Statement of Plug Power Inc., Latham, New York

 My name is Dr. Roger Saillant, President and CEO of Plug Power Inc., a Latham, NY-based company that is a leader in the development of on-site energy systems utilizing proton exchange membrane (“PEM”) fuel cells for stationary power, emergency backup power and material handling applications.  Plug Power espouses the values of sustainability and is developing and commercializing fuel cell systems that contribute to the United States’ energy independence. 

Plug Power would like to thank the Members of the Committee for the opportunity to submit testimony in favor of including commercial and residential fuel cell credit extensions in the energy legislation being advocated by Congressional Leadership. Also, let me thank you for your initiation of these credits in the Energy Policy Act of 2005 and for providing a one-year extension of the credits last year. 

We have been advocating tax credits for fuel cells in both residential and commercial use since 1999 and have been working closely with our Congressman, Michael McNulty, who has introduced legislation in each Congress since that time. Thanks in large part to Rep. McNulty’s steadfast leadership, and to the support in this Committee, today we have the credit in existing tax code.

Fuel cell tax credits currently in existence are critical for our fledgling industry. This credit targets stationary and portable fuel cell technologies and it has been our intention that the credits apply to all non-mobile applications that meet the credit criteria of efficiency and size.   These applications are the precursors to the fuel cell vehicle and a low or no-carbon transportation and energy generation future.   In fact, at Plug Power, our vision is one of a sustainable and renewable future, and we believe that such a future cannot occur without fuel cell conversion devices.  Renewable energy sources are, unfortunately, not readily adaptable to the transportation market, but through fuel cells, can supply that motive power.  In addition, some renewable energy sources are intermittent, and fuel cells allow for the storage and use of that energy power at all times. 

Plug Power support H.R. 550 and its companion bill S. 590, the Securing America’s Future Act.  This bill extends both the fuel cell and  solar tax credits and provides those credits though 2016.  The long term nature of the fuel cell credit is critical.  First, it recognizes the evolution of the range of fuel cell technologies and products.  This is not akin to providing a credit for a “highly efficient motor”.  It is more like a credit for highly efficient motors, power generators, battery replacements, forklifts, back up power units, critical load providers, loaders, and so on.  You get the idea: fuel cells need a long term credit because we are talking about a VERY wide variety of products.

The long term nature of the credit is also important because it allows us to:  reduce our manufacturing costs, invest in our manufacturing facilities with confidence, give security to our manufacturing base, build confidence in our supply base, and importantly, provide time for the long term planning that is often involved in building and siting fuel cell technologies. Like solar, we have some large scale systems and/or some aggregations of systems that takes a long time to gain approvals and otherwise be ready for installation.

H.R. 550 also calls for relief from the Alternative Minimum Tax, which some of our commercial credit customers have requested.  Ours is a fledgling industry but one in which there are at least 30 products now available.  We must find ways to get our fuel cell systems into customer hands, and the tax credit is proving to be a very valuable tool.  We believe that, once customers have enough experience with fuel cell systems, they will want to use them to replace existing, and in many cases, inferior technologies.  We cannot rely on the credit as a tool for gaining experience with fuel cells if our customers cannot even take advantage of that credit.

For the fuel cell portion of H.R. 550, it continues to allow telecommunications customers to take advantage of the credit.  We support the continuation of this provision.

We are very encouraged by the support of H.R. 550 to date and urge its passage as part of any comprehensive energy legislation.  The credit of 30% capped at $500 per half kilowatt is just enough to encourage cost reductions and leverage early sales, yet not so much that we are installing technologies that are not yet ready for commercial introduction. 

Again, Plug Power thanks you for the opportunity to provide testimony and for your support to date of fuel cell tax credits.

FUEL CELL DESCRIPTION

A fuel cell is an on-site power generation system that electrochemically combines hydrogen with oxygen in the air to form electricity. Hydrogen fuel can be generated by electrolyzing water with low-cost off-peak electricity, or with electricity obtained from renewable sources such as solar, wind, or biomass. This makes such fuel cell systems highly efficient as well as environmentally friendly. The heart of stationary or portable PEM fuel cell system is the stack, which is comprised of the same technology as is used in most fuel cell vehicle applications.

STATIONARY, BACKUP AND PORTABLE FUEL CELL BENEFITS

• In backup applications, fuel cells can provide power for critical infrastructure such as communication systems and water utilities.
• Fuel cells used in materials handling applications offer a clean and highly efficient alternative to the current battery solutions.
• Fuel cell systems are designed to stringent standards developed by the telecommunications industry that qualify equipment under extreme environmental conditions and requires specific levels of technological resiliency including temperature extremes, wind-driven rain, altitude, earthquake and ballistics tolerance.
• Fuel cell technology operates with very low audible noise, 60dba@1m, in stark contrast to traditional combustion systems, which typically operate at 70db@7m.
• Our traditional central generation model for supply of power in the U.S. is failing to meet the needs of a growing economy with increasing demand for high-quality power.  There are weaknesses in both power generation and transmission and distribution infrastructure that can best be met with the new paradigm of distributed generation:  placing the generating assets on site, where the energy is needed.  Fuel cells will be an important technology component of our nation’s distributed generation portfolio as issues of energy security become more critical. 
• When fueled by hydrogen from a renewable energy source such as solar, wind, or hydropower, or if the fuel source is bio-fuel like ethanol from plant wastes, CO2 emissions are net zero.
• Fuel cells can provide highly reliable electricity.  Some studies estimate that power quality and reliability issues cost our economy alone as much as $150 billion per year in lost materials and productivity, while others have reported estimates as high as $400 billion per year.
• Unlike traditional combustion technologies, fuel cell systems are designed to require only one preventive maintenance call per year to ensure full capability and performance.
• Because fuel cells provide electricity at the site of consumption, they reduce the load on the existing transmission and distribution system.  Siting the fuel cells at the point of consumption also avoids the line losses (up to 15%) inherent in moving electricity and provides an alternative to costly and unattractive traditional power lines.  Provides critical backup when grid power is unavailable due to weather related outages and can carry the load at the site of consumption until grid power is restored. 

A HYDROGEN ECONOMY

Both stationary and mobile fuel cell systems are the ideal technologies to transition to a fully sustainable energy future based on hydrogen.  Vehicular and stationary fuel cells, taken together, provide the impetus for development of a hydrogen infrastructure in the United States and move us to natural capitalism.  This technology, like other innovative transportation options, is cursed with the "chicken or the egg" question.  That is: what comes first, the infrastructure or the fuel cells?  By developing both stationary and transportation applications with the ability to refuel on a small scale, demand can be generated by multiple product applications and provide a stronger incentive to develop a full-scale hydrogen infrastructure.  By way of example, our company is exploring a home refueling station that would fuel, via hydrogen, the family automobile as well as provide the electricity and heat for the home.  One can imagine the early adopters buying a fuel cell car and a home refueling station at the same time.