General Electric has a bright idea for keeping the lights on even when the electrical grid short-circuits. The 122-year-old company wants to bring clean, reliable, affordable energy to the masses with hyper-efficient fuel cells , and in a rare move, is launching a startup to do it.

On Tuesday, the energy and electronics conglomerate unveiled GE Fuel Cells, an internal startup that's working to commercialize fuel cell technology that runs on natural gas, creating energy that's not only cleaner than dirty power plants, but more energy efficient, too. In the race to create a more environmentally sound alternative to power plants, fuel cells have emerged as a viable option, alongside solar and wind power. But unlike solar and wind power, fuel cells can provide steady, nonstop energy that doesn't fade when the sun goes down or when the wind stops blowing.

>Since Hurricane Sandy, there’s been a widespread movement to “unplug” from the grid’s vulnerable infrastructure.

Instead, they're similar to batteries and use a chemical reaction, rather than combustion, to generate energy. The problem is, fuel cell technology has been prohibitively expensive, because it often requires costly materials like platinum, to trigger the chemical reaction. But GE is working on making advances in technology known as "hybrid solid oxide fuel cells," which use less expensive materials like ceramic and stainless steel to deliver 65 percent energy efficiency—5 percent higher than anything else on the market today. And while GE might not be alone in this field—Bloom Energy, a NASA spinoff, has had some success with a similar concept—experts say that GE's entry into the space could turn what has been a fringe industry into a mainstream success.

"Having the GE logo on the side of the unit will, I think, lend quite a bit of credibility, as a known name in the field," says Scott Samuelsen, director of the National Fuel Cell Research Center at UC Irvine.

Going Off the Grid

GE's timing couldn't be better. In the aftermath of Hurricane Sandy, the second costliest hurricane in United States history, "resilience" has become a buzzy idea. The storm, which caused 8.1 million people across 17 states to lose power, called attention to the country's aging power grid. Since then, there's been a widespread movement to "unplug" from the grid's vulnerable infrastructure. According to The Wall Street Journal, the number of standalone electricity-generation units at commercial and industrial sites has more than quadrupled since 2006.

Meanwhile, cities and states are attempting to build their own "microgrids," or self-sustaining energy systems that operate independently of the broader grid. In the ensuing years, the call from businesses, municipalities, and even the Obama administration for more reliable forms of energy has grown deafening, and GE, which has been working on fuel cell technology in its global research center for decades, finally decided to answer it.

Inspired by Jet Engines

According to Johanna Wellington, who runs GE Fuel Cells as general manager, the company stumbled upon two major breakthroughs in recent years that convinced the higher ups at GE to invest more heavily in fuel cells. Traditionally, solid oxide fuel cells require a very thin layer of ceramic that can withstand the extreme heat—1,500°F—needed to turn natural gas into energy. But the ceramic is delicate, and when hundreds of these cells are stacked on top of one another, they're susceptible to breakage. As a result, existing solid oxide fuel cells are small, making the materials more manageable, but the technology less scalable.

GE took a different approach. Using technology similar to what it uses to coat its jet engines, GE figured out how to spray the ceramic, almost like spray paint, in layers. "There are huge advantages to this in terms of the ability to scale," Wellington says. It means the cells can cover a larger surface area, the ceramic will always lay flat, and it can act as its own sealant, reducing many of the common risks involved in manufacturing this technology.

>Because these fuel cells would be stored locally, rather than at a central plant, they’re less vulnerable to outages when severe weather strikes.

Having crossed that hurdle, GE began considering how to make its fuel cells more energy efficient than the competition. To do that, a team of researchers decided to marry the fuel cell technology with a traditional gas engine. Whatever exhaust the fuel cell gives off, which is mostly steam and carbon dioxide, is processed by a gas engine, giving an added oomph to the energy output.

According to Samuelsen, that last part is key, because it will enable the fuel cell to increase and decrease its output as needed, something that most existing fuel cells can't do. Plus, he says, the fact that the gas engine helps make the system more efficient than any alternative "will be very popular in the marketplace."

Cleaner Data, Stronger Cities

The fuel cells are still in the prototyping phase, and GE is currently developing a pilot manufacturing facility, where it can test the technology at commercial scale. Though Wellington says GE won't begin selling the technology for another couple of years, she already has plenty of potential applications in mind.

Tech companies, for one, are beginning to do something about their massive energy hogging data centers. Bloom Energy, GE's main competitor, has already sold its fuel cells to the likes of eBay and Google to make their data centers cleaner. Wellington says GE, too, could easily enter this space.

Cities working on resilience efforts will also be a key market for GE's fuel cells. Because these fuel cells would be stored locally, rather than at a central plant, they're less vulnerable to outages when severe weather strikes. Plus, they're more efficient and environmentally sound than traditional diesel backup generators. Meanwhile, Wellington also sees opportunities in parts of the developing world, where there is no grid infrastructure yet and demand for it is still limited. Rather than building their own power lines and transmission networks, she says, "This gives developing countries an option to build out efficient power in increments, as they need it."

Still, Wellington says she can't imagine this technology completely replacing the grid in the U.S. any time soon. "When you're looking for very large chunks of power, there's always going to be some need for centralized power," she says.

Instead, fuel cells will, like solar and wind power, be added to the menu of options for cutting down on our energy use and exclusive reliance on the grid. "Historically, you had gas, steam and coal," she says. "This breaks that paradigm. Now, you can have efficient energy that's just as good. To me, that's very exciting."