FuelCell Energy Announces Market Development Updates in Asia for Efficient and
Environmentally Friendly Fuel Cell Power Generation
*Construction started for South Korean fuel cell manufacturing facility
*Growing Asian demand for ultra-clean, efficient and reliable distributed
*POSCO Energy and FuelCell Energy enter into a Master Service Agreement for
Asian fuel cell power plant installations
DANBURY, Conn., Oct. 24, 2013 (GLOBE NEWSWIRE) -- FuelCell Energy, Inc.
(Nasdaq:FCEL), a global leader in the design, manufacture, operation and
service of ultra-clean, efficient and reliable fuel cell power plants, today
announced a series of updates with its South Korean partner, POSCO Energy,
including the start of construction for the South Korean fuel cell
manufacturing facility, growing demand for multi-megawatt fuel cell
installations, and the execution of a master service agreement for
installations in Asia.
POSCO Energy is licensed to manufacture Direct FuelCell^® power plants in
South Korea and commenced construction of the previously announced
manufacturing facility. The facility will serve Asian markets and is expected
to be producing in 2015 with an initial capacity of 100 megawatts (MW) per
year and capacity will be increased as demand supports. Industrial engineering
enhancements at the FuelCell Energy (FCE) production facility in North America
increased total production capacity to 100 megawatts annually and these
enhancements will be incorporated into the South Korean production process,
accounting for the increased production capacity compared to previously stated
figure of 70 MW annually.
Increasing production volume leads to lower product costs for both FuelCell
Energy and POSCO Energy as a globally integrated supply chain serves all the
manufacturing facilities, including this new facility in Pohang, South Korea
as well as existing production facilities in Torrington, Connecticut, USA and
Ottobrunn, Germany. Greater purchasing volume and enhanced predictability of
demand reduces material costs.
The South Korean market is adopting large-scale fuel cell parks and the
project pipeline of POSCO Energy is oriented towards multi-megawatt
installations composed of two to twenty power plants per site. The fuel cell
parks supply continuous ultra-clean power to the electric grid near the point
of use and can supply steam or hot water to district heating systems.
"Highly efficient and low emission fuel cells are meeting the needs of power
generators in South Korea and we are discussing more multi-megawatt projects
in the second year following the adoption of the renewable portfolio
standard," said Jung-Gon Kim, Senior Vice President, POSCO Energy.
"We value our relationship with POSCO Energy as they are an excellent partner
for expanding the Asian market based on their commitment, their power
generation expertise and the resources that they are investing in market
development such as the production facility in Pohang, South Korea," said Chip
Bottone, President and Chief Executive Officer. "As we discuss multi-megawatt
projects with prospective customers and project investors in North America and
Europe, it is helpful to have a strong partner in Asia to provide validation
of the market opportunities."
The Gyeonggi Green Energy 59 MW fuel cell park illustrates the scale and the
ability to rapidly construct multi-megawatt fuel cell installations.
Construction began in December 2012 and all twenty one of the DFC3000^® fuel
cell power plants are installed and operating, undergoing commissioning or
being prepared for commissioning. Sixteen of the plants are operational,
producing ultra-clean electricity for the South Korean electric grid and
usable high quality heat for a district heating system. Full operation is
expected by the end of 2013 or early 2014.This park is a global model
demonstrating ultra-clean and efficient power generation that can improve the
resiliency of the electric grid due to the ability to easily site fuel cell
power plants throughout an electric utility service area.
High urban population densities, costly imported fuels and adoption of a
visionary renewable portfolio standard support the demand for clean and
efficient distributed generation including fuel cells.POSCO Energy is
witnessing an increase in inquiries for multi-megawatt installations,
*Seoul City, the capital of South Korea, previously announced a program to
install 230 megawatts of fuel cell power plants to enhance power
independence with an efficient and environmentally friendly distributed
power generation solution.Seoul City is moving forward with Korea Hydro
and Nuclear Power (KHNP), an electric utility, to procure and install the
first stage of fuel cell power plants totaling 120 MW beginning with a 20
MW fuel cell park.This fuel cell park will be located on a former
municipal landfill that has been converted to a new and renewable energy
park containing a solar power array and a hydrogen fueling station
utilizing landfill gas.The fuel cell park will use clean natural gas to
generate low carbon and virtually pollutant free electricity adequate to
power approximately 43,000 households and heat adequate for 9,000
households and is expected to be fully operational by the end of 2014.
