BOARD MEETING DATE: October 1, 2010
AGENDA NO. 9

PROPOSAL:

Issue RFP for Demonstration of Natural Gas Stationary Fuel Cells at AQMD Headquarters

SYNOPSIS:

Fuel cells are energy efficient and clean sources of electrical power. Staff proposes to install stationary fuel cells at the AQMD headquarters as a demonstration project to accelerate commercialization, gain operational experience, and achieve public awareness of the efficiency and air quality benefits of this clean technology. This action is to issue an RFP soliciting bids to install a 250-300 kW fuel cell for the main AQMD facility and two 3-5 kW fuel cells at the child care center, cafeteria, or other appropriate site located at the AQMD headquarters. The exact cost, scope and manner of the services for installing the fuel cells will be determined as part of the competitive bidding process.

COMMITTEE:

Technology, September 24, 2010, Recommended for Approval

RECOMMENDED ACTION:

Approve issuance of RFP #P2011-09 to solicit proposals to install a 250-300 kW fuel cell for the main AQMD facility and two 3-5 kW fuel cells each for the child care center, cafeteria or other appropriate site located at the AQMD headquarters.
 

Barry R. Wallerstein, D.Env.
Executive Officer

Background

Stationary fuel cells provide an avenue to help California and the nation solve pressing problems such as dependence on foreign oil, greenhouse gas emissions and poor air quality. Fuel cells can run on a variety of fuels and can be sited to produce and deliver electrical power and waste heat where it is required; this type of on-site power generation is referred to as distributed generation (DG). Major attributes of DG include the avoidance of transmission and distribution line losses, the capture and use of waste heat, and increased reliability of electricity and electric power quality for the consumer. Fuel cells produce almost zero criteria pollutant emissions, and they are extremely quiet. Fuel cells can also be designed to capture process waste heat, and this recovered heat can be used for space heating and heating water.

The Board has long supported the development and demonstration of stationary fuel cells as illustrated by the AQMD hosting the first-ever commercial ONSI 200kW PC-25 Phosphoric Acid Fuel Cell unit for stationary power generation in 1993. Although this fuel cell is no longer in operation, the AQMD recognizes the need for additional clean DG infrastructure for growing energy demand. The primary goal is to promote the commercialization of DG applications that use clean fuels, and the secondary goal is to demonstrate the most viable technologies and designs to be adopted for future large-scale DG infrastructure implementation. These goals can be given high visibility and outreach potential to decision-makers by using the AQMD headquarters as a showcase for these technologies. To that end, staff drafted the AQMD Headquarters Building Electric Energy Self Sufficiency Study that utilized fuel cells as an integral component to providing a portion of the facility’s base load electrical power. The projects solicited in this RFP represent the initial phase of the AQMD headquarters energy self sufficiency.

Two different applications are envisioned for this RFP. The first project is for a large fuel cell that produces 250-300 kW and would supplement up to 17% of the 1800 kW average daytime electrical load that is supplied to the AQMD district offices from the grid. The second proposal is for two 3-5 kW fuel cells that will be used to provide electricity and hot water within the AQMD complex for the child care center, the Blue Sky Cafe (cafeteria), or other appropriate site. By demonstrating these fuel cells, the commercialization for many diverse applications from commercial to residential can be accelerated along with public awareness of this clean fuel technology. 

Proposal

Staff requests the Board to authorize the issuance of an RFP to solicit bids from qualified contractors to provide and install fuel cells that will supply combined heat and power to the building and facilities at AQMD Headquarters. While the exact cost, scope and manner of the services are not known at this time, these will be determined as part of the competitive bidding process. Two projects that will be included in the RFP are as follows:

Project A: Large Fuel Cell Demonstration

Applicants will have the ability to provide the following equipment and minimum services:

• A fuel cell that will provide 250-300 kW of electrical power and interface to AQMD’s main facility electrical system;

• Provide a heat recovery system and interface from the fuel cell to AQMD’s facility;

• Fuel cell must operate on pipeline natural gas;

• Fuel cell must be certified to comply with commercial and industrial standards;

• Fuel cell installation and startup shall be turn-key; and

• Provide a long-term service and maintenance agreement.

