Clean Coal: The Economics Work

The selection by the US Department of Energy of FuelCell Energy (NASDAQ: FCEL) to participate in its clean coal program has significant upside potential for the maker of solid oxide fuel cells (SOFC). Clean coal is a controversial clean technology. Yet the reality is that the world has a lot of coal and its major energy consumers, including China and the United States, have placed clean coal at the center of their clean energy strategies.

The economics of the SOFC power plant are attractive. FuelCells is targeting 50 percent energy efficiency. The fuel source, coal, is cheap at a few cents per kilowatt hour. Furthermore, in prototypes such as the DOE’s FutureGen—a 275 MW coal-fueled zero emissions power plant—carbon capture and storage is part of the SOFC-based model. CO2 sequestration can add another 3 – 5 cents per kwh. Additionally, there are many ultra-clean spin-offs or value-added processes from coal derivatives, including sulfur-free diesel and hydrogen.

The technology and economics work. However, if dirty coal wants to come clean, it also has to invest in human capital and make coal mining safer.