, and one Senior Manager from TIAX LLC; five male; two Asian-Pacific Islander and three Caucasian.

Based on the Panel’s technical evaluation and the subsequent cost evaluation based on contribution of lowest cost per installed capacity ($/kW), the proposal from Alliance Power, Inc. was recommended for contract award. The technical and cost scores are shown below.
 

Although the Plug Power proposal received a lower score than Alliance Power, staff believes there may be sufficient technical merits to pursue a project since the fuel cell technology offers a useful comparison to an existing AQMD residential fuel cell project. Staff will investigate with the project proponent options for enhancing the proposal such that an additional recommendation may be made to the Board in the near future.

The cost proposal from Acumetrics Corp. was not reviewed because its technical proposal score was less than the minimum points required for technical qualification.

Proposal

The Alliance Power proposal adheres to the tasks described in the RFP’s work statement and satisfies the requirements of the RFP technical and cost sharing criteria. Alliance Power is an authorized, licensed distributor of FuelCell Energy (FCE) molten carbonate fuel cells and has recently completed three projects, totaling 120 megawatts (MW) of distributed generation facilities in Southern California.

Alliance Power has selected a Direct Fuel Cell (DFC) 300A molten carbonate fuel cell module for the demonstration project, and proposes to install, operate, and maintain two 250 kW fuel cell units at the TST-Timco metal foundry in Fontana and one 250-kW fuel cell unit at the National Fuel Cell Research Center at the University of California at Irvine (UCI). In addition, Alliance Power will use the available waste heat to support the smelting operation at TST-Timco and to generate steam for hot-water demands at the UCI campus. Alliance is requesting $1,000,000 from the AQMD to support installation of all three units.

Recommendation
Alliance’s proposal is to install two fuel cell units at a metal foundry and one unit on the UCI campus. Since the RFP stated a desire to demonstrate fuel cell units in high efficiency applications, staff recommends funding the two fuel cells for combined heat and power at the TST-Timco metal foundry at a cost not to exceed $565,000. These units will provide near-zero emissions and high efficiency power to a real-world, industrial process in an area of environmental justice concern and to an industry sector with high emissions. This project will demonstrate the commercial viability of fuel cells in a metal foundry, but more generally, it will illustrate the validity of clean, distributed generation in industrial applications.

Benefits to AQMD

The proposed project is included in the 2003 Advanced Air Pollution Research Plan under item D-12, "Demonstration of Commercial and Large Scale Fuel Cells," and the 2004 Technology Advancement Plan Update under "Fuel Cell Technology – Demonstrate Stationary Fuel Cells for Residential, Commercial, and Industrial Applications."

The AQMP promotes the expedited implementation of advanced technologies and clean fuels in Southern California to achieve air quality standards. The proposed RFP will demonstrate the technological feasibility of near-zero emission fuel cells. As these projects demonstrate commercial viability, the technology will increase in acceptance and lead to increased orders, decreased costs, and eventual widespread application. The impact of higher efficiency, lower polluting energy production will substantially reduce emissions in the South Coast basin.

Resource Impacts

The total cost for the two units at TST-Timco is estimated to be $4,176,325. Staff recommends supporting the project at a cost not to exceed $565,000. The proponents will apply for $1,250,000 in direct funding contribution from the Public Utilities Commission Self-Generation Incentive Program, while Fuel Cell Energy will provide an in-kind contribution of $1,000,000. Alliance Power will also provide $1,305,000 in direct funding contribution. The total estimated cost-share for this project is reflected in the table below:
 

Sufficient funds are available from the Clean Fuels Program Fund, established as a special revenue fund resulting from the state-mandated Clean Fuels Program. The Clean Fuels Program, under Health and Safety Code Sections 40448.5 and 40512 and Vehicle Code Section 9250.11, establishes mechanisms to collect revenues from mobile sources to support projects to increase the utilization of clean fuels, including the development of the necessary advanced enabling technologies. Funds collected from motor vehicles are restricted, by statute, to be used for projects and program activities related to mobile sources that support the objectives of the Clean Fuels Program.

/ / /