Lawmakers step in as fuel cell makers decry state contracts
Clean energy contracts that were apparently headed for fuel cell makers would be diverted to solar companies in a reversal of preliminary awards that fuel cell companies say is unfair — with one in Danbury questioning the motives of the Connecticut Department of Energy and Environmental Protection.
Under the Shared Clean Energy Facilities program, the contracts would fund electricity generators to share the benefits of alternative energy in low-income areas. Fuel cell makers — including FuelCell Energy, based in Danbury — have proposed converting industrial sites including brownfields for the purpose.
Legislators, including the leadership of the General Assembly’s energy committee from both parties, are now stepping into the dispute over the program they authorized, apparently on behalf of the Connecticutbased fuel cell businesses.
In late September, based on bids, Eversource Energy and Avangrid’s United Illuminating subsidiary told FuelCell and South Windsor-based Doosan Fuel Cell America that their projects had been selected in the first year of the program.
Then in October, the Connecticut Public Utilities Regulatory Authority rejected appeals from seven solar energy companies that lost the bids, saying their bids did not meet the rules. But in November, PURA reversed itself, ordering Eversource to re-qualify the solar bids.
Eversource has now given preliminary awards to the solar companies. PURA is expected to make a final ruling next month.
FuelCell Energy and Doosan had already started preparatory work including planning for at least 100 new hires at FuelCell, much of it related to the state contracts. Both companies said that although the agreements with the utilities were not final, they are not aware of PURA reversing a decision in such a way in previous proceedings.
In a Thursday interview, FuelCell CEO Jason Few expressed frustration with the process, saying PURA — or perhaps the Department of Energy and Environmental Protection, which oversees it — exerted influence based on a bias against fuel cells, in favor of solar energy.
Few noted FuelCell’s economic impact in Connecticut. The company employed about 550 people in Danbury and Torrington near the peak of the economic boom before layoffs the past few years, amid financial losses and the impact of the pandemic. It now has about half of that but its facilities create significant tax revenue and its operations use outside vendors locally.
“The energy transition is happening — this state has an opportunity to have a leadership position,” Few said. “Fuel cells, ... hydrogen — that’s what’s going to drive energy transition. And this state has an opportunity to be a major player in that — but perhaps not, because DEEP is going to continue to undermine the governor’s goal of economic growth and job creation.
“Their job is to enact the policy of the governor, not to make policy — and it’s certainly not to put a policy in place and then take that process and strip it completely of any integrity,” he added. “And that’s exactly what happened.”
Few did not rule out the company pursuing a remedy in the court system.
DEEP spokesperson Will Healey indicated Thursday that the department’s role was limited to reviewing a section of applications dealing with siting issues and the “preferential weighting for projects built on brownfields and landfills” in his words.
He said fuel cells passed DEEP’s review of those criteria. He did not state how the department views solar versus fuel cells as a source of electricity. Under state law, fuel cells are considered a Class I renewable energy source and are therefore eligible to bid on clean energy projects.
Several members of the Connecticut General Assembly have weighed in. The Energy and Technology Committee is planning a Friday press conference to address the topic. Rep. Holly Cheeseman, R-East Lyme, has called the PURA decision “unusual and highly problematic.”
In September, the utilities had sought clarification from PURA on whether to disqualify the apparently nonconforming solar bids and PURA had told them to do so, based on insufficient information about control over property in the bids.
“The solar bidders who were originally disqualified back in September should remain disqualified in this current auction and submit bids in Year 2 of the program,” said Rep. David Arconti, D-Danbury, co-chairman of the energy and technology committee, in an email in response to a query Thursday. “FuelCell was ramping up to hire 125 positions. ... The projects would have brought in $10 million in revenue to the [state].”
Under the program, participating electricity customers will get credits for the electricity they use, giving them benefits typically available only to homeowners and businesses that can use alternative energy sources. It is limited to households with lower income or small businesses located in neighborhoods with lagging economies.
FuelCell Energy, which has its main factory in Torrington, has about half of its total installed base of generation located in Connecticut.
“DEEP and PURA have conducted numerous, clean-energy solicitations,” said Jennifer Arasimowicz, general counsel of FuelCell. “We didn’t win anything in 2011, in 2013, in 2016. And we protested and we were told, ‘The process is the process.’ But now all of a sudden — because solar has not won — the process is no longer the process and we have to have a do-over. ... I’d love to know exactly what happened and why.”
PURA spokesperson Taren O’Connor cited the agency’s ruling reversing its previous rejection of the solar bids, in which PURA cited “overarching policy objectives of the program, in particular...removing barriers to entry.”
The ruling added, “The Year 1 SCEF procurement was not administered as envisioned by stakeholders or PURA.”
Doosan Fuel Cell America, which also strongly opposes the way the bid offers were handled, traces its heritage to the former United Technologies Corp., now Raytheon Technologies, which helped develop fuel cells for the U.S. space program in the 1960s. Doosan Fuel Cell America’s parent company Doosan Corp. is considered South Korea’s oldest conglomerate.
Fuel cells produce electricity through a chemical process that passes hydrogen through vertical stacks of metal membranes, which are coated with chemicals to peel off electrons from the atoms to produce a current.
FuelCell’s systems do use natural gas as a source of hydrogen, but at a higher rate of efficiency than conventional gas-powered generation plants. They operate at super-heated temperatures, but do not produce pollution in the manner of power plants that burn fuel to drive turbines.
Fuel cells have a major advantage over solar in being able to generate power around the clock. On the downside, FuelCell’s plants have an industrial appearance not unlike electrical substations in neighborhoods.
Connecticut has lowered the amount of carbon dioxide it creates by between 10 percent and 12 percent since 1990, according to PURA estimates, as oil-fired power plants have been phased out in favor of cleaner natural gas plants, and as the state has invested in incentives for solar panels and electric vehicles among other initiatives.
The state faces uncertainty at the end of the coming decade, when a power-purchase agreement expires with the Millstone nuclear plant in Waterford which accounts for a quarter of the power on New England’s electric grid.