California Center for Sustainable Energy

$23.5 million secured to fund nation’s largest fuel cell project

Companies involved in a clean energy venture that will provide an additional 4.5 megawatts of generating capacity to San Diego by mid-2011 announced securing the $23.5 million financing needed for the project in November. Billed as the nation’s largest integrated fuel cell project, it will receive an additional $14.4 million incentive award from the California Public Utilities Commission’s Self-Generation Incentive Program ( SGIP) administered by CCSE in San Diego.

"The citizens of San Diego will benefit from this project as we protect our air quality while also generating revenue for the city," said Mayor Jerry Sanders. "This is yet more proof that San Diego is leading the charge in the exciting world of clean energy technology."

The nearly $38 million project will fund three fuel cell systems to be located on sites owned by the University of California, San Diego (UCSD) and the City of San Diego that will run on renewable biogas directed from the Point Loma Wastewater Treatment Facility. Currently, biogas from the roughly 175 million gallons of wastewater the facility treats per day is flared into the atmosphere.

In addition to the SGIP incentive, the project is being financed by bonds authorized by the California Pollution Control Authority, equity and debt investments from the New Energy Capital Cleantech Infrastructure Fund and the North Sky Capital CleanTech Alliance fund and federal investment tax credits. The fuel cell power plants will be built by Fuel Cell Energy, Inc. of Danbury, Conn., and owned by BioFuels Energy (BFE), LLC of Encinitas, Calif.

Announcement of the financing comes after nearly two years of project development, according to Ryan Amador, CCSE’s SGIP manager, who describes the project as one of the most complicated and complex projects that has applied for an SGIP incentive since 2001.

“This project is coming to fruition only because of the dedication of the many partners involved,” Amador said. “The City of San Diego will convert a waste problem into a revenue stream through this directed−biogas project, offsetting some of their power requirements with clean energy.”

The project incorporates a unique solution that purifies the biogas on site at the Point Loma facility and then injects the biogas into an existing gas pipeline to supply the fuel cells at different locations. Fuel cells are usually installed at the site of origin of waste biogas and this “directed” biogas transmission required public hearings and approval by the California Public Utilities Commission.

The project will install a 2.8- megawatt ( MW) fuel cell at UCSD to supply power to the campus electrical grid. The university will use the byproduct heat from the fuel cell generation as a continuous source for 320 tons of chilling capacity for its buildings, increasing the overall efficiency of the power plant. The fuel cell will be paired with an additional 2.8- megawatt advanced energy-storage system, which will allow UCSD to store off-peak power and discharge the energy during peak-demand hours.

A combined heat and power 1.4- MW fuel cell will be installed at the South Bay Water Reclamation Plant, a municipal pumping station that does not generate biogas on site. A smaller, 300- kilowatt fuel cell will be located at the Point Loma Wastewater Treatment Plant to generate the power required for the biogas purification process.

The City of San Diego estimates the project will generate $2.6 million of revenue over ten years from payments made by BFE for the biogas. In addition, the city expects to save $780,000 in electricity costs to power the South Bay facility under a ten-year power purchase agreement with BFE. The three fuel cells will produce approximately 35 million kilowatt hours of electricity per year and reduce annual carbon dioxide emissions by more than 12,500 tons. The California Air Resources Board has certified the pollution emissions of the planned fuel cell systems as an “ultraclean” electrical generation technology.

"We have been working closely with the City of San Diego, UC San Diego and the California Center for Sustainable Energy on this project and believe this is a model that can work for other municipalities to generate revenue and renewable electricity from their waste streams," said Frank Mazanec, BFE managing director.

About Fuel Cells

Fuel cells generate electricity cleanly and efficiently using an electrochemical process that does not involve combustion. Electricity is produced by separating the component electrons and protons of a fuel, which for this project is methane, and forcing the electrons to travel through a circuit that converts them to electrical power. Methane-powered fuel cells are in operation at landfills and wastewater treatment plants across the country, as well as at breweries and other manufacturing facilities. Fuel cells will operate virtually continuously as long as the reactant fuel is replenished.

About SGIP

SGIP is the largest and longest-running distributed energy incentive program in the country with more than 1,300 projects in the state and about 350 MW of rebated capacity. Initially a peak-load reduction program, SGIP now also seeks to stimulate installation of clean, efficient energy generation technologies in order to reduce greenhouse gas emissions. CCSE administers SGIP within the SDG&E service territory, providing rebates for fuel cells, wind generating systems and advanced energy storage from 30 kilowatts to 3 megawatts in size. The program is funded by utility ratepayer.

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