Second of a three-part series. Click here for the first part.

FOUNTAIN VALLEY, Calif.—The contents of your toilet could soon be powering your car and helping to cut down greenhouse gas emissions.

In this suburb of Los Angeles, FuelCell Energy Inc. is operating the world's first "tri-generation" plant that converts sewage into electrical power for an industrial facility and renewable hydrogen for transportation fuel.

The system runs on anaerobically digested biogas from the Orange County Sanitation District's municipal wastewater treatment plant. A 300-kilowatt-hour molten carbonate fuel cell uses the biogas to produce heat, electricity and hydrogen—making it a "tri-generation" system.

Hydrogen produced by the fuel cell is captured, compressed and sent to an on-site public hydrogen filling station for fuel-cell vehicles (FCVs) to use. The energy station produces approximately 100 kilograms of renewable hydrogen per day, which is enough to fuel up to 50 cars.

Visitors to the Fountain Valley station have to wear hard hats, orange vests and clunky steel toes that clamp over their shoes. On a warm day in the spring, a pungent odor wafted around the wastewater treatment plant. But none of that curbed Jack Brouwer's enthusiasm for the project.

"I love it. It's like my baby," said Brouwer, associate professor of mechanical and aerospace engineering at the University of California, Irvine. He's been working in collaboration with FuelCell Energy on the tri-generation plant for more than a decade. Air Products and Chemicals Inc. also partnered on the project.

"Not everyone starts to work on an idea in 2001 and then sees it go all the way to a reality—to actually powering a wastewater treatment plant and putting zero emission fuel into fuel-cell vehicles that are zero emissions themselves," he said. "Come on, this is pretty awesome."

Relying more on homegrown fuel
Three major automakers, Hyundai Motor Co., Toyota Motor Corp. and Honda Motor Co., have announced they will launch commercial FCVs during the next year. Several others plan to release vehicles before the end of the decade.

The University of California, Davis, estimates that the number of FCVs on the road in California—where automakers and infrastructure developers are focusing the market launch—could reach 250,000 around the year 2025. This would put FCVs at 1 percent of light-duty vehicles in California and 6 percent of annual light-duty vehicle sales. In percentage terms, this growth rate tracks hybrid vehicle adoption in the United States.

With tens of thousands of FCVs coming to market, stakeholders in public and private sectors are looking for clean and affordable ways to produce and distribute the hydrogen that fuels them.

The vast majority of hydrogen in the United States today is made using natural gas. Industrial gas companies produce millions of metric tons of hydrogen each year, which is used to refine fuel and make other consumer products.

In the near-term, the cheapest way to make hydrogen for the transportation market is to expand the existing hydrogen economy. But in the longer-term, assuming vehicle sales meet expectations, relying on fossil fuels to make hydrogen will work against climate mitigation goals. Producing hydrogen at large-scale regional facilities, then building pipelines or burning fuel to ship it to individual fueling stations around the country, will also become increasingly expensive and inefficient.

Tri-generation is not only renewable but also has the advantage of producing fuel next to where it's being used. Where there are people, there is waste.

"Distributed hydrogen is going to win out in the end, just like distributed generation has a significant portion of the [electricity] supply," said Chip Bottone, president and CEO of FuelCell Energy. "The question is when."

Tri-generation isn't the only technology suitable for distribution production. Small-scale natural gas reformation and electrolysis—splitting water to make hydrogen—can also be done on-site.

"I think one of the biggest benefits that hydrogen has is that it can be produced locally from local resources," said Chris White, communications director at the California Fuel Cell Partnership. "So if you are in a place where there's a hydrogen refinery already using natural gas, you have that. If you're in a really water-rich state like Washington and Oregon, you can make a lot of hydrogen from electrolysis. If you're a state that's really rich in agricultural waste, like California, you can make it from that."

