US Fuel Cell and Hydrogen Policy Trends and Challenges

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1 US Fuel Cell and Hydrogen Policy Trends and Challenges F-cell 2011 Stuttgart, 26 Sept Robert Rose

2 The Bottom Line Fuel cell markets in the U.S. are growing Third party financial support is crucial in power markets Business case is driving forklift markets Federal policy focus remains on batteries, but Growing recognition of the realities of the battery pathway and value of fuel cells New openness in the Obama Administration Strong support in some states Divided political leadership makes national policy progress difficult

3 U.S. Markets

4 U.S. Fuel Cell Market 50 MW+ of power installed in the past year Substantial demand: nearly 100 MW applied for California self generation support Repeat customers for power generation, forklifts, backup power High-quality, visible customers Green sells

5 Major Share of Power Gen. Market Fuel Cell Today 2011

6 Repeat Customers Coca-Cola Forklifts at two warehouses, Plug Power CHP at two production facilities,utc Primary power in CA (Bloom Energy), uses redirected biogas FCEVs in CA and Germany

7 Repeat Customers Walmart Uses FC power at 17 retail sites Forklifts deployed in three warehouses 71 FC forklifts at Balzac, Alberta warehouse operate in refrigerator and freezer areas

8 Repeat Customers Health Care: Kaiser -Permanente Grocers: Price Chopper, Whole Foods, Albertsons Whole Foods (CT) and Albertsons (CA) remained open during recent widespread grid failures Telecom primary power: AT&T, Cox Warehouses: Central Grocers, U.S. Foodservice, Sysco (268 units, 315 more planned)

9 Telecom Using fuel cells for primary power/chp and backup power 500+ backup power units deployed with federal help so far

10 Biogas a New Growth Market ADG generated onsite Gills Onions, wineries, breweries (Sierra Nevada) Wastewater treatment plants (CA, NY) Redirected biogas Bloom Energy servers at Coca-Cola, NTT America s data center and Kaiser Permanente operate using redirected biogas Cox Enterprises: UTC FCs at two sites are powered by a blend of biogas and natural gas

Residential-Small Commercial Hampstead Lafayette Hotel Village Lindo Paseo Dormitory (SDSU) City of San Diego Historic Landmark 8 Unit Install Tax advantages

facilities / pools 12 Unit Install Model schools program Cambrian Center Low Income Senior Living (HUD) 4 Unit Install System providing power to public areas

11 Residential-Small Commercial Hampstead Lafayette Hotel Village Lindo Paseo Dormitory (SDSU) City of San Diego Historic Landmark 8 Unit Install Tax advantages for historical remodel $1M savings in construction costs 9 Unit Install Solar/fuel cell hybrid installation Irvine Unified School District (2) High school facilities / pools 12 Unit Install Model schools program Cambrian Center Low Income Senior Living (HUD) 4 Unit Install System providing power to public areas and heat to pool $23B Energy Service Provider Installed at wind farm 1 unit install NextEra Energy Fresh & Easy 5 Unit Install 2 locations Part of the DOE Program

12 Business Case Lower cost than grid: LCOE as low as $0.09 per commercial kwh and $0.12 per residential kwh Cleaner than grid: 37% less CO 2 with negligible levels of NO x and So x Continuous base-load power: Clean, uninterrupted power 24x7 ClearEdge Power High efficiency: Up to 90% CHP energy efficiency and designed for 40% electrical efficiency

13 Financing Fuel Cell Installations Federal incentives Federal Industrial Tax Credit and Payment in Lieu of FITC (1603 grant) Market incentives Net metering, renewable energy credits State incentives Calif. Self-Generation Incentive Program (SGIP) New York State Energy Research and Development Authority (NYSERDA) Manufacturer (or third party) financing UTC Power Energy Service Agreement (ESA) Bloom Energy Bloom Electrons

14 Creative Financing Tax and direct cash support from federal and state government and from the marketplace Financing often involves monetizing environmental or system benefits Fuel cell manufacturers (FuelCell Energy, UTC Power, Bloom) and middle-men (Logan Energy) offering innovative financing arrangements Selling electrons, not units Tax credits can be packaged and re-sold

15 Federal Policy

16 New Visibility for Hydrogen rapid development in fuel cells, we still need a clean source of hydrogen, but these are examples of things where technology can really give us much better choices to the internal combustion engine and oil. Sec. Chu, APEC, 13 Sept.

