More than 1,000 fuel cell micro-cogeneration units have been installed in homes and business in ten countries over the last several years by the ene.field project. Its successor, the PACE project, aims at bringing costs further down, although manufacturers and users say the technology is market-ready.

“I thought it would be nice to have my own power plant,” says Jochen Steneberg, a participant in the ene.field project field trial. A demonstration project for fuel cell micro-cogeneration, the ene.field project was funded to the tune of €52.5 million, with matching contributions from industry and the Fuel Cell and Hydrogen Joint Undertaking (FCH JU), a public private partnership supporting research, technological development and demonstration activities in fuel cell and hydrogen energy technologies in Europe.

Steneberg is one of 3500 households and businesses across Europe that are currently using fuel cell micro-cogeneration for their heating, hot water and electricity supply. The product is transforming Europeans like Steneberg into active energy ‘prosumers’ (producers-consumers) who can sell excess electricity back to the grid, creating a decentralized energy system with a reduced carbon footprint – and lower energy bills.

The fuel cell works by using a single fuel (natural gas, hydrogen, LPG) to generate electricity and heat. In systems fueled by natural gas, the natural gas is reformed into hydrogen and carbon monoxide, which reacts with oxygen in the fuel cell to produce electricity and heat. Currently fueled by gas from the grid, it is hoped that the “fuel flexible” technology will be progressively fueled by renewable energy sources, such as hydrogen and renewable gas, converting a home fuel cell into a renewable energy technology.

Products include a range of fuel cell technologies and system sizes, provided by ten different manufacturers (Ballard, Bosch, Ceres Power, Elcore, Hexis, RBZ, SenerTec, SOLIDpower, Vaillant, Viessmann).

An additional €90 million shared between European industry and the EU will go into the successor project PACE, aiming at bringing unit costs down sufficiently to mainstream the technology, and establishing Europe as a global leader in fuel cell micro-cogeneration. By 2021, PACE aims at installing at least 2,500 units in Europe manufactured by the project partners BDR Thermea, Bosch, SOLIDPower and Viessman. It is estimated that manufacturing volumes upwards of 500 units / year will lower the cost of units by around 30-40%, and the PACE project is aiming at manufacturing in the order of 10,000 units per year post 2020.

Japan’s Ene-farm program, in which government and manufacturers joined forces to increase volumes and subsequently lower costs, saw the installation of 200,000 units by the end of 2016, and the Japanese government is aiming at 5.3 million units by 2030. In 2009 the cost per unit was around €24,000, while in 2015 it had decreased to approximately €10,000.

European markets

To date the most advanced European market is in Germany, with more than 1500 units installed. Following an earlier German federal project, Callux, the German government put in place the grant support scheme, KfW433, to encourage early market uptake. Grants come in the range of €5,700-€28,000, with €10,000 offered for a 1 kilowatt-electric (kWe) system. Already 1,100 applications have been submitted since the kick-off of the programme in August 2016.

Support for fuel cell micro-cogeneration in other countries, including Belgium, France, and the UK, is through feed-in premiums, feed-in tariffs, and white certificates/green certificates. Depending on the level of support from national schemes, estimates from UK low-carbon consultancy Element Energy indicate that the European market for fuel cell micro-cogeneration could grow to around 25 GW of installed electrical capacity by 2030 (i.e. 25 million units).

As noted in the European Commission’s Heating and Cooling Strategy, space heating in buildings can account for more than 80% of total heat demand in colder climates. Almost half of the EU’s buildings have individual boilers installed before 1992, with efficiencies of 60% or less. Based on an assessment from the European Heating Industry Association (EHI) less than 15% of the boiler stock are efficient condensing boilers, and currently just 1% of buildings are heated by heat pumps and micro-cogeneration technologies.

As the fuel cell micro-cogeneration units are powered by gas from the grid and produce electricity, the combination of low gas prices and high electricity prices (‘spark spread’) also provides favorable market conditions for fuel cell micro-cogeneration. For the average household in Germany or the Netherlands, this means that energy bill savings in the range of €600 – €1000 are achievable using the product. Currently, fuel cell micro-cogeneration unit costs range between €14,000 and €25,000 per kWe, however ramping up manufacturing through the PACE project aims at lowering upfront capital costs by 30-40%.

