Update: This Contract Win Takes FuelCell Energy Closer To Its Target Dec. 6, 2014 1:21 PM ET | 2 comments | About: FuelCell Energy, Inc. (FCEL), Includes: UIL Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More...) Summary
The company announced a contract to install a 3.4 megawatt generator with UIL Holdings. This contract takes FuelCell Energy closer to the target of 80-90 DFC systems per year. As we explained, the company needed growth on the top line, along with the consolidation on the supply side, to become profitable. This article was sent to 9,987 people who get email alerts on FCEL. Get email alerts on FCEL » FuelCell Energy (NASDAQ:FCEL) announced that the company will install a new power generation facility for UIL Holdings Corporation (NYSE:UIL) for its gas pipeline application. The power generation source will be the new 3.4-megawatt [MW] Direct FuelCell [DFC] Energy Recovery generator, which will be operational by the end of 2015. FuelCell's advanced technology has been developing approaches to leverage its fuel cell technology from just power and heat generation to other processes, including carbon capture. This multi-megawatt project will also include a 2.8 MW DFC fuel cell power plant, which is accompanied by a turbo expander, an expansion turbine which will produce an additional 600 kilowatts of clean, class-1 renewable power, improving the carbon footprint and enhancing the project's efficiency.
FuelCell also disclosed that the power plant will be placed at a gate station owned by UIL Holdings' subsidiary Connecticut Natural Gas Corporation. The efficiency and carbon footprint improvement of the project is mainly due to the company's DFC-ERG [Energy Recovery Generation] configuration and the letdown process during natural gas pressure reduction. This process allows high pressure steam to be reduced under control to a lower pressure, operating over a limited flow range, which spins the turbine and generates electricity. The DFC-ERG system is capable of achieving electrical efficiencies up to 70%, almost double the fuel-to-electricity conversion efficiency of the U.S. electric grid. Further, the electricity it produces will be sold to the Connecticut Light and Power Company under a 20-year contract.
FuelCell Energy is one of the most important players in the stationary power solutions segment of the energy market. However, the company is operating under losses and it needs to achieve a certain level of production in order to be profitable. As I explained in my previous article, the company will benefit from the production and supply side consolidation; however, the annual installed base levels will need to increase for the company to have sustainable profitability. This contract takes FCEL one step closer to its target of 80-90 DFC systems in order to be profitable. The company is still some way from being profitable, but I believe it is on the right path and it remains one of the best companies in the sector. |