Project B: Small Fuel Cell Demonstration

Applicants will have the ability to provide the following equipment and minimum services:

• Two stand-alone fuel cells systems that will each provide 3-5 kW of electrical power and hot water for the child care center, the Blue Sky Cafe or other site located at the AQMD headquarters;

• Fuel cells must operate on pipeline natural gas;

• Fuel cell must be certified to comply with commercial and industrial standards;

• Fuel cell installation and startup shall be turn-key; and

• Provide a long-term service and maintenance agreement.

Outreach

In accordance with AQMD’s Procurement Policy and Procedure, a public notice advertising the RFP/RFQ and inviting bids will be published in the Los Angeles Times, the Orange County Register, the San Bernardino Sun, and Riverside County Press Enterprise newspapers to leverage the most cost-effective method of outreach to the entire South Coast Basin.

Additionally, potential bidders may be notified utilizing AQMD’s own electronic listing of certified minority vendors. Notice of the RFP/RFQ will be mailed to the Black and Latino Legislative Caucuses and various minority chambers of commerce and business associations, and placed on the Internet at AQMD’s website (http://www.aqmd.gov where it can be viewed by making menu selections “Inside AQMD”/“Employment and Business Opportunities”/“Business Opportunities” or by going directly to http://www.aqmd.gov/rfp/index.html). Information is also available on AQMD’s bidder’s 24-hour telephone message line (909) 396-2724.

Bid Evaluation

Proposals will be reviewed and evaluated by a diverse, technically qualified panel in accordance with criteria contained in the attached RFP. Points will be awarded in the RFP evaluation process to proposals that will qualify for the California Public Utilities Commission’s Self-Generation Incentive Program (SGIP) credit.

Benefits to AQMD

AQMD’s Clean Fuels Program has been active in funding the development and demonstration of low and zero-emission fuel cell technologies within its Technology Advancement Office. The AQMD has also supported a number of activities directed to the commercialization of low-emission fuel cell technologies. Promoting distributed generation and energy self sufficiency are goals of the AQMD. This project is included in the Technology Advancement Office 2010 Plan Update under “Stationary Clean Fuel Technologies.”

California Public Utilities Commission established a rebate program in 2001 to reduce peak demand on the grid. SGIP provides incentives for the installation of new, qualifying equipment installed to meet all or a portion of the electrical energy and heat needs of a facility. If the proposed systems in this project qualify for the SGIP credit the incentive would be $2.50/W for each unit. The SGIP credit for the two small fuel cells could be up to $25,000 and the credit for the large fuel cell could be up to $750,000.

Schedule of Events

The anticipated schedule of events for the RFP is as follows:

Resource Impacts

The exact cost of the services to provide and install a high power fuel cell is not known at this time for RFP #P2011-09. This RFP seeks to solicit bids from qualified parties to provide these services. The exact cost of the services will be determined as part of the competitive bidding process and will be subject to subsequent budget approval by the Board.

Sufficient funds are available in the Clean Fuels Fund, which is established as special revenue from the state-mandated Clean Fuels Program. The Clean Fuels Program, under Health and Safety Code Sections 40448.5 and 40512 and Vehicle Code Section 9250.11, establishes mechanisms to collect revenues from mobile and stationary sources to support projects to increase the utilization of clean fuels, including the development of the necessary advanced enabling technologies. Funds collected from emission fee surcharges on stationary sources emitting more than 250 tons of pollutants are restricted, by statute, to be used for projects and program activities related to stationary sources that support the objectives of the Clean Fuels Program.

Attachment (DOC, 963k)

RFP #P2011-09 – Demonstration of Natural Gas Stationary Fuel Cells at the South Coast Air Quality Management District Headquarters