Freeport, TX - February 10, 2004
The Dow Chemical Company and General Motors started a GM hydrogen fuel cell to convert hydrogen into electricity at Dow's manufacturing site in Freeport, Texas. The initial fuel cell will convert hydrogen into 75 kilowatts of electricity, or enough power for sixty homes for one year. Ultimately, fuel cells from GM could generate 35 megawatts of power from hydrogen for Dow, equivalent to electricity for 25,000 homes. The test is a milestone that could have wide ranging affects and benefits for industry and individuals in the years to come.
Energy Cost Savings For Dow
Dow manufacturing is energy intensive. The cost of power is an important determinant of the company's profitability. Successful installation of hydrogen fuel cells will give Dow an additional supply of electricity. The 35 megawatts of power Dow anticipates from this arrangement is about 2% of the total used at Dow's Texas Operations. So while this is a small percentage, the hydrogen derived electricity represents a significant step for both companies.
Energy Is Business Critical For Dow
Supporting, investing in and seeking out renewable energy sources provide a triple advantage for Dow. Dow needs energy to run facilities, but also relies on fossil fuel sources as raw material. These are transformed using energy into products used by consumers every day. The global competitiveness of Dow's US operations has been affected by volatile natural gas prices as growing U.S. demand continues to outstrip supply. As energy price and supply volatility affects the company and its shareholders, Dow is keen to find reliable alternatives to fossil fuel.
More Firsts
Not only is this a big step for evaluating the broad industrial use of fuel cell technology, it is the first time a carmaker has used its fuel cell technology to provide electricity and heat for buildings and manufacturing. The industry calls this "distributed generation." Because of its manufacturing processes, Dow is able to supply the hydrogen "fuel" needed for the conversion. But this is very unique. The hydrogen for most other fuel cells comes from natural gas, a commodity in short supply at this time. That Dow is in a position to supply its own hydrogen is an interesting position for the company.
Hydrogen fuel cells, if proven a reliable source of energy for industrial use, will provide a number of benefits for industry. Use of hydrogen fuel cells will contribute toward the Climate Change challenge faced on a global scale. Less fossil fuel is used, thus decreasing nitrogen oxide and carbon dioxide emissions.
Dow sees fuel cells as one potential solution for the environmental challenges associated with being an energy intensive company, committed to the principles of Sustainable Development. Dow continues to explore and invest in other alternative energy solutions.
Technological Landmark
This project will inevitably drive technological progress for fuel cell technology which is a positive for industry, consumers and society as a whole. To compete with the internal combustion engine, fuel cells will have to cost about $3,000.00 - $4,000.00 for 75 kilowatts of power or about $50.00 per kilowatt. The arrangement between GM and Dow will help GM drive fuel cell systems to the automotive price point by 2010 and a competitive price point for distributive systems by 2005.
The initial field test will also greatly improve durability and life of the fuel cell systems.
GM expects each fuel cell unit to exceed 8,000 hours of operation by 2010, which equates to more than 175,000 miles in an automobile.
The Dow-GM transaction typifies the type of creative arrangements that will arise from the new hydrogen economy-one part of the solution to global Climate Change challenges. This is an excellent example of environmental stewardship making good business sense. By using hydrogen in a fuel cell, Dow is able to reduce emissions at a site from traditional power sources and create electricity. This type of creativity will generate a stream of entrepreneurial thinking that will ultimately accelerate the arrival of the hydrogen economy. As costs fall and durability improves, new applications will emerge that save industrial, commercial, and finally consumer power and transportation needs. Fuel cell suppliers will also benefit from this deal because the volumes go from prototypes to a limited production run of more than 1,000 units.
General Motors (NYSE: GM), the world's largest vehicle manufacturer, designs, builds and markets cars and trucks worldwide, and has been the global automotive sales leader since 1931. GM employs about 350,000 people around the world. More information on GM can be found at www.gm.com.
Dow is a leader in science and technology, providing innovative chemical, plastic and agricultural products and services to many essential consumer markets. With annual sales of $33 billion, Dow serves customers in more than 180 countries and a wide range of markets that are vital to human progress, including food, transportation, health and medicine, personal and home care, and building and construction, among others. Committed to the principles of sustainable development, Dow and its approximately 46,000 employees seek to balance economic, environmental and social responsibilities. References to "Dow" or the "Company" mean The Dow Chemical Company and its consolidated subsidiaries unless otherwise expressly noted.
For further information, visit www.dowfuelcell.com.
