Shares of FuelCell Energy Inc. (NASDAQ: FCEL) skyrocketed Thursday morning following an announcement that the fuel cell maker will work with Exxon Mobil Corp. (NYSE: XOM) on a new method to capture carbon dioxide emissions at power generation plants.
FuelCell Energy received a $2.5 million grant from the U.S. Department of Energy in 2014 for development of the technology, and it struck a deal with Cenovus Energy Inc. (NYSE: CVE) in 2015 to complete preliminary front-end engineering and design for siting a fuel cell system to capture carbon dioxide from power plant flue gas.
According to Thursday’s announcement, the arrangement with Exxon could run for about four years:
The scope of the agreement between ExxonMobil and FuelCell Energy will initially focus for about one to two years on how to further increase efficiency in separating and concentrating carbon dioxide from the exhaust of natural gas-fueled power turbines. Depending on reaching several milestones, the second phase will more comprehensively test the technology for another one to two years in a small-scale pilot project prior to integration at a larger-scale pilot facility.
The technology uses fuel cells to capture carbon dioxide emissions from power plant exhaust and replaces air that is normally used in combination with natural gas to generate power with carbon dioxide. As the fuel cell generates power, the carbon dioxide is concentrated allowing it to be more easily and cheaply captured and stored from the fuel cell’s exhaust.
Two years of testing have demonstrated that natural-gas fired power generation and the carbonate fuel cells combine to capture carbon dioxide more efficiently than existing scrubber technology. The potential breakthrough, according to Exxon, “comes from an increase in electrical output using fuel cells, which generate power, compared to a nearly equivalent decrease in electricity using conventional technology.”
A bonus from the technology is the ability of the fuel cell to break up and destroy about 60% of the nitrogen oxides that contribute to smog and that is costly to eliminate from power plant emissions.
Shares of FuelCell Energy traded up about 25% in Thursday’s premarket, at $6.98 in a 52-week range of $4.51 to $15.36.
Exxon’s shares are up about 1% at $88.88, but that is more likely due to a 4.5% jump in the spot price of crude oil Thursday morning.