Exelon’s Constellation Deepens its Bet on Bloom’s Fuel Cells

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Exelon Corp.’s Constellation unit agreed to invest in 40 megawatts of Bloom Energy Corp. fuel cells, twice the size of its first foray last year into on-site power plants.

Constellation will buy stakes in the fuel cells that Bloom Energy installs for customers including Wal-Mart Stores Inc. and AT&T Inc. in four states, the Chicago-based utility-owner said in a statement Wednesday. Bloom will operate and maintain the natural-gas powered fuel cells at 170 locations. The amount of the investment wasn’t disclosed.

Last year, Constellation invested an undisclosed amount in 21 megawatts of so-called Bloom boxes at 75 sites throughout California, New York, New Jersey and Connecticut, giving the company confidence the investments will pay off, said Gary Fromer, senior vice president of distributed energy.

“Getting the first 21 megawatts done was a big challenge,” Fromer said. “We now have a good understanding of how to be more efficient.”

Demand for on-site power-production has surged amid rising concerns about damage from blackouts and falling prices for fuel cells, solar panels and other technologies that can be installed at customers’ facilities, said Asim Hussain, vice president of marketing at Bloom.

“It’s a mix of customer repeats like AT&T and Walmart but also new customers,” Hussain said in an interview. Hartford, Connecticut, is using fuel cells to build a microgrid to keep power running at a gas station, seniors’ center and supermarket during outages, he said.

Lower Carbon

The deal shows the growing interest in fuel cell generators, which produce electricity through a chemical reaction that generates fewer carbon emissions than plants that burn fuel. The customers will pay Constellation for the energy the fuel cells produce over 15 years.

For Walmart, which has fuel cells at 46 sites in California and Connecticut, they help reduce carbon emissions and provide lower energy prices than the company would otherwise get from their utility, said David Ozment, Walmart’s senior director of energy. In Connecticut, the company will add control systems that will keep basic store functions operating when the grid fails.

“It’s not going to supply 100 percent of a store’s needs but enough to keep the refrigeration, lighting and cash registers going,” Ozment said in an interview. “We’re excited to begin testing it.”

The Bloom fuel cells for Constellation should be completed by the end of next year and qualify for a federal investment tax credit, Constellation’s Fromer said.