Blackout expected to generate more interest in alternative power source

By JOHN CHRISTOFFERSEN, Associated Press Writer, 8/23/2003

When the massive blackout struck more than a week ago, millions of people looked for a sign of light in the darkness.

They could find it in Central Park in New York City, where a police station retained electricity with a fuel cell.

"A lot of people have been surprised the last few days to find out the one place they could find power still on was Central Park, the last place you would probably think of going in a blackout," said Peter Dalpe, spokesman for UTC Fuel Cells.

The venture is part of Hartford, Conn.-based United Technologies Corp. and supplied the fuel cell used by the police station.

The worst blackout in U.S. history created a widespread crisis, but it also may provide a jolt of opportunity for companies involved in generating electricity from fuel cells.

"It highlights the need for reliable backup. This is something I think a lot of companies will be looking at," said Chris Kwan, an analyst with TD Securities.

The police station at Central Park may be exhibit A. Stations typically have backup generators that kick in during outages, but the Central Park station never lost power, said Detective Walter Burnes.

"They didn't even know it happened until somebody looked out and saw the street lights were out," Burnes said. "They weren't affected at all by the blackout. Never skipped a beat."

Kwan, the analyst, upgraded his rating on Fuel Cell Energy Inc. of Danbury, Conn., from reduce to buy after the blackout.

Fuel Cell Energy stock jumped about 20 percent a day after the blackout. The company makes fuel cell power plants for customers including hotels, universities, hospitals and breweries.

"The continued attention to electrical reliability in this country will drive greater and greater interest in not only strengthening the grid but putting in fuel cell power plants that do not need the grid," said Jerry Leitman, chief executive of Fuel Cell Energy.

Fuel cells produce electricity, heat and water by extracting hydrogen from natural or propane gas and combining it with oxygen. The electrochemical process avoids burning fuel, eliminating most of the polluting emissions associated with conventional methods.

Fuel cell power plants are quiet, small and clean enough to place right at a customer site. That avoids problems that arise with transmission from centralized power plants, as well as controversies associated with getting permits for transmission lines and conventional power plants, proponents said.

Northeast Utilities supports research into fuel cells but has concerns about the costs and the amount of electricity produced, said Frank Poirot, spokesman for the Connecticut utility.

"It's a burgeoning technology," Poirot said. "It does have a role in the overall solution to our future electric needs."

Getting power from fuel cells is more expensive than getting it from conventional sources. Capital costs for fuel cell projects can run two to three times higher than traditional power generation, Dalpe said.

But Kwan said costs could drop as more people turn to the alternative. And the benefits of the technology have enabled UTC to sell 255 fuel cell power plants to hospitals, hotels and others over the past decade, Dalpe said.

With the blackout still fresh in many minds, UTC expects more interest in fuel cells and in other methods of distributed generation such as microturbine power plants.

"We think the next two to four months is going to be critical to make the business case for using these devices to provide reliable power," Dalpe said. "We have to create a business case that will turn interest into sales."
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