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Wall Street Eyes Fuel Cell Developments with Interest

Wall Street Eyes Fuel Cell Developments with Interest

As the dot.com stocks begin to lose a "little bit of their luster," Wall Street investors quickly are setting their sights on companies that are involved in the development of fuel-cell technology for the energy market, as well as the individual utilities that are "embracing" the new technology.

Investors who made a killing during the telecom revolution are the "same people today [who] are looking at this opportunity," said Sam Brothwell, a utility analyst with Merrill Lynch, at the annual meeting of the Energy Bar Association in Washington D.C. last week.

"The idea of energy technology, fuel cells and distributed generation has captured [their interest], and I believe [it] will remain a compelling theme on the Street" for awhile, Brothwell noted. In fact, at Merrill Lynch "we have created a separate research group and a separate banking group to deal with this going forward. So we definitely believe in it."

The residential market alone for fuel cells and distributed generation is "somewhere in the 90 some-odd-billion-dollars-a-year range. So it is a very big market," he estimated. Initially, the market for fuel cells will be "niche" in size, and will take off later in the decade. "John Q. Public customer in most places in the U.S. is not going to realize [at the outset] the benefits of this despite the hype.....out there.

GE, which is at the forefront of the new technology for the energy market, already has begun testing 50 fuel-cell units for the residential market. If successful, it plans to commercially offer a 7 kW unit for residential use beginning in the third quarter of 2001, said Barry Glickman, president of GE Fuel Cell Systems. It will carry a price-tag of $8,000, and installation costs will vary from region to region. "Where natural gas is available, that [will be] the fuel of choice" for fuel cells, he noted.

Who will be the rising utility stars in this new market? "Nobody heard of Quest.....or [MCI's] Worldcom as recently as five to 10 years ago. We don't know who the Quests and Worldcoms are going to be in the power sector, but we do know that they're out there," Brothwell told the gathering of energy lawyers.

Some of the most "forward-looking" utilities include DTE Energy, NiSource, Keyspan and Public Service Electric and Gas in New Jersey. They are "embracing distributed power and see it as not a threat [to traditional markets], but [as] an opportunity," he said.

Susan Parker

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