We recently revisited solid-oxide fuel-cell technology in light of increasing delays affecting gas Combined Heat and Power (CHP) and its associated CO₂ footprint. What we found was surprising. Despite higher upfront capital costs, lower operating costs and environmental benefits present a compelling business case, particularly when financed under a Power Purchase Agreement (PPA).
The key benefits are a powerful combination: superior resilience and modularity; high electrical efficiency meaning significant gas savings; emissions reduction and ETS status; fuel flexibility; and rapid deployment and reliable off-grid operation. These align closely with the growing needs of commercial and industrial energy users.
Superior reliability and resilience
Fuel cells provide continuous, uninterruptible power, even under stressed grid conditions. They use natural gas, biogas, hydrogen or blends as a source of hydrogen, which is then used to make electricity via an electrochemical process without combustion. This enables stable, quiet and highly reliable operation with no moving parts.
Experience from more than 250,000 hours of CHP operation shows average availability of around 95 per cent, which requires active monitoring and action to achieve. By contrast, fuel cells can offer guarantees of up to 99.999 per cent availability for customers operating critical infrastructure. Each fuel cell is replaced approximately every five years and involves a ‘hot-swap’ that takes an hour, rather than extended major maintenance and the associated downtime. Due to system modularity, less than 325kW is offline during maintenance.
High electrical efficiency means less gas consumption
Fuel cells deliver industry-leading electrical efficiencies of more than 55 per cent, exceeding 90 per cent total efficiency in CHP configurations. This results in gas consumption typically 30 per cent lower than gas reciprocating engine CHP. A further benefit is that all waste heat is produced at a higher, single temperature (from 120°C up to 370°C), making it more usable across a wider range of applications than the typical low-grade heat from a gas engine.
Fuel cells also offer compelling environmental benefits, particularly for organisations with sustainability commitments. Unlike wind and solar, fuel cell systems operate continuously, enabling emissions reductions without intermittency or the need for large-scale storage.
Emissions reduction and ETS status
Because fuel cells operate without combustion, they produce no NOₓ, SOₓ or particulate emissions — making them exempt from environmental emissions permits. As the waste CO₂ stream is more concentrated, carbon capture becomes simpler and more cost-effective, providing a clearer pathway to full decarbonisation where hydrogen is not available in the long term. Fuel cells operating in a standalone facility are exempt from ETS when the sum of combustion capacity on a site is below 20MW. This creates an interesting additional business case for heat electrification.
Fuel flexibility and hydrogen-ready architecture
Fuel cells are uniquely fuel-agile, capable of running on natural gas today while transitioning to hydrogen as markets mature, without loss of efficiency. Gas CHP vendors often quote ‘100 per cent hydrogen ready’ but fail to mention the higher hydrogen consumption needed to achieve the same outputs, meaning a 25 per cent increase in usage.
Rapid deployment and off-grid capability
For industries with grid capacity delays holding back expansion, or those waiting years for grid upgrades to connect — such as new data centres — fuel cells offer a viable off-grid solution with availability guarantees of up to 99.999 per cent. A major benefit of BTM fuel cell systems is not only speed of deployment, but their modularity, meaning they can be simply added to and have a high energy density per m² as they can also be stacked.
If you are considering a new CHP, or replacing an existing one, fuel cells can deliver around 30 per cent gas savings, reduce exposure to fossil fuels and support carbon reduction targets. The high upfront costs can be enabled through a PPA. Although more expensive at the outset, lower fuel consumption, reduced running costs and simpler maintenance mean overall operating costs, including ETS or compliance costs, are significantly lower. At OSE, we offer fuel cells on 10, 15 and 20-year PPAs, with overall power costs typically lower than gas CHP.