Can FCEL Boost Returns From Existing Fossil-Fuel Plants?

FuelCell Energy’s FCEL carbon capture platform is designed to address the growing economic challenges facing aging coal and natural gas power plants. Tightening emissions requirements are raising compliance expenses, while permanently retiring these facilities can be costly, disruptive and politically difficult.

Many of these plants continue to play an important role in maintaining grid reliability and supplying thermal energy, making premature shutdowns potentially problematic. FuelCell Energy’s strategy centers on extending the useful life of existing assets by integrating carbon capture technology directly into current exhaust streams. This enables plants to continue operating with substantially lower emissions while avoiding the significant capital costs associated with building replacement infrastructure.

Unlike traditional carbon capture technologies that can consume approximately 20% of a power plant’s electricity output, FuelCell Energy’s carbonate fuel cells produce additional electricity while capturing carbon. That incremental generation can create an added revenue stream and strengthen overall project returns. Producing power and heat on-site can also lower operating expenses by eliminating transmission losses, which average roughly 5% across the U.S. grid. The system’s high-temperature operation also supports combined heat and power applications, enabling facilities to use both electricity and thermal energy efficiently at the point of consumption.

Scalability adds another advantage to FCEL’s commercial proposition. Its modular architecture can support projects ranging from sub-megawatt installations to large, multi-megawatt fuel cell parks. Individual stacks generate between 250 kilowatts and 400 kilowatts, while four-stack modules provide approximately 1.4 megawatts of net output, offering considerable flexibility in system design. This combination of stack-level and module-level configuration makes the platform suitable for a broad range of industrial and utility applications. Better capture economics, longer asset lives and scalable deployment could collectively strengthen FuelCell Energy’s demand outlook and long-term investment potential.

Although technologies, such as FuelCell Energy, demonstrate how carbon capture can improve the economics of existing fossil-fuel facilities, momentum behind carbon capture and storage (“CCS”) extends well beyond emerging technology developers. Large and established energy companies are also deploying capital and leveraging decades of operating expertise to make carbon capture an important component of their long-term strategies.

Major Energy Companies Expand Their Carbon Capture Efforts

Oil and gas giant Chevron Corporation CVX considers CCS an important technology for supporting a lower-carbon energy future and brings decades of experience to the field. Chevron helped advance large-scale CO2 injection at its SACROC unit nearly four decades ago and has safely operated CO2 pipeline infrastructure, including the company-led Raven Ridge line in Colorado, for many years. Chevron also leads the Gorgon CCS project, which has injected more than 10 million tons of CO2, while pursuing additional developments such as Bayou Bend CCS in Texas.

Meanwhile, another major energy producer, Occidental Petroleum OXY, has more than five decades of experience in carbon storage and has made carbon capture a central part of its climate strategy. Occidental believes large-scale carbon capture, utilization and storage can provide near-term emissions reductions while supporting longer-term climate objectives. Through its 1PointFive subsidiary, Occidental is scaling Direct Air Capture technology developed by Carbon Engineering. The company is also investing in carbon utilization initiatives, storage hubs and carbon markets aimed at supporting global CO2 removal efforts and broader net-zero ambitions.

The Zacks Rundown on FCEL

Shares of FuelCell Energy have gained 168.3% over the past six months, contrary to the industry's decline.

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FCEL currently has an average brokerage recommendation (ABR) of 2.56 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by nine brokerage firms.

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The chart below shows FCEL’s earnings over the past four quarters.

Image Source: Zacks Investment Research

The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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