Energy Policy Center, Great Lakes Environmental Finance Center
Ohio has not, heretofore, been a major player in the deployment of stationary fuel cell applications, notwithstanding its status as a leader in developing fuel cell technology. One reason for this is that in the years since fuel cells became commercially available, fuel cell power generation had struggled to be cost effective in Ohio due to a combination low electricity prices and high natural gas prices, the latter being the most common fuel for stationary fuel cell applications.
By 2015, this had changed. The Mid-Atlantic region was enjoying the lowest natural gas prices in North America as a result of regional shale development. Meanwhile, wholesale electricity prices in the PJM Interconnect regional transmission organization (Mid-Atlantic region) are among the highest in the nation. This has created therein a historically high “spark spread” -- the term used to describe the price differential between wholesale natural gas and electricity. What’s more, fuel cell generation qualifies for net metering, and may be valued at retail costs. Finally, additional new value for the avoided costs of carbon and other emissions may be derived from new ultra-efficient fuel cell technologies.
As for other nascent technologies, early adoption will likely require public-private financing partnerships. There are available federal, state and local financing strategies to enable the deployment of fuel cells in Ohio. Loan programs such as the Energy Loan Fund and Qualified Energy Conservation Bonds can be used to support fuel cell demonstration with low interest loans. Property Assessed Clean Energy (PACE) bonds may also soon be available to support fuel cell deployment, depending upon pending Ohio legislation. In addition, the Public Utility Commission of Ohio has within its authority to support power purchase agreements or special arrangements for buyers to support generation that is in the interest of Ohio ratepayers (such as when it promotes economic development).
The best places to acquire natural gas for power generation on long-term, fixed prices will be at gathering points along the natural gas pipeline and processing system. Such points offer natural gas producers the most flexibility to supply natural gas long term. Most of the gathering and processing points are currently located in southeastern Ohio, however new interstate pipelines are being built across northern Ohio. This new infrastructure may provide opportunities to locate stationary fuel cells in the generation, transmission and capacity-constrained northern Ohio market.
Low gas prices may also provide opportunities for stationary fuel cell applications using low temperature fuel cells. Such fuel cells run directly on hydrogen, and heretofore, the costs of manufacturing, transporting and storing hydrogen has made the economics for such generation difficult. Low hydrogen feedstock costs, together with the ability low temperature fuel cells have to supply the lucrative peak loading market, may make such applications cost effective in the near term.
Thomas, Andrew R.; Clark, Benjamin Y.; and Immonen, Allan, "Opportunities for Stationary Fuel Cell Applications in Ohio: Public Finance and Other Strategies" (2015). Urban Publications. 0 1 2 3 1323.