Greening up natural gas
California law requires that 33 percent of all hydrogen produced in the state come from renewable sources. Most companies are meeting the renewable fuel mandate by purchasing methane from a landfill or a wastewater treatment plant and feeding it into a centralized steam methane reforming facility.

This methane is blended with natural gas, which is also methane, but a fossil fuel. So, mathematically, one-third of the hydrogen for sale at a given station is coming from renewable sources.

The California-based startup FirstElement Fuel Inc., which recently received a $27.6 million grant from the California Energy Commission to build out 19 stations, the most of any company, is setting up two fully renewable hydrogen stations. This means they will purchase enough methane made from wastes to offset all of the fuel at the two stations.

It's similar to the electricity market where companies buy renewable electrons to meet their climate targets but don't use those electrons on-site, said Shane Stephens, chief development officer and principal at FirstElement Fuel. He added that the renewable electricity mandate in California is currently 20 percent, whereas hydrogen's is 33 percent.

"It's a little bit frustrating to me because a lot of people criticize hydrogen for coming from natural gas and that it's not green enough," Stephens said. "But hydrogen right now, at least in California where it's [being used], has a much higher renewable portfolio standard than anywhere in the country."

To meet California's renewable hydrogen target, the industrial gas company Air Liquide plans to use methane from a landfill across the country in Georgia. Adding this form of methane, sometimes called biogas, to standard methane in the steam reformation process is the most cost-effective way to create renewable hydrogen at present. But Air Liquide and others are watching how competitors might use other pathways.

"The tri-generation project, I think, is very compelling," said Stephens of FirstElement Fuel, which is in talks with FuelCell Energy to develop a more commercial version of the Fountain Valley project.

FirstElement is focused on getting its 19 stations built and operational during the next year and so is tapping into the existing hydrogen economy. But the company is encouraging hydrogen producers to explore new renewable hydrogen pathways.

"Knowing what we know about the expected volumes of fuel-cell vehicles and the demand for hydrogen, I think the time is right for a commercial larger-scale [tri-generation] project to be developed," Stephens said.

"It's a year or two for project development," he added. "So, by the time a system like that comes online, I think we'll start seeing the right kind of demand out there from the fuel-cell market."

Waiting for the demand
There is a limit to how much fuel that waste-streams can provide. According to Brouwer of UC Irvine, installing tri-generation plants at all of California's wastewater treatment plants could meet about 10 percent of the state's overall transportation fuel demand.

"We use so much fuel that we can't replace all of our transportation demand with this," he said. "But we can replace a big chunk of it. And that's very important."

FuelCell Energy's core business isn't producing transportation fuel; it's manufacturing and operating fuel cells for stationary power plants that provide clean, reliable baseload power to 1,000 homes or more.

"I'm more keen on [the transportation market] today than in the past because it's not really a technology issue anymore," Bottone said. "I think it's much more of an application financing issue that's easier to solve."

FuelCell Energy received a $2.2 million grant from the Department of Energy to build out the first tri-generation system. At just 100 kilograms of hydrogen produced per day, the system was designed as a proof of concept not to be commercially viable. But at 600 kg of hydrogen per day, it could be competitive.

Scaling up would justify the capital expenditures and bring down the cost of fuel. The price of hydrogen in California is currently about $10 per kg, which is about equal to today's price on gasoline on a per-mile basis. FuelCell Energy claims that at a production rate of 600 kg per day its tri-generation technology could produce hydrogen at $7 per kg. Selling what would otherwise be a waste stream could also generate revenue for cash-strapped municipalities.

The problem, said Bottone, is that there simply isn't 600 kg worth of hydrogen demand. FuelCell Energy is now looking outside the transportation sector to provide renewable hydrogen to the industrial gas market and various stationary fuel-cell systems.

"There needs to be a strategy that allows us to create enough demand, and maybe in the short term it's not all about the demand for cars," he said.

Tomorrow: Using hydrogen to balance future electric grids.

Reprinted from Climatewire with permission from Environment & Energy Publishing, LLC., 202-628-6500