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ClearEdge scores $40 million in Korea - next stop Oregon?

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Wednesday, June 16, 2010

ClearEdge, the fuel cell company headquartered in Hillsboro, made big headlines last week after announcing a $40 million deal with Korea’s LS Industrial Systems to distribute 800 of its fuel cells over the next three years to commercial businesses.  The deal marks the company's first major expansion out of its target market of California and its first foray overseas.

Despite being an Oregon company, ClearEdge has yet to target business in the state.  All but one of the fuel cells the company has installed are in California, where energy rates are higher and the tax incentives are greater. But if millions can be spent in California and Korea will Oregon be next?

ClearEdge hopes so.  Mike Upp, ClearEdge’s vice president of marketing, said the company has found renewed interest in the Oregon market in the last two months and is making strides to secure business.  Upp said he has a meeting scheduled with the Oregon Department of Energy this week.

“The biggest stumbling block for Oregon is that energy rates are so low, but we are redefining our Oregon strategy and we are certainly starting to get noticed,” said Upp.

ClearEdge's product, which is about the size of a refrigerator, takes hydrogen from gas and turns it into electricity.  The gas can come from a number of places as either natural gas, gas from decomposing garbage dumps or biomass.  It can generate 5 kW of power an hour, enough to power a small business or a large residence of more than 4,000 sqare feet.  In order to make the financial model work the cell needs to also be used to capitalize on its important byproduct: heat.  The cell generates enough heat to cover both space and water heating along with its energy output.

So why hasn’t this innovative energy technology based out of Oregon caught on here?  The company started in 2003 in Hillsboro, but to date only has one cell installed at a fire station in Oregon.  Rick Wallace is the Biofuels Program Coordinator at the Oregon Department of Energy and he said that despite tax credits he hasn’t seen much interest from anyone in the state for either residential or commercial use.

“We keep waiting to see what will happen, but there just isn’t any interest in Oregon and the technology isn't developed enough to gain any,” said Wallace.

Wallace said the technology is still too experimental and that few of the devices actually work.

But ClearEdge has plenty of paying customers to dispute that, with 25 units installed and 300 on order, plus the additional 800 units for the Korean company.  With a $56,000 price tag each that equals plenty of green for the company, which expects to hire an additional 150 employees by the end of the year.

Congressman David Wu is a fan. He recently toured the ClearEdge facility and has introduced a bill in Congress that would increase tax breaks for people who use fuel cells in their homes.  As with solar and wind power, incentives are crucial for this developing renewable energy technology. Tax breaks have been a key factor in CleanEdge's success in California, and the Korean deal resulted from a government mandate that 10 percent of the energy needs for new buildings must come from renewable sources.

Upp believes the company is ready to expand its focus outside of California now that they have had more experience.  The high energy costs and tax breaks made California an ideal first market, but other states including Oregon are beginning to follow in terms of creating incentives for renewable energy investments.

“We focused on one area and limited the geography in the beginning to get the bugs out and cleanly and clearly document our services," said Upp, "but we are here in Oregon to stay."

ClearEdge employs 150 people in Oregon and hopes to double its head count to 300 by the end of the year.

Jessica Hoch is an online reporter for Oregon Business.



0 #1 Erik 2010-06-17 17:51:02
It would be interesting to compare environmental versus economical costs between green energy sources like Clearedge fuel cell 'fridge' with dirtier forms of energy producers
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Stephan Brodhead
0 #2 Cap and TradeStephan Brodhead 2010-06-19 21:14:05
So David Wu wants to pass Cap and Trade, drive up energy prices on seniors just to make fuel cell technology affordable in Oregon? Nice logic.
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