A 2015 study commissioned by the FCH JU compared total cost of ownership of fuel cell micro-cogeneration and other technologies, finding that “with sufficient reduction of capital cost, it can offer the most attractive economic value proposition, in terms of total cost of ownership, as measured by total annual energy costs”. Increasing manufacturing volumes is the key to cost reduction; with cost reductions of 30% possible with manufacturing 500 units per year, and 60% at 100,000 units per year.

Source: Advancing Europe’s energy systems: Stationary fuel cells in distributed generation.

Along with the high upfront cost, finding the routes to market for fuel cell micro-cogeneration remains challenging. Heat installers, 600 of whom were trained to install the units as part of the ene.field project, proved effective. Although utilities, many of whom are facing financial challenges in Europe’s energy transition, were initially hesitant, with the success of the roll-out, new commercial partnerships are underway.

“Now that utilities can see that fuel cell micro-cogeneration works – customers are happy, and the product is reliable – we have a number of business partnerships with utilities in development,” says Olivier Bucheli, Chief Business Development Officer of the SOLIDpower Group. One utility-led business model is a leasing arrangement, whereby the utility owns the installed unit, and the householder benefits from low electricity prices and free hot water. “From volumes of 500 units upwards, this business model is interesting for utilities,” says Bucheli.

System benefits

By generating heat and electricity near the point of consumption, fuel cell micro-cogeneration reduces the stress on grid electricity at times of peak demand, by contributing to the production of electricity, i.e to power electric heat pumps and charge electric vehicles, and by supporting intermittent renewables. And higher market penetration of fuel cell micro-cogeneration could bring multiple benefits for Europe’s future decentralized energy system, according to a recent report from Imperial College London. The study analyzed the impact of fuel cell micro-cogeneration on the capacity and operation of the electricity grid, along with the impact on CO2 emissions and gas consumption.

The electricity system benefits are significant. Adding fuel cell micro-cogeneration to the European energy mix could generate a gross reduction in infrastructure and operating costs of more than €6,000 for every kilowatt of installed capacity up to 2050. System benefits at distribution level can amount to €1,600 – €2,600 per installed kWe, mainly by deferring the investment cost at the low voltage level.

Regarding CO2 emissions, fuel cell micro-cogeneration can achieve reductions in the range of 370 – 1,100 kg CO2 per year for each kWe of installed capacity, although the extent of emissions reduction is system-specific, depending on the share of fossil fuels in the generation mix. Average carbon intensity of electricity generation across Member States was around 2,207 kg CO2 per year for each kWe.

Policy push

Along with national support schemes and large-scale projects such as ene.field and PACE, policy support will be a decisive factor in the take-up of fuel cell micro-cogeneration. Many attributes of the product are emphasized in Europe’s climate and energy goals – energy efficiency, renewable energy, decarbonisation, consumer empowerment, job creation and innovation – but existing policies tend to address heat and power separately, although some policy progress is evident in the EU’s Heating and Cooling Strategy, first launched in 2015.

To take one example, Article 7 in the Energy Efficiency Directive, currently under discussion as part of the European Commission’s Clean Energy for all Europeans policy package, requires energy companies to achieve yearly energy savings of 1.5% of annual sales to final consumers. However, the focus is on energy reduction as the end-user level (final energy) rather than on primary energy. As well as advocating for primary energy use to be taken into account, industry association COGEN Europe says that renewable energy, as well as energy efficiency, should be included in the energy savings targets.

In addition, although European policy is nominally supportive of ‘prosumers’, electricity self-production and self-consumption are often penalised through disproportionately high grid connection and grid tariffs compared to real grid use. Financial, as well as administrative barriers to grid connection or support schemes at the national level persist and represent a major barrier to the large-scale roll-out of fuel cell micro-cogeneration.

Despite these challenges, the industry mood is upbeat. “Following the successful completion of ene.field, major European manufacturers, supported by the FCH JU at the EU level and key European national governments, are now committed to bringing the technology closer to mass market by increasing scale and achieving further product cost reductions. PACE will enable manufacturers to establish fuel cell micro-cogeneration as a standard technology”, said Hans Korteweg, Managing Director of COGEN Europe, the Coordinator of the PACE and ene.field projects.