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Statement of FuelCell Energy, Inc.
FuelCell Energy, Inc. (FCE)
appreciates the opportunity to submit this statement to support the extension
and expansion of the current tax credits available for fuel cells. FCE
(www.fce.com) is the leading fuel cell manufacturing company with headquarters
in Danbury, Connecticut that produces and sells fuel cell systems. We
currently have over sixty units in operation worldwide that have generated
approximately 155 million kilowatt hours of electricity.
Fuel cells are ultra-clean
systems that produce power at very high efficiencies, at scales ranging from a
few kilowatts per installation to multi-megawatt power plants. They are
applicable to both distributed generation and central station power and can also
operate in a cogeneration mode that uses waste heat from the system. Our fuel
cells operate on a variety of fuels including natural gas, gasified coal,
digester gases from waste treatment facilities, other biofuels and hydrogen.
Their versatility, efficient operation and superior environmental
characteristics make them a very desirable alternative to conventional fossil
fuel fired power systems.
As with many new technologies,
capturing sufficient order volume to lower product costs is the remaining challenge
for large-scale deployment. Consistent and robust incentive programs are
essential to facilitate the order volume that is necessary to drive down
product costs. The resulting order volume will generate thousands of new, high
quality, manufacturing and engineering jobs in the US.
This Committee recognized both
the environmental and efficiency benefits of fuel cells as well as the need for
incentives to accelerate their commercial introduction through enactment of the
Section 48 fuel cell investment tax credit included in the 2005 Energy Bill.
FCE appreciates the Committee’s action in this regard. In combination with
state-level incentives, FCE has been able to complete agreements for the
installation of fuel cells in a handful of states that offer such incentives,
particularly California. As a result, states with fuel cell incentive programs
and high cost power are the early target markets.
The fuel cell industry is in a
position to provide very-high efficiency, low greenhouse gas power in both distributed
and central station power applications with a minimum of environmental
emissions. Continuing and improving the tax incentives originally provided by
this Committee is in the best interest of our nation as it strives to reduce
the environmental impact of electricity generating technologies, reduce overall
energy use and dependence on foreign sources of energy. Therefore, FCE
recommends that:
- The ITC be increased to $3,000 per kilowatt
- The ITC be extended for a minimum of 5 years, and
- Enable fuel cell users to claim both the ITC and the renewable
energy PTC for electricity from biomass sources.
In order to compete nationally in
the near term, fuel cells must receive an equivalent incentive in states where
they are not currently available. Our experience, based on incentive levels in California, indicates that an investment tax credit of $3,000 per kilowatt is necessary.
Such a credit will allow for a comprehensive base of fuel cell installations
across the country instead of those few locations that provide state-level
incentives. It will provide a significant increase in the volume of fuel cell
sales, which in turn will allow fuel cells to be cost competitive with
conventional, more polluting technologies.
In addition, FCE requests that
the ITC provision be extended for at least five years. Such an extension will
allow for rapid growth of the fuel cell industry. An extension will allow for
the development of healthy markets and capital investment in production
facilities to serve those markets. In addition, the extension would avoid the
boom and bust cycles that occurred with other technologies as a result of short
term tax credits.
Finally, FCE understands that if
an entity opts to take advantage of the ITC it may not use the Production Tax
Credit (PTC) available for electricity produced using biofuels. Removal of the
prohibition on using both credits would promote the use of environmentally
friendly biofuels for renewable applications such as fuel cell based power
generation. FCE has several installations running on digester gas and would
benefit greatly in this market if this prohibition is removed.
Thank you for your consideration
of these matters. Please contact me with any questions you may have.
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