GE and Plug Power Finalize Joint Venture to Sell Fuel Cells Worldwide
HOUSTON, Feb. 11 /PRNewswire/ -- GE Power Systems and Plug Power announced today that they have finalized an agreement to create "GE Fuel Cell Systems," a joint venture company that will distribute fuel cell systems worldwide. GE Power Systems owns 75% and Plug Power owns 25% of the new company. In addition to forming the joint venture, GE Power Systems also acquired 10% ownership of Plug Power, with an option to increase its position to 20% at a future date. As part of the joint venture agreement, Plug Power will work closely with GE's Corporate Research & Development Center for product development and manufacturing support. The financial terms of the deal were not disclosed. GE Fuel Cell Systems will market, sell, install and service Plug Power-designed and -manufactured fuel cells, up to 35kW, for residential and small business power applications on a worldwide basis. Field-testing will begin later this year and continue through the year 2000. GE Fuel Cell Systems expects to offer commercial units beginning in January 2001. "This joint venture adds another technology-based solution to our expanding portfolio of products and services," said Robert L. Nardelli, President and Chief Executive Officer of GE Power Systems. "Fuel cell technology has the potential to provide an environmentally friendly and economical alternative for customers seeking to generate power at the point of consumption." GE Fuel Cell Systems plans to partner with carefully selected resellers that will market the systems to end-users within defined territories. Resellers will likely include companies where GE Power Systems already has strong relationships, such as natural gas and propane distribution companies, electric utilities, electric service companies and gas and power marketers. GE Fuel Cell Systems also expects to partner with a select group of service providers, in order to offer resellers and end-users a global network of high-quality, cost-effective installation and maintenance support. "Globally, there are more than 1.2 billion households, many without electricity," said Gary Mittleman, Plug Power President and CEO. "Others have electricity that is unreliable, too costly or generated by high emission, fossil fuel-burning power plants. Our fuel cell will improve the world we live in and offer people what they want." Plug Power's fuel cells will provide homes and small businesses a compact, efficient, reliable, clean, and economically advantageous method of meeting their electricity requirements. Fuel cells generate electricity through an electrochemical process, instead of combustion, that combines generally available fuels, such as natural gas and propane, with air, and water. Fuel cells have no moving parts, are virtually noiseless, and produce pure water and excess heat as byproducts. The initial commercial units will operate on natural gas, propane, or methanol and are expected to achieve 40% electrical efficiency. When excess heat generated by the fuel cell is captured and used for hot water or heating, overall efficiency can exceed 70%. Fuel cell systems can be sized to match consumers' specific energy requirements and in many regions, will provide an attractive alternative to grid-supplied power. Another major benefit is the elimination of the cost and inconvenience associated with power outages. To date, fuel cells have not been a viable option for small-scale power generation due to their relatively high cost. However, due to technical and production advances by Plug Power, GE Fuel Cell Systems expects to offer residential-sized systems in 2001 for $7,500 to $10,000. Moreover, prices are expected to fall dramatically over time as production volumes increase and manufacturing efficiencies are achieved. In mass production, a residential fuel cell system is expected to retail for approximately $3,500. At that price, fuel cells can generate electricity at 7-10 cents per kilowatt-hour, depending on usage and the fuel costs in a given market. About GE Power Systems GE Power Systems is one of General Electric's major businesses and is the world's leading supplier of power generation technology, energy services and energy management systems. The joint venture with Plug Power is the latest in a series of actions by GE to broaden its participation in the small power generation market. In 1994, GE acquired Nuovo Pignone, an Italian-based manufacturer of small gas turbines, pumps and compressors. In early 1998, GE completed the acquisition of Stewart & Stevenson's Gas Turbine Division, which has significant experience in packaging and servicing small power generation equipment. That business now is known as S&S Energy Products. In May 1998, GE entered into a distribution agreement with Elliott Energy Systems, which provides GE global rights to sell and service Elliott's line of Turbo Alternators(R). With the Plug Power relationship, GE's portfolio of power generation products extends from 7kW up to 450MW (450,000kW). About Plug Power Based in Latham, NY, Plug Power is a joint venture between DTE Energy Company (NYSE: DTE), parent company of Michigan's largest electric utility, and Mechanical Technology Inc. (OTC Bulletin Board: MKTY), an early developer of fuel cell technologies. Plug Power is dedicated to the development and manufacture of fuel cells for electric power generation in residential, small business and automotive applications. Formed in June 1997, Plug Power has grown from 22 to 160 employees, and expects to expand to 300 when it begins mass manufacturing of commercial units. The National Energy Resources Organization awarded Plug Power the 1998 Research and Development Award for its fuel cell breakthroughs. Since June of 1998, Plug Power has operated its proprietary Plug Power 7000, a 7kW residential power system. The demonstration marked the first time a fuel cell has been used to meet a home's complete electricity requirements. Plug Power intends to be the first company to make one million residential fuel cell units.RELATED LINKS
SOURCE GE Power Systems
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