Oct 25 - Knight Ridder/Tribune Business News - John M. Moran The Hartford Courant, Conn.

Fuel cell companies are steadily cutting costs and boosting reliability for their power plants, but need greater sales to reach widespread commercial acceptance, fuel cell executives at an industry conference said Monday.

Volume sales would play a key role in driving down the cost of producing stationary fuel cells to power industrial, commercial and residential buildings, according to a panel of fuel cell executives addressing the annual Fuel Cell Summit at Mohegan Sun.

"There are no technical barriers to deploying fuel cells into the marketplace," said Jan van Dokkum, president of UTC Power, a South Windsor-based division of United Technologies Corp. But prices remain too high, van Dokkum said, and greater production would go a long way toward solving that problem by encouraging suppliers to work hard to deliver cheaper parts, lowering the overall price.

"Like anything else, price and cost is driven by volume," he said. "If you have no large orders, you can't activate your supply base. You need to get your supply base believing that this fuel cell technology is going mainstream."

Executives said they anxiously await coming contract awards for multimegawatt projects that they hope will simultaneously boost sales and raise visibility for Connecticut-based makers of stationary fuel cell power plants.

One such order is a coming contract for 10 megawatts of fuel cell power being considered by the Long Island Power Authority. Another is Connecticut's Project 100, which calls for the commissioning of 100 megawatts of renewable power generation by 2008. The first contracts awarded under Project 100 are expected in the first quarter of 2006.

Jerry Leitman, chairman and chief executive of Danbury-based FuelCell Energy, which is competing with UTC Power for the Long Island Power Authority contract, said multimegawatt projects will not only help cut costs, but also raise awareness among government, utilities and the public about the advantages of fuel cells as an electricity generation technology.

"It's a big, big step," he said.

Fuel cells combine hydrogen with oxygen to efficiently generate power without the noise and pollution associated with conventional combustion-based power generators, such as oil, gas and coal-fired plants. But because pure hydrogen is not readily available, fuel cell plants typically use natural gas as a fuel source.

Connecticut is particularly tuned to the evolving fuel cell market because FuelCell Energy, UTC Power, Wallingford's Distributed Energy Systems Corp. and other fuel cell-related companies are located here.

Walter "Chip" Schroeder, chief executive of Distributed Energy Systems, which makes hydrogen generation equipment through its Proton Energy subsidiary, said high energy prices and power disruptions attributable to hurricanes and other events are helping to raise the profile of fuel cells as an electricity alternative. "In a rising energy price environment, the focus on these technologies is stronger than it's ever been," he said.

At the conference Monday, the state's fuel cell industry said it is forming a new trade group called the Connecticut Hydrogen Fuel Cell Coalition to promote its interests and raise awareness of its economic potential.

The state's fuel cell technology sector is not tied entirely to large stationary fuel cells. UTC Power is also working on a variety of transportation-related applications.

The firm recently presented a fuel cell bus that uses hybrid-electric technology to boost fuel efficiency and reliability.

Other attendees at Monday's conference touted other fuel cell applications that they said were making progress toward commercialization, but are not yet ready for full-scale production.

Among the products under development are fuel cell batteries that could provide long-lasting power for electronic devices, such as laptop computers, and small stationary units that could be suitable for small businesses and homes.

But several executives said fuel cells will only succeed commercially when they work as well or better than the conventional energy technologies they seek to replace.

"At the end of the day, we're talking about another power generation device," said Mark Fleiner, vice president for Rolls-Royce Fuel Cell Systems.