Deal highlights:
Initial order of 3 MW and $10 million investment in FuelCell Energy
Marubeni to secure up to 45 MW in orders over the next two years
FuelCell Energy to supply all fuel cells for power plants
Marubeni receives warrants for additional equity based on order
volume
Additional investment of up to $30 million and formulation of joint venture to assemble Direct FuelCell modules in Asia
June 18, 2001, Danbury, CTFuelCell Energy, Inc. (Nasdaq:FCEL) and Marubeni Corporation (TSE: 8002) entered into a comprehensive strategic alliance agreement that is targeted to generate at least 45 MW in Direct FuelCell® (DFC®) power plant orders, while providing the necessary infrastructure for successfully launching the product in Japan and Asia.
Initially Marubeni will purchase these plants directly from FuelCell Energy. As volume grows Marubeni will design and supply increasing portions of the power plant to assure this product fullymeets the needs of the Asian markets. Marubeni and FuelCell Energy expect to form a joint venture for the purpose of assembling DFC modules in Asia from components produced by FuelCell Energy at its manufacturing facility in Torrington, CT.
This alliance agreement strengthens our relationship with Marubeni and demonstrates a clear commitment by both companies to aggressively pursue the growing opportunities for distributed power generation in Japan and Asia, said Jerry D. Leitman, president and CEO of FuelCell Energy. We'll be getting products into the market while creating a business partnership that is committed to our joint, long-term success.
We are excited to formalize our strategic alliance with FuelCell Energy, to bring this new technology to the Asian markets, said Marc G. Aube, Manager, Power Systems Division for Marubeni America Corporation (New York, NY). Marubeni has been focusing on developing clean, efficient power plants in Japan and throughout Asia. These include hydropower, geothermal, wind and now fuel cells. It is Marubenis goal to provide high-quality, high-reliability power to satisfy Asia's growing demand, in a way that respects the environment.
Marubeni intends to aggressively pursue the distributed generation market through our network of offices in Japan and Asia, said Mamoru Sekiyama, Senior Operating Officer of Marubenis Utility & Infrastructure Division. Using our knowledge of the local markets and government agencies, we will capitalize on programs that promote ultra-high efficiency and green technologies, such as Japans ambitious wastewater treatment initiative. FuelCell Energys world-leading technology and Marubenis considerable marketing resources are a winning combination.
New DFC power plants for Japan and Asia
Upon signing the agreement, Marubeni will order 3 MW of DFC power plants from FuelCell Energy, in addition to the 1.25 MW currently on order. The two companies will also develop a balance of plant design for the Asian market. During the next two years, Marubeni is targeting orders of at least 45 MW in Japan and Asia.
FuelCell Energy will manufacture all fuel cells in its Torrington, CT, facility.
Growing market for distributed generation in Japan and Asia
The need for clean, efficient distributed power continues to grow in the Far East. As is in the U.S., much of this new generation need is in and around major metropolitan areas where grid congestion and environmental constraints make fuel cells an excellent fit. Due to the high cost of energy, there is also a strong focus on cogeneration and the use of opportunity fuels such as wastewater treatment gases. Both of these applications are well suited for fuel cells. All this is further enabled by the introduction of deregulation of the electric industry, especially in Japan.
Equity investment
Marubeni is making an initial $10 million investment in FuelCell Energy upon the signing of this agreement. FuelCell Energy is also granting 950,000 warrants to Marubeni, which will vest over the next two years, based on Marubeni reaching certain order targets of DFC power plants. Marubeni is expected to invest an additional $30,000,000 in FuelCell Energy over the term of the agreement as it designs and sources increasing portions of the power plant and participates in the manufacturing joint venture.
Joint Venture in Asia
The two companies plan to form a joint venture for the purposes of assembling DFC modules in Asia from components provided by FuelCell Energy. FuelCell Energy will have a business control in the joint venture. Marubeni will provide logistical support to the joint venture, including procurement, shipping and transportation functions. It will also provide management of the manufacturing facilities in Asia.
About Direct FuelCells
Direct FuelCells generate electricity with no combustion. They are, in-effect like large, continuously operating batteries that generate electricity as long as fuel, such as natural gas is supplied. Since the fuel is not burned, there is no pollution commonly associated with the combustion of fossil fuels. Also, the high efficiency leads to more electric power from less fuel and with less carbon dioxide emissions
About Marubeni
The Marubeni Corporation (www.marubeni.com), established in 1858, is one of Japan's leading general trading houses (sogo shosha), with operations that encompass domestic, import, export, offshore trade and investment activities, which range from the development of natural resources to the retail marketing of finished products. The Company, based in Tokyo, conducts these operations through a worldwide business network. Marubeni has been involved in the development of over 20,000 MWs of power generation worldwide.
About FuelCell Energy, Inc.
FuelCell Energy, Inc. (www.fuelcellenergy.com), based in Danbury, Connecticut, is a world-recognized leader for development and commercialization of high efficiency fuel cells for electric power generation. The Company has been developing DFC technology for stationary power plants with the U.S. Department of Energy through the National Energy Technology Laboratory, whose advanced fuel cell research program is focused on developing a new generation of high performance fuel cells that can generate clean electricity at power stations or in distributed locations near the customer, including hospitals, schools, data centers and other commercial and industrial applications.