17 Intense Congressional Debate Politically divided Congress 2012 campaign begun Budget woes Serious divisions over energy policy /financing Cut energy funding for disaster relief? Dialogue, U.S. House, 1856

18 DOE Fuel Cell Program ($ millions) 2010 Approved 2011 Approved 2012 Possible EERE $170 $98 $98 H2 Turbines $31 $31 $14.5 SOFC $50 $50 $25 TOTAL $255 $179 $137.5

19 Federal Tax Support for Fuel Cells Hydrogen Fueling Facility Credit Investment Tax Credit for Fuel Cells to 2016 Grants in Lieu of Tax Credits through % up to $30,000 30% to $3,000 /kw Allows grants for businesses with insufficient tax liability Fuel Cell Vehicles $4,000 Residential Energy Efficiency Credit Up to $1,000, or $3,334 for multi-family

20 Analysis

21 Powertrains Report for H2Mobility FCEVs are ready for commercialization FCEVs are the lowest carbon solution for medium/larger cars and longer trips which produce 70% of CO2 emissions BEV s are ideally suited to smaller vehicles and shorter trips

22 H2Mobility Report Converted to US Ownership & Use Patterns Even if BEVs replace all small cars, all small vans, all small wagons, all small pickup trucks, all small SUVs and 50% of midsize sedans, BEVs will still account for less than: 40% of all vehicles on the road 30% of all vehicle miles traveled Reduce GHGs from LDVs by only 10% compared to 2015 (less than 30% with a carbon-free electrical grid

Ref SI Adv SI Adv CI SI HEV SI PHEV10 SI PHEV40 CI HEV CI PHEV10 CI PHEV40 FC HEV EV E85 HEV E85 PHEV10 E85 PHEV40 Lifecycle GHG emissions (g CO2 eq / mi) Petroleum Consumption (gal gasoline-eq / mi)

23 Ref SI Adv SI Adv CI SI HEV SI PHEV10 SI PHEV40 CI HEV CI PHEV10 CI PHEV40 FC HEV EV E85 HEV E85 PHEV10 E85 PHEV40 Lifecycle GHG emissions (g CO2 eq / mi) Petroleum Consumption (gal gasoline-eq / mi) DOE Consensus View In 2030 Success case -- Assumes both battery and fuel cell technologies achieve DOE goals GHG Emissions and Petroleum Consumption by Vehicle Technology GHG Emissions (g CO2-eq / mi) Petroleum Consumption (gal gas-eq / mi) Reference vehicle GHG emissions: 430 g CO2eq /mi 50% reduction from reference vehicle GHG emissions: 215 g CO2eq /mi NREL/Argonne analysis for DOE

24 Autonomie Report Potential of Technologies for Displacing Gasoline Consumption by Light-Duty Vehicles through 2045

25 FCEVs Compete on Efficiency

26 Vehicle Costs Converge

27 Status and Outlook for the U.S. Non-Automotive Fuel Cell Industry: Impacts of Government Policies and Assessment of Future Opportunities (Green II)

28 Reductions Exceeding Projections

29 U.S. State Activity

30 Strong State-Level Interest CA: $15 M for infrastructure OH: $8 M for research SC: Cost-shared research program NY: Continuing NYSERDA program CT: Substantial deployment support

31 2011 Policy Activity Ohio: Qualified Energy Project Tax Exemption. California: CAEATFA (California Alternative Energy and Advanced Transportation Financing Authority) Louisiana: renewable energy pilot program Oklahoma: alternative fuel vehicle and infrastructure tax credits, & renewable energy goal Maryland: fuel cells eligible for net metering Florida: fuel cells target industry for development Delaware: FCs renewable

32 Hydrogen Infrastructure

33 ~50 Operating Fueling Stations 30 at forklift sites

34 California Snapshot About 20 stations installed or funded About 20 more needed for first wave 33% renewable being achieved Costs are coming down: CARB: $0.6 to $3 million+ (renewable are at the high end) Profitability may need as few as 25,000 cars 300 kg/day station might be profitable

35 Station Costs Are Declining Cheaper compression / no compression at stations Modular station designs Lower delivery costs Higher efficiency for distributed generation Standardization Some entrepreneurial interest

36 CAFCP/Industry Sales Estimates

37 ZEV Regulation California Air Resources Board to vote in January Staff Report out soon Continued support for FCEV pathway

38 Likely Compliance Scenario

39 Other State-Level Programs Hawaii: H 2 waii H2 fueling stations 5,000 25,000 cars

40 Other State-Level Programs New York: NYH 2

41 Final Thoughts Starting to see some market pull though price is still a critical issue Systems and fuel infrastructure Policy leadership shifting to the States Opinion is shifting subtly in government and among opinion leaders Key interest groups still need educating

42 Questions?

Fuel Cells and Hydrogen Energy

Fuel Cells and Hydrogen Energy Power Expo Ruth Cox Fuel Cell and Hydrogen Energy Association May 4, 2011 Our Members View in Washington DOE Fuel cell and hydrogen programs are one of the most successful