Micro CHP Residential Fuel Cells: What's the ROI?

These small combined heat and power (Micro-CHP) fuel cells reduce a household’s overall carbon-footprint, offset the utility company’s greenhouse gas emissions and provide significant energy savings for homeowners.

The most common types applicable for residential use are the proton exchange membrane, also known as polymer electrolyte membrane (PEM) fuel cell and the solid oxide fuel cell (SOFC). Both combine heat and power on a small scale suitable for average to large homes.

Micro-CHP Technology

Micro-CHP technology is powered by natural gas or propane using a platinum catalyst combined with oxygen to provide electrical power and hot water. If your home has large energy demands, such as a heated pool, sauna, central forced air conditioning and multiple, major appliance loads, switching to fuel cells can save you thousands of dollars a year on your energy bills with a simple pay back of 10 to 20 years2.

A major benefit of micro combined heat and power fuel cells is that they can operate 24 hours a day, leading far ahead of local limitations for wind power and the five-hour maximum solar window in California. This makes fuel cells an excellent source of on-demand backup power as they continue to generate power during grid outages.

They operate with no noise, produce no harmful exhaust, expel no breathable particulate matter or discernable smell and they blend in with other household appliances or are easily hidden in the design of a building. PEM’s and SOFC’s are also a superior choice for remote locations, airports and hospitals where power quality and reliability are critical.

Another benefit is the energy output volume of stackable fuel cells. A single home (5 kilowatt) PEM can produce 120-kilowatt hours per day of electricity, (or 3,600 kWh per month), as well as making heat of up to 15,000 British Thermal Unit’s per hour at 140°F, (or 108 Therms per month) 3.

According to the United States Energy Information Administration (EIA) the average home energy consumption in California is 573kWh per month of electricity and 51 Therms per month of natural gas used for heating 4. That means a 5kW fuel cell has the potential to provide enough electricity for six homes and enough heat for two!

With a utility bill of 573 kWh per month at $0.15 per kWh, the average savings found using an alternate energy source is more than $1000 per year ($86 monthly, $1030 annually). Furthermore, utility companies compensate alternative energy generating customers for their excess unused electricity through net metering programs 5.

Using the example above to illustrate net metering shows the PEM’s 3600 kWh of electricity first feeds directly to the utility grid, then the customer draws down 573kWh back from the grid, and through their net metering agreement, the monthly excess of 3,037 kWh would credit $455.55 back to the customer’s utility bill. A homeowner could feasibly generate their entire year’s worth of electricity by running a 5kW fuel cell for only three months, while using the utility grid as free energy storage.

High Upfront Cost of Residential Fuel Cells

The downside is that residential fuel cells have a high initial capital cost ranging from $25,000 to $50,000 (not including installation), with federal and state incentives6 offering a simple pay back of 10 to 20 years.

To offset these costs, homeowners installing alternative energy sources like fuel cells can use IRS Form 5695 7 to apply for a 30% tax break, or up to $500 per 0.5kW, whichever is smaller. But for most families, a 5kW system is more than enough and that limits the tax credit to $5000. This can only be a good investment if your individual energy demands are much higher or the cost of energy is greater.

Energy cost per kilowatt increases with greater load profiles and often double as usage crosses higher tiers. For instance, Southern California Edison’s Residential Rate Plan as of July 2014 dictates Tier 1 at $0.15 per kWh, up to 386 kWh metered; Tier 2 increases to $0.19/kWh, from 387 to 501 kWh; Tier 3 increases further to $0.28 /kWh between 502 to 771 kWh; and Tier 4 maximizes at $.032 per kWh for more than 772kWh metered 8. At Tiers 3 and 4, the energy savings increases and time of simple pay back is reduced substantially.

My personal recommendation on residential fuel cells is that they are worth the high initial capital costs only if you live in climates with very cold winters or very hot summers, draw a high energy load profile and plan on keeping your home for many years. Considering the federal and state incentives, if your home is in New York or California, operates with central heating or air conditioning, and you plan on residing there for 30 years or more, then the high initial investment makes perfect sense.

However, I do see limitations to widespread use at this time.

E-Bay claimed that 5 Bloom Box fuel cells saved their company over $100,000 in energy costs 9. Bearing in mind, E-Bay paid initial costs of $700,000 each for five units, plus installation costs (speculating at $20,000 each for retrofitting an existing building 10), the Bloom Box fuel cells then offer a simple payback of 36 years (35 without installation costs)!

Those numbers are far too steep for most homeowners to afford.

Fuel cell implementation does bode well for a multi-billion dollar corporation’s public relations and eco-friendly marketing campaign, so they are a sound investment for large facilities with deep pockets. Until the initial start up cost drops or government programs are better promoted to encourage investment, fuel cells appear prohibitively expensive for many homeowners.

Therefore, the home fuel cell market may take decades of innovation before reaching widespread acceptance.

Promising Future

In conclusion, fuel cells offer one of the most efficient, reliable, clean and sustainable alternative energy solutions currently available for homeowners. They are an excellent choice for backup emergency power and 24 hour demand for remote locations. Their water output and carbon dioxide exhaust can be integrated into a net zero home’s greenhouse edible garden design, offering countless paybacks in quality of life and sustainability benefits. Some manufacturers offer “stackable” cells to adapt configurations with changing needs over time.

In the long view, energy savings for residential fuel cells correlates with the end user’s climate, energy needs, as well as their economic resources, but these limitations will improve over time.

With advancements in biomass fuels, improved cost efficiencies and increased political pressure towards sustainability, residential PEM and SOFC fuel cell use may eventually overshadow all other micro sustainable technologies.

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1 Hawkes, Adam. “Solid oxide fuel cell systems for residential micro-combined heat and power in the UK: Key economic drivers.” Journal of Power Sources 149 (2005): 72-83. Print.
2 “Fuel Cells - Basics”. U.S. Department of Energy. Web. 2014 http://energy.gov/eere/fuelcells/fuel-cells-basics
3 “5kW Fuel Cell”. Fuel Cell Residential. Frequently Asked Questions. Web. 2010. 4 “Household Energy Use In California”. U.S. Energy Information Administration. Web. 2014.
http://www.eia.gov/consumption/residential/reports/2009/state_briefs/pdf...
5 “Net Metering”. Department of Energy. Green Power Markets. Web. 2014.
http://apps3.eere.energy.gov/greenpower/markets/netmetering.shtml
6 “Current Financial Opportunities”. Energy Efficiency & Renewable Energy. Web. 2010. 
 http://energy.gov/eere/fuelcells/current-financial-opportunities
7 “American Recovery and Investment Act”. U.S. Internal Revenue Service. Web. 2014.
http://www.irs.gov/uac/Energy-Incentives-for-Individuals-in-the-American...
8 “Residential Rate Plans”. Southern California Edison. Web. 2014. https://www.sce.com/wps/portal/home/residential/rates/residential-plan
9 “Bloom Boxes”. NACHI. Web. 2014. http://www.nachi.org/bloom-box.htm
10 “Fuel Cell Benefits/Costs.” ToolBase. Technology Inventory. Web. 2001.
http://www.toolbase.org/Technology-Inventory/Electrical-Electronics/chp-...

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