The Departments of Defense (DoD) and Energy (DOE) have cooperatively supported the development and commercialization of domestic stationary fuel cell systems since 1996.In 1995 Congress appropriated funds for the DoD Office of the Assistant Secretary for Economic Security for a competitive, cost-shared, near-term Climate Change Fuel Cell Program (H.R. 103-747).


The Program grants funds to fuel cell power plant buyers to reduce the high initial cost of early production systems, providing up to $1,000 per kilowatt of power plant capacity not to exceed one-third of total program costs, inclusive of capital cost, installation and pre-commercial operation. For the programís six years, the grant program significantly aided commercialization of the first generation of fuel cell systems as intended by the Congress.


Benefits of the Program

The fuel cell grant program has expedited market introduction of early fuel cell systems.Production quantities are low and first time costs (e.g. engineering, manufacturing facilities, tooling) are high, yielding high early unit capital costs. The grant program has facilitated an increase in manufacturing quantities thereby reducing unit cost and enabling early adopters to participate in demonstrations and field trials. Lastly, federal participation in fuel cell demonstrations and field trials has encouraged, in some cases, supplemental support from state agencies or electric utilities, further reducing costs.In virtually all cases, fuel cell projects would not be possible without the grant program support.


Requested Action

$18 million in FY 2002 funding is being sought for the fuel cell grant program at $1,000 per kW capacity.This level of funding is needed to support the growing number of fuel cell technologies and manufacturers that are bringing new fuel cell products to market.The criteria used to select applications for a program grant should be identical to that used in the last year of the programís operation.


The key criteria include, but are not limited to: demonstration by applicant of a commitment to purchase and use fuel cell power plants with a rated capacity of at least 1 kW; power plants purchased before September, 2000 are not eligible; grants awarded consistent with the amount of funding available; applicants must comply with all National Environmental Policy Act and other applicable regulatory requirements; signed contract within 60 calendar days of being notified of award required; first payment to applicant (70%) made after applicant submits a signed factory or site acceptance test form; second payment (30%) dispersed after receipt of acceptable report covering a year of fuel cell operation; applicants cannot be fuel cell vendors, manufacturers or developers; priority given to projects using DoD installations; all fuel cell technologies are eligible; no restrictions on fuel type; applicantís fuel cell vendor must offer commercial warranty for one calendar year of operation; and, it is desirable to select for award a group of projects representing diverse sizes, applications, fuels and locations.


Anticipated Program Benefits

Presently there are several fuel cell technologies completing advanced development and nearing commercial readiness.Over a dozen U.S. fuel cell manufacturers will field products that qualify for program grants. The fuel cell grant program has enjoyed bipartisan Congressional support for many years. Continuation of this initiative will benefit the nation by accelerating deployment of environmentally benign, reliable, distributed generation technologies to provide needed new electricity capacity.



Contact Judith Bayer at 202-336-7436 or if you have any questions.