*The first phase of the South Korean Renewable Heat Obligation (RHO)
beginning in 2016 requires new commercial building construction exceeding
10,000 square meters to contain on-site new & renewable power generation
such as combined heat and power fuel cell plants.The program goals are to
reduce the emission of greenhouse gases and support economic growth
through clean energy adoption. The second phase begins in 2020 and
expands the requirement to buildings of 5,000 square meters or larger.
POSCO Energy has two sub-megawatt Direct FuelCell^® products for on-site
applications and the high urban density of South Korea supports the
servicing of sub-megawatt as well as multi-megawatt installations. The
population is concentrated in urban areas and on-site power requirements
account for approximately 60 percent of total energy use in metropolitan
areas such as Seoul City, highlighting the size of the potential market.
*Liquefying and transporting natural gas results in some leakage of the
gas, termed boil-off gas.POSCO Energy recently signed a contract with
Korea Gas Corporation (KOGAS), the world's largest LNG importer, for a
demonstration project at the Samcheok LNG terminal to utilize boil-off gas
to generate ultra-clean power, rather than letting the gas escape or
incurring the cost to re-liquefy the gas.This project is intended to be
the initial step in developing multi-megawatt fuel cell parks at LNG
facilities to generate electricity for the LNG operations and to supply to
the electric grid.The market potential is sizeable as POSCO estimates a
600 megawatt LNG opportunity in just South Korea.
*The South Korean Ministry of Trade, Industry and Energy (MOTIE) recently
announced a plan to introduce the second phase of the Renewable Portfolio
Standard, expanding compliance obligations to major commercial energy
users such as the information technology and heavy industry sectors, with
implementation expected in 2016.POSCO Energy anticipates a significant
market opportunity will develop that has even greater market potential
than the large market opportunity from the current RPS program that is
oriented towards power producers.
Service is an important facet of the fuel cell business model, both to serve
the customer and to provide a source of stable and recurring revenue.Service
agreements are up to 20 years in duration and include scheduled fuel cell
module exchanges.FCE and POSCO Energy recently executed a revised Master
Service Agreement whereby POSCO assumes more responsibility for servicing
installations in Asia that utilize power plants manufactured by POSCO
Energy.FCE will perform engineering and support services for each unit in the
installed fleet and receive quarterly fees as well as a royalty on each
scheduled fuel cell module exchange built by POSCO Energy and installed at any
plant in Asia.
Fuel cells electrochemically convert a fuel source into electricity and heat
in a highly efficient process that emits virtually no pollutants due to the
absence of combustion.The Direct FuelCell^® stationary fuel cell power plants
manufactured by FuelCell Energy utilize carbonate fuel cell technology and
provide continuous baseload power that is located where the power is used,
including both on-site applications and electric grid support. The combination
of near-zero pollutants, modest land-use needs, and quiet operating nature of
these stationary fuel cell power plants facilitates locating the power plants
in urban locations.The power plants are fuel flexible, capable of operating
on natural gas, on-site renewable biogas, or directed biogas.
About FuelCell Energy
Direct FuelCell® power plants are generating ultra-clean, efficient and
reliable power at more than 50 locations worldwide. With more than 300
megawatts of power generation capacity installed or in backlog, FuelCell
Energy is a global leader in providing ultra-clean baseload distributed
generation to utilities, industrial operations, universities, municipal water
treatment facilities, government installations and other customers around the
world. The Company's power plants have generated more than 1.8 billion
kilowatt hours of ultra-clean power using a variety of fuels including
renewable biogas from wastewater treatment and food processing, as well as
clean natural gas.For more information, please visit www.fuelcellenergy.com.
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registered trademarks of FuelCell Energy, Inc. DFC-ERG is a registered
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CONTACT: FuelCell Energy, Inc.
Kurt Goddard, Vice President Investor Relations
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