FuelCell Energy Announces 70 Megawatt Order From
POSCO Power and $9 Million Charge to Second Quarter 2011 Earnings
FuelCell Energy, Inc. (Nasdaq:FCEL),
a leading manufacturer of ultra-clean, efficient and reliable power plants,
today announced a two-year order for 70 megawatts (MW) of fuel cell kits from
POSCO Power. The total value of the order and other commitments for services
is estimated to be at least $129 million with delivery of fuel cell kits
beginning in October 2011 and occurring monthly through October 2013. Payment
terms include a down payment and progress payments during the term of the
contract, with approximately 40 percent of the contract value received by
October, 2011.� POSCO Power is an independent power producer in South
Korea and subsidiary of POSCO, a global steel producer.�
"Fuel
cells address the needs of the South Korean market for ultra-clean and
efficient power that is generated continuously," said Soung-Sik Cho, President and CEO, POSCO Power.� "We expect fuel cells to play a
significant role in meeting the new and renewable power needs for South Korea
under the Renewable Portfolio Standard and we want to ensure that POSCO Power
is positioned to meet the demand."� � �
South
Korea adopted a renewable portfolio standard (RPS) in 2010 to promote clean
energy, reduce carbon emissions, and develop a local green-industry to promote
economic growth.� Beginning in 2012, 350 MW of
renewable energy per year is mandated through 2016, and 700 MW per year
through 2022.� Fuel cells operating on natural gas and biogas fully
qualify under the RPS and earned a prominent position within the RPS pricing
mechanism due to their efficient and reliable generation of ultra-clean
power.
"This
is the largest order ever received by FuelCell
Energy, almost doubling product sales and service backlog and enabling us to
maintain production at an annual rate of 55 MW," said Chip Bottone, President and CEO of FuelCell
Energy, Inc. "Higher production levels will drive product costs down
further as we achieve manufacturing and purchasing efficiencies."�
"Our
relationship with POSCO Power is an excellent example of the market for fuel
cells where value is placed on ultra-clean baseload
distributed generation and where we have a strong local partner to grow the
market," continued Mr. Bottone.
POSCO
Power recently completed construction of a fuel cell module assembly
facility, which utilizes FuelCell Energy
proprietary fuel cell components.� POSCO Power
stacks the fuel cell components to create the fuel cell module and adds
electrical and mechanical balance of plant to complete the power plant.� The POSCO Power fuel cell module assembly
and balance of plant facilities are designed for 100 MW annual capacity.
In
addition to the revenue generated by the sale of fuel cell kits, FuelCell Energy receives a royalty for each complete
power plant built and installed by POSCO Power, under a licensing agreement
signed in 2009.� Future potential royalty payments to FCE are not
included in the $129 million estimated order value.�
This
announcement follows an order in June 2009 for 30.8 MW of fuel cell modules
and components valued at approximately $58 million.� Including
this order, POSCO Power has ordered 140 MW of fuel cells.
Second
Quarter 2011 Charge to Earnings
FuelCell Energy, Inc. has� committed
to a repair and upgrade program for a select group of 1.2 MW fuel cell modules
produced between 2007 and early 2009. Second quarter 2011 earnings will be
impacted by a non-recurring charge of approximately $9 million, which will be
accounted for as an increase to cost of goods sold.� The
program will begin in the third quarter of 2011 and no additional charges are
anticipated. � The estimated cash impact in fiscal 2011 is $3 to $5
million.
The
program will ensure that this group of modules is achieving expected
performance levels.� The performance shortfall
is due to the type of sealant and design utilized, not the stack itself.� In total, 16 modules totaling 19.2 MW will
be affected with 14 of the modules located in South Korea and the remaining
two modules located in the USA.� Completion of the program is expected
by mid-2012.�
"We
understand the cause of the performance shortfall and are confident that it
impacts only a subset of our fleet as different designs and sealant material
are used for the remainder of the modules in the fleet," said Chip Bottone.� "The performance for these 1.2
megawatt modules did not meet our objectives.� Subsequent
advancements in sealant technology combined with a different design prevent
this performance shortfall from occurring in our current generation of 1.4
megawatt fuel cell modules or any of our sub-megawatt modules."�
FuelCell Energy will release second quarter 2011 earnings on
June 6, 2011, after the market close.� All
forward-looking statements are subject to risks and uncertainties that could
cause actual results to differ materially from those projected.� � �
About
FuelCell Energy
DFC�
fuel cells are generating power at over 50 locations worldwide. The Company's
power plants have generated over 750 million kWh of power using a variety of
fuels including renewable wastewater gas, biogas from beer and food
processing, as well as natural gas and other hydrocarbon fuels. FuelCell Energy has partnerships with major power plant
developers and power companies around the world. The Company also receives
funding from the U.S. Department of Energy and other government agencies for
the development of leading edge technologies such as fuel cells. For more
information please visit our website at www.fuelcellenergy.com
This
news release contains forward-looking statements, including statements
regarding the Company's plans and expectations regarding the continuing
development, commercialization and financing of its fuel cell technology and
business plans. All forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from those
projected. Factors that could cause such a difference include, without
limitation, general risks associated with product development, manufacturing,
changes in the regulatory environment, customer strategies, potential
volatility of energy prices, rapid technological change, competition, and the
Company's ability to achieve its sales plans and cost reduction targets, as
well as other risks set forth in the Company's filings with the Securities
and Exchange Commission. The forward-looking statements contained herein
speak only as of the date of this press release. The Company expressly
disclaims any obligation or undertaking to release publicly any updates or
revisions to any such statement to reflect any change in the Company's
expectations or any change in events, conditions or circumstances on which
any such statement is based.
Direct FuelCell, DFC, DFC/T, DFC-H2 and FuelCell
Energy, Inc. are all registered trademarks of FuelCell
Energy, Inc. DFC-ERG is a registered trademark jointly owned by Enbridge,
Inc. and FuelCell Energy, Inc.
CONTACT: FuelCell Energy, Inc.
�������� Kurt Goddard, Vice President Investor Relations
�������� 203-830-7494
�������� ir@fce.com