Fuel cells have been the next best clean-energy thing for, well, a long time.

A technology with roots in the 1800s and modern-day use in every NASA-manned space flight from Apollo through the end of the space shuttle program, fuel cells just kind of look like a big box. Inside, they electrochemically combine hydrogen and the oxygen from ambient air to create electricity.

The byproducts of that reaction are heat and water. The heat can be recycled into the fuel cell itself and/or used for external heating and cooling – generally referred to as combined heat and power. That makes stationary fuel cells – the kind used for electricity, as opposed to ones used in vehicles – extremely efficient and as clean an energy source as solar and wind.

But because the hydrogen source for most fuel cells comes from natural gas, they are generally not considered renewable, leaving them in an environmental limbo.

And so despite having a physical footprint so compact that they can easily be sited in crowded urban areas, and unlike wind and solar can run 24/7, fuel-cell use has struggled. They remain pricey and saddled with a perception that “the performance of fuel cells is really too good to be true,” said Scott Samuelsen, director of the National Fuel Cell Research Center at the University of California-Irvine.

“It’s a very challenging thing to market when it just kind of sits there and just kind of hums quietly,” he said.

The U.S. is the world hub for fuel-cell development and manufacturing, centered largely in Connecticut, home to the companies Fuel Cell Energy and Doosan – now the owner of United Technology’s original NASA fuel-cell manufacturing. In the U.S., fuel cells are most often used individually or stacked together as distributed generation to power specific buildings or operations. California-based Bloom Energy has even sited three of its 250 kilowatt units – the smallest fuel cells out there right now – on top of a building in New York City.

In space-constrained South Korea and Japan, however, fuel cells have been stacked together into grid-tied power plants, the largest of which is 59 megawatts. Fuel Cell Energy has proposed an even larger one – more than 63 megawatts – in Connecticut, but so far the only large fuel cell power plant in the U.S. is a 15-megawatt Fuel Cell Energy unit in Bridgeport, Connecticut.

With utilities resisting fuel cells the same way they have resisted wind and solar, the impending loss at the end of 2016 of the large federal tax credit fuel cells have now, and only a couple of handfuls of states considering them a top-tier clean energy, fuel cells still face a tough climb in the U.S.

Consider some of the pros and cons.

The hydrogen conundrum

Concern about the natural gas used to make hydrogen in fuel cells reflects what it takes to get that gas – fracking and its impacts, and the methane leakage associated with transporting gas.

“Any time you’re talking about a fossil fuel,” said Nathanael Greene, director of renewable energy policy for the Natural Resources Defense Council, “no matter how efficient your conversion technology is, you’re starting with something that’s fundamentally unsustainable. You can’t make it into a sustainable source of electricity. But it’s better than burning it in a combustion engine.”

Fuel cells have a place, he said, but he doesn’t buy the argument that they’re a bridge between combustion-based fossil-fuel power and renewables. “We need to keep our eyes on the long-term renewable prize,” he said. “I’m not against them, but I don’t think we need to be driving them forward.”

The counterargument is that fuel cells actually can run without natural gas. One way is a specialized application that uses biogas. For example, a fuel cell paired with a wastewater treatment plant can use the biogas produced by the plant to make the hydrogen to run the fuel cell that in turn, runs the plant.

But Fuel Cell Energy’s 1.4-megawatt fuel cell running the Regional Water Quality Control Plant in Riverside, California, can only power about a third of the plant, said Ernest Marquez, principal engineer for the city of Riverside, who calls the system “really green.”

Another renewable alternative for natural gas is a direct hydrogen source or a renewable hydrogen source. Renewable hydrogen can be made by separating the elements in water, hydrogen and oxygen. But the process to do that, electrolysis, is expensive and inefficient, and it requires a great deal of power – though the use of renewable power, such as solar, is possible … eventually.

“I was excited about the potential for a rapid shift from natural gas-driven fuel cells to fuel cells as a way to use renewably derived hydrogen,” said NRDC’s Greene. But, he added, “That transition’s not on the near-term drawing board.”

Joel Rinebold, director of energy initiatives at the Connecticut Center for Advanced Technology, where he has championed the state’s fuel-cell industry for years, has said it could take years to make non-natural gas technologies the norm.

