GE Power Systems and Plug Power have signed a memorandum ofunderstanding to form “GE Fuel Cell Systems,” a joint venture thatwill sell, install and service Plug Power-designed and manufacturedfuel cell systems. The announcement last week follows Plug Power’srecent demonstration of a prototype residential fuel cell systemthat produces more than enough power to meet the energyrequirements of an average-sized home.

Plug Power said that its initial units will operate on naturalgas, propane or methanol and can achieve 40% electrical efficiencyin simple-cycle operation. When excess heat generated by the fuelcell is captured and re-used, overall efficiency can reach 70-85%.

Under the terms of the understanding, GE Fuel Cell Systems willdistribute Plug Power fuel cells for residential and smallcommercial power applications. GE will be Plug Power’s exclusivedistributor for fuel cell systems worldwide, except for Michigan,Indiana, Ohio and Illinois. As part of its fuel cellcommercialization approach, GE plans to partner with a selectnumber of gas distribution companies, electric utilities, electricservice companies and power marketers. All fuel cell products soldby GE will carry both the GE and Plug Power brands.

“Commercializing innovative new technologies is part of ourstrategy to build the GE brand across a wider range of product andservice solutions for the entire energy industry,” said Robert L.Nardelli, president and chief executive officer of GE PowerSystems.

Fuel cells offer a clean, quiet and cost-effective alternativefor customers looking to eliminate the cost and inconvenienceassociated with unexpected power outages. In many areas, fuel cellsalso will provide an attractive alternative to grid-supplied power,with three- to five-year paybacks possible.

Fuel cells operate by converting fuels such as natural gas orpropane to electricity through an electrochemical process, ratherthan combustion. The benefits of fuel cells include highelectrical efficiency and reliability, low operating andmaintenance costs, and near zero emissions of particulate matterand other pollutants. Fuel cell systems can be sized to matchconsumers’ specific energy requirements.

“Partnering with GE gives us access to the technical expertise,market presence, service infrastructure and brand recognition ofthe world’s leading energy technology and services company,” saidGary Mittleman, Plug Power president and CEO.

In June, Plug Power demonstrated its proprietary Plug Power7000, a 7-kilowatt (kW) residential power system. The demonstrationmarked the first time a fuel cell has been used to meet a home’scomplete electricity requirements. The sale of test units isexpected to begin early next year, followed by commercial units inthe year 2000.

To date, fuel cells have not been a desirable option for on-sitepower generation, due to their relatively high cost. Prices areexpected to fall dramatically, however, as production volumesincrease and manufacturing efficiencies are achieved. In massproduction, a residential fuel cell system is expected to retailfor $3,000-5,000. At these prices, fuel cells can generateelectricity at 7-10 cents per kilowatt hour, depending on the fuelcosts in a given market. Plug Power (https://www.plugpower.com) is ajoint venture between DTE Energy, the parent of Detroit Edison, andMechanical Technology Inc., an early developer of fuel celltechnologies.

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