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

Geoff Harjo's picture
Geoff Harjo
April 14, 2015

Home fuel cells cleanly convert natural gas into heat and electricity with a high efficiency of 80–90%.

Fuel cells offer one of the most efficient, reliable, clean and sustainable alternative energy solutions currently available for homeowners.
Fuel cells offer one of the most efficient, reliable, clean and sustainable alternative energy solutions currently available for homeowners.
Credit: Houselogic

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 available 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 thousands of dollars a year on energy bills with a realistic pay back of 10 to 20 years.

A major benefit of Micro-CHP fuel cells is that they can operate 24 hours a day, surpassing 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.

Micro CHP home fuel cell diagram

Micro-CHP fuel cells operate without 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. PEMs and SOFCs 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 (kwh) of electricity per day, (or 3,600 kWh per month), as well as generating heat of up to 15,000 British Thermal Units per hour at 140°F, (or 108 Therms per month)

According to the United States Energy Information Administration (EIA) the average home energy consumption in California is 573 kWh per month of electricity and 51 Therms per month of natural gas used for heating. That means a 5 kW 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 (i.e. $86 monthly and $1030 annually). Furthermore, utility companies compensate alternative energy generating customers for their excess unused electricity through net metering programs.

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 573 kWh 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 years’ worth of electricity by running a 5kW fuel cell for only three months, while using the utility grid as free energy storage.

Free LEED Exam PreperationHigh 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 incentives offering a pay back of 10 to 20 years.

To offset these costs, homeowners installing fuel cells (or microturbines) can use IRS Form 5695 to apply for a 30% tax break (with no upper limit). Qualifications include existing homes (for retrofitted fuel cell technology) and new construction; rentals and second homes do not qualify. This tax credit will expire by December 31, 2016 and covers any installations since January 1, 2006. Check out the Database of State Incentives for Renewable Energy for more incentives and policies in your state.  

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 772 kWh metered. At Tiers 3 and 4, the energy savings increases and time of simple payback is reduced substantially.

Considering the federal and state incentives, if you live in climates with very cold winters or very hot summers (e.g. states like New York or California), draw a high energy load profile (through central heating or air conditioning) and plan on keeping your home for decades, then the high initial investment makes perfect sense.

However, there are 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. 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), 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.

 Until the initial startup cost drops or government programs are better promoted to encourage investment, fuel cells appear prohibitively expensive for many U.S. homeowners.

Homeowners in Japan, however, are benefiting from a 2015 commercial program, ENE-FARM, which included the installation of over 120,000 residential fuel cells, along with consumer education and strategic advertising. The cheaper and more durable PEM models are available for apartment complexes, as well as homes, and reportedly achieve more than 60,000 hours of continuous cycling.

Large-scale fuel cell implementation, while unimaginable years before, is now on the horizon. The new research partnership between ExxonMobil and FuelCell Energy aimed at utilizing fuel cell technology in carbon capture could revolutionize the power generation industry.  

Fuel Cells Offset Power Plant Carbon Emissions

As of May 2016, ExxonMobil and FuelCell Energy have officially agreed to work together in pursuing a new technology for capturing and sequestering carbon dioxide emitted by fossil fuel power plants. By integrating two existing technologies - carbonate fuel cells and natural gas-fired power generation - the capturing of carbon dioxide is much more efficient than conventional carbon capture technology.Poplar Newsletter Signup

This new configuration involves directing carbon emissions from fossil fuel plants into fuel cells and using it as a substitute for the primary air supply during the fuel cell power generation process. As power is generated, the carbon is then compressed, until it can be easily and affordably captured and stored.

According to Chip Bottone, president and chief executive officer of FuelCell Energy, Inc., “Ultra-clean and efficient power generation is a key attribute of fuel cells and the carbon capture configuration has the added benefit of eliminating approximately 70 percent of the smog-producing nitrogen oxide generated by the combustion process of these large-scale power plants.”

The first two years of this agreement will focus on improving efficiency in separating and concentrating carbon emissions. The second phase will initiate testing on small-scale projects, before moving into large-scale facilities.

The potential to dramatically reduce carbon emissions from large-scale power generation facilities would be an impressive feat that would likely inspire even greater advancements in residential fuel cell technology. 

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 correlate 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.

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.
5. “Net Metering”. Department of Energy. Green Power Markets. Web. 2014.

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.
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.


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