“We can make hydrogen, and we can make hydrogen fairly easily, and we can make hydrogen fairly easily out of renewable feedstocks. It’s all technically possible, but economically challenging,” he said. “Economics are holding back the technology from increased market penetration.”

The cost challenge

Fuel cell companies are notoriously close-mouthed about the particulars of their projects, especially cost. Rinebold estimates the price per installed kilowatt has dropped by half in the last decade.

But competing costs are relative, he said. “Right now, we’re competing with other hydrocarbons like very inexpensive oil and very inexpensive natural gas.

“Fuel-cell technology does not enjoy the economy of scale that can beat some of these other conventional industries on price alone,” he added.

And to get that economy of scale, you need more fuel cells, which means you need lower prices, a Catch-22 that has stymied industry growth.

Adam Forni, senior research analyst with Navigant Research and a one-time program manager at Bloom, said fuel-cell adoption is behind where industry and observers thought it would be five or 10 years ago.

The newest natural gas plants, he and others have said, are nearly as efficient and a whole lot cheaper.

“It’s just a slow-adoption industry,” according to Chip Bottone, CEO of Fuel Cell Energy. “You don’t build power plants every week.”

The company’s most recent quarterly report shows total revenues down by nearly half from the same quarter last year and product sales off by even more, which Bottone said was the result of project delays. After that quarter, the company’s stock took a dive when it lost out on competitive bidding that would have facilitated several proposed projects in New England, including the 63-megawatt power plant. But Bottone says the company is working on its largest pipeline of projects ever.

And the private sector sees the value in fuel cells, financing Fuel Cell Energy’s projects to the tune of $1 billion. The company uses power purchase agreements, in which a utility, company, or municipality agrees to buy the power at a fixed price for a long term, as part of its formula.

The Riverside project, for instance, is owned, operated, and maintained by Fuel Cell Energy. The treatment plant supplies the biogas for free and buys the power under a 20-year power purchase agreement.

On Long Island, New York, energy company PSEG has taken an even bigger step to level the playing field for fuel cells. It’s running what may be the first fuel cell-only competitive bidding for projects. According to Jim Parmelee, PSEG/Long Island’s senior manager of power resources and contracts, the targeted request for fuel-cell projects is aimed at taking advantage of their reliable power at specific locations. And fuel cells do something wind and solar can’t do – run when the wind isn’t blowing and the sun isn’t shining.

The reliability advantage

Fuel cell proponents argue that that reliability gives fuel cells the edge and makes them the perfect power companion to intermittent renewables. Grid-tied fuel cells can also target their power to where it’s needed. And they can help decentralize the grid – something many people believe will make it less vulnerable to attack and other security threats.

Fuel cells are tailor-made for microgrids – configurations in which power can still be generated for a particular area if the grid goes down.

Just ask tiny Woodbridge, Connecticut, population 9,500.

Woodbridge wanted a microgrid that, in the event of an outage, could run multiple town and public safety buildings including the regional high school and the emergency shelter.

A fuel cell was the initial idea. “When we got the budget figures back, we went, ‘Whoa,’” said Anthony Genovese, town finance director and administrative officer. “‘Hold on a minute.’”

Woodbridge was on the verge of going with a cheaper reciprocating engine when the utility in the area offered to buy a 2.2 megawatt fuel cell. The power would go to the grid; the town would buy it through a power purchase agreement.

But if the grid goes down, the fuel cell goes into “island mode” and keeps power flowing to the designated buildings. The high school gets the heat from the fuel cell for free – it just had to buy the equipment to use it.

“The concept was first to provide energy security for our town, given climate change,” said Ellen Scalettar, the first selectman.

It’s those kinds of benefits – energy security and a not-insurmountable cost – that the NFCRC’s Samuelsen would like to see emphasized with policy-makers.

“When one really looks at it critically, the only option that’s there is the fuel cell,” he said. “Do not throw the baby out with the bathwater. In other words, don’t throw out fuel cell technology now because of this argument that they are natural gas only. They are really a key component, if not a virtually critical cornerstone, of this future grid, from distributed to microgrid to the utility grid as a whole.”