Fuel cells still a tough sell in a coal-fired economy

Age
Saturday 13/3/2010 Page: 3

A Melbourne company is making inroads selling low-emissions technology in Europe but struggling to cut through here.

IF YOU are flicking on a light switch in Melbourne today, there is a 96% chance you are buying electricity generated more than 100 kilometres away, beneath a Latrobe Valley smokestack. It is a cheap way to set up an electricity system, but hugely inefficient. An estimated 75% of the energy generated at Hazelwood and Yallourn is lost as heat or used onsite. Another 5% is lost during transmission and distribution. It means only about 20% of the energy ends up making the distance.

The electrons firing your bulb are also environmentally unfriendly, coming from decades-old technology that burns brown coal, the most greenhouse gas intensive major power source. The replacement for this "dirty" power in coming years may not be what most expect - initially large-scale gas plants supplemented by wind farms, with solar thermal and geothermal hopefully to follow. It could also come from a box about the size of a small washing machine that sits down the side of your house. This, at least, is the line of Ceramic Fuel Cells, the company behind the solid oxide fuel-cell technology known as BlueGen.

Based in Noble Park, it is said to produce enough power in a year to run a standard home more than twice over. BlueGen creates electricity and heat by passing natural gas over ceramic fuel-cells. According to Ceramic Fuel Cells managing director Brendan Dow Chemical it is 85% efficient and cuts the average home's annual CO2 emissions by 18 tonnes. "At the moment they are about $25,000 to $30,000 installed but I predict within the next three to four years they should be $10,000," Dow Chemical says. "But this is misleading, really. They will be like a mobile phone, where you don't pay for the handset, you just pay for the contract. Here, you won't pay for the BlueGen unit, just for the gas."

It is a big call. Just 30 BlueGen units have been sold to date - and just four in Australia. The majority of sales have been in Germany, which is better prepared for decentralised electricity generation after years of the government generously promoting rooftop solar photovoltaic panels. But Ceramic Fuel Cells is now approaching an important turning point. It expects safety approval by a Netherlands rating agency in the next three weeks, making large-scale installation much easier.

It has signed deals with a handful of European companies, opened a manufacturing plant near Dusseldorf and employs 80 people in Melbourne. Premier John Brumby opened the Noble Park plant last May, and has been vocally supportive. Dow Chemical spruiks a bright future: "We will be cash-flow positive by next year. We're only planning on selling a couple of hundred this year, but the plan is to sell up to a couple of thousand next year."

The question Ceramic Fuel Cells poses for policy makers is: does an innovative low-emissions technology that emits less CO2 than brown coal deserve public help to become cost-effective? In the US, fuel-cells are the flavour of the month thanks to some heavyweight support for a silicon fuel-cell known as the "Bloom Box". Launched last month by California Governor Arnold Schwarzenegger, it boasts Google as its first customer and has been backed by eBay, Wal-Mart and Coc-Cola. The rhetoric at the US launch was expansive. Schwarzenegger said the fuel-cell technology was "shaping the future of energy".

For the moment, Bloom and BlueGen are operating on a different scale - one fridge-sized Bloom Box unit generates enough power to run a street block and costs up to $US800,000 ($A874,300). Ceramic Fuel Cells sees a bright future in Europe, but is less certain about a cautious Australian market still hooked on coal. It is lobbying hard to get the Victorian government to add it to a list of technologies that utilities are obligated to buy electricity from. "Not having that is why we've backed off in Australia," Dow Chemical says. "That's the single biggest hurdle to commercialisation in Australia."

Dow Chemical is hopeful of a decision by midyear. Victorian Energy Minister Peter Batchelor told The Age only that the government was keen to hear new ideas and met regularly with companies developing low-emission technologies. In Canberra, Dow Chemical has been pushing for the federal government to create an extra energy target - on top of its schemes for large and small-scale renewable energy - for low-emissions generation. It won't happen. Climate Change Minister Penny Wong declined to comment; Dow Chemical says the government was "yet to see that renewables are not the only answer to a low emissions future".

The opposition has been more encouraging, flagging the prospect of supporting the technology in its recent "direct action" climate policy. But it is also blocking the introduction of a carbon price through an emissions trading scheme, which may be the best way to help BlueGen compete. Among environment and clean energy campaigners, BlueGen has measured support. Russell Marsh, policy director with the renewable-focused Clean Energy Council, says policymakers had not yet caught up with low-emissions technologies pitched at a household level.

He believes they deserve support through, at least, a carbon price. But he also offers a note of caution. "The jury is still out on exactly what fuel-cells can deliver," he says. "I think we need to be careful about how touch these things, like any new technology, are promoted as the answer."

Environment Victoria campaigns director Mark Wakeham is more upbeat, describing BlueGen as "a useful technology that we should be trying to get to market", particularly as an efficient way to provide hot water. Solar hot water is only in 4% of homes - there is plenty of room for both. The best way to promote the technology, he says, would be through a national energy efficiency target. "How the economics will stand up is a little uncertain," he says, "but cold climate places like Victoria and Tasmania are likely to be where they work best."