FuelCell Energy Doubling Factory as CEO Seeks to Turn Profitby
Expanding Connecticut factory with $30 million in state help
Company will be profitable when sales exceed 90 megawatts
FuelCell Energy Inc. Chief Executive Officer Chip Bottone is making his factory bigger and his systems better, part of a plan to make the money-losing manufacturer profitable.
Even though FuelCell hasn’t reported annual income since 1997, Connecticut Governor Dannel Malloy is on board. The state provided Thursday a $10 million loan to more than double the footprint of its factory, the first part of a package that may eventually reach $30 million and will help the company boost manufacturing capacity to 200 megawatts a year.
At a rainy groundbreaking ceremony at the Torrington, Connecticut, site, Malloy joined Bottone and staff with shovels to voice his support for FuelCell, the company, and fuel cells, which generate electricity from hydrogen or natural gas without producing significant carbon emissions.
“We are believers in the technology,” Malloy, a Democrat, said at the event. “Hydrogen will wind up playing a larger role in the world.” It already plays a pretty big role in the state, with about 600 companies involved the fuel-cell supply chain adding $211 million to Connecticut’s economy.
The factory currently has about 100 megawatts of annual production capacity, and the company is selling about 70 megawatts a year. Bottone said the company will be profitable when it exceeds 90 megawatts of sales per year.
“One big utility deal could take us over the hump,” Bottone said in an interview after the ceremony.
The funding will help expand the facility, a year-long project that will improve throughput and lower costs, and doesn’t including boosting capacity, Bottone said.
“We’re laying the groundwork now,” he said. “We could do 100 megawatts with the space we have now, but it would be crowded. With the new space we get much more efficient.”
Bottone said the company will move on to the next phase of the expansion project, doubling manufacturing capacity, when FuelCell has enough orders to justify that kind of production. The state will eventually provide another $10 million in loans, and as much as $10 million in tax credits if certain job-creation conditions are met. The debt has a 2 percent interest rate and principal payments are deferred for four years.
FuelCells push gas through a membrane, creating electricity through a chemical reaction that also generates heat. The company plans to announce next month a new version of its systems that captures the heat and uses it to make the reaction more effective, generating more electricity. Efficiency is expected to increase to 60 percent now from about 40 percent for its current systems, which use the heat to produce steam.
FuelCell is in talks with potential customers for the new systems in New York, Connecticut and California and expects to announce some orders before the end of the year. Its total backlog is increasing as new orders get signed, Bottone said. That’s bringing the company closer to profitability, though he’s wary of predicting when that will finally happen.
“I’m not going to over-promise,” he said. “That’s happened a lot in this industry. But we’re very close.”