Wachovia Initiates Fuel Cell (FCEL) with a Market Perform


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July 10, 2008 8:49 AM EDT

Wachovia initiates coverage on Fuel Cell (NASDAQ: FCEL) with a Market Perform rating and a $7 to $8 valuation range.

The firm said, "In our view, rising energy prices, growing environmental concerns, and an increasingly unreliable grid should lead to significantly higher demand for distributed generation (DG) products. We think FCEL's ultra-clean products are well positioned to take a share of this growing market."

Since FuelCell's systems use a variety of fuels, have much lower emissions than traditional DG technologies, and are cleaner than microturbines, the firm believes FuelCell’s systems “are attractive to customers seeking a ‘clean’ DG option, particularly in resource recovery and combined heat and power (CHP) applications.” Wachovia also considers FuelCell's products as a unique and excellent option for utilities to meet renewable portfolio standards (RPS) or other environmental targets or goals because of their ultra-low emissions, high efficiencies, baseload operation, and scalability up to 50MW.

However, the firm believes that FuelCell will not be profitable until at least FY2011.

FuelCell Energy, Inc. engages in the development and manufacture of fuel cell power plants for electric power generation.


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Comments

FC Cleanliness
Jim Horwitz on Jul 14, 2008 01:51 PM

To Herb Levin: SInce there is no combustion in fuel cells, they are not only inherently cleaner, but are 100% clean (pollutants, SOXs, NOXs) in many cases. Their CO2 output is significantly less than thermally produced power, but not much less than turbines, including the Capstone 30 kW. The various case studies say this. Fuel cells are still not cost-effective as compared to other power sources, but will always be the cleanest way to produce power from any type of hydrocarbon fuel. Many of the cases studies Mr. Levin is probably referring to would be with the old generation (1990's) UTC 200 kW PAFC systems. Fuel Cell Energy's DFC current self-reforming systems are very fuel versitile, and UTC's brand new 400 kW systems which will power NYC's Freedom Tower all should be extremely reliable, and of 100% clean with a marked reduction in GHG's. There is a real future in fuel cell, turbine hybrid systems though, with the Capstone units producing power from the fuel cell's waste heat. See US DoE Case study for example: http://www.chpcenternw.org/NwChpDocs/ColumbiaBlvdWastewaterCaseStudyFinal.pdf

micro turbines
Herb Levin on Jul 10, 2008 12:09 PM

Your assertion that Fuel cells produce less emissions than Micro turbines is inaccurate. If Microturbines are used for CHP, they are cleaner than Fuel cells, and Less costly. Contact Capstone Microturbine for case studies.

FCEL
Jim Horwitz on Jul 10, 2008 11:57 AM

I am an independent analyst specializing in the global fuel cell industry. I would like you to get this major US player's name correct as you state it in the final line, "FuelCell Energy, Inc." rather than refering to it by the generic "fuel cell". FCE's products now and through 2011 scale no higher than 2.4 MW (yet to be delivered), and its main selling point is a long term production and licensing deal with Korea's largest steel producer, POSCO, and in waste water treatment plants in the US, primarily CA. The US grid is still comparatively reliable, and the US DoE and utilities give little support to distributed generation.


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