Backup Power Cost of 

Ownership Analysis and 

Incumbent Technology 

Comparison 

J. Kurtz, G. Saur, S. Sprik, and C. Ainscough 

National Renewable Energy Laboratory 

NREL is a national laboratory of the U.S. Department of Energy 

Office of Energy Efficiency & Renewable Energy 

Operated by the Alliance for Sustainable Energy, LLC 

This report is available at no cost from the National Renewable Energy 

Laboratory (NREL) at www.nrel.gov/publications. 

Technical Report 

NREL/TP-5400-60732 

September 2014 

Contract No. DE-AC36-08GO28308 
 

 

 

 

 

 

 

National Renewable Energy Laboratory 

15013 Denver West Parkway 

Golden, CO 80401 

303-275-3000 • www.nrel.gov 

Backup Power Cost of 

Ownership Analysis and 

Incumbent Technology 

Comparison 

J. Kurtz, G. Saur, S. Sprik, and C. Ainscough 

National Renewable Energy Laboratory 

Prepared under Task No. H279.1710 

NREL is a national laboratory of the U.S. Department of Energy 

Office of Energy Efficiency & Renewable Energy 

Operated by the Alliance for Sustainable Energy, LLC 

This report is available at no cost from the National Renewable Energy 

Laboratory (NREL) at www.nrel.gov/publications. 

Technical Report 

NREL/TP-5400-60732 

September 2014 

Contract No. DE-AC36-08GO28308 
NOTICE

This report was prepared as an account of work sponsored by an agency of the United States government. 

Neither the United States government nor any agency thereof, nor any of their employees, makes any warranty, 

express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of 

any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately 

owned rights. Reference herein to any specific commercial product, process, or service by trade name, 

trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, 

or favoring by the United States government or any agency thereof. The views and opinions of authors

expressed herein do not necessarily state or reflect those of the United States government or any agency thereof.

This report is available at no cost from the National Renewable Energy

Laboratory (NREL) at www.nrel.gov/publications.

Available electronically at http://www.osti.gov/scitech

Available for a processing fee to U.S. Department of Energy

and its contractors, in paper, from:

U.S. Department of Energy

Office of Scientific and Technical Information

P.O. Box 62

Oak Ridge, TN 37831-0062

phone: 865.576.8401

fax: 865.576.5728

email: mailto:reports@adonis.osti.gov

Available for sale to the public, in paper, from:

U.S. Department of Commerce

National Technical Information Service

5285 Port Royal Road

Springfield, VA 22161

phone: 800.553.6847

fax: 703.605.6900

email: orders@ntis.fedworld.gov

online ordering: http://www.ntis.gov/help/ordermethods.aspx

Cover Photos: (left to right) photo by Pat Corkery, NREL 16416, photo from SunEdison, NREL 17423, photo by Pat Corkery, NREL 

16560, photo by Dennis Schroeder, NREL 17613, photo by Dean Armstrong, NREL 17436, photo by Pat Corkery, NREL 17721.

NREL prints on paper that contains recycled content.
 

Acknowledgements 

Funding for this report came from the U.S. Department of Energy’s Fuel Cell Technologies 

Office. The authors would like to acknowledge the industry project partners, both developers and 

end users, for their participation through deployment and providing operation data as well as 

reviewing the National Renewable Energy Laboratory’s composite data products. Their 

participation and review are essential, and appreciated, for the validation analysis summarized in 

this report. Special thanks to Sprint, ReliOn, Altergy, Cummins Generator, Deka Batteries, AC 

Systems, and FAA for their contributions. 

iii 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
 

 

List of Acronyms 

ARRA American Recovery and Reinvestment Act of 2009 

CDP composite data product 

DOE U.S. Department of Energy 

FC fuel cell 

HSM hydrogen storage module 

kg kilogram 

kW kilowatt 

NFCTEC National Fuel Cell Technology Evaluation Center 

NREL National Renewable Energy Laboratory 

iv 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
 

 

 

 

 

 

Executive Summary 

Over a two-plus year period, the American Recovery and Reinvestment Act of 2009 (ARRA), 

through the U.S. Department of Energy’s Fuel Cell Technologies Office, exceeded its target to 

install 1,000 fuel cell units across several different applications including backup power to spur 

commercialization of early market technologies. Fuel cell backup power can provide a critical 

service in times of emergencies and decrease the economic and productivity losses during other 

grid instabilities when compared with incumbent technologies. Fuel cells can provide an 

extended run time similar to that of diesel generators while also providing a low-emission and 

low-noise solution, which is especially important in urban environments. 

By December 2013, more than 1,300 fuel cell units were deployed, of which 852 were providing 

backup service, mainly to telecommunications towers (Figure ES-1). Project participants 

provided detailed operational data for 134 of the fuel cell backup power units, and the National 

Renewable Energy Laboratory’s technology validation team analyzed the data. 

The data provided a great deal of information regarding deployment numbers, installed capacity, 

reliability, and operation trends and characteristics. The start reliability of those systems was 

99.5%. While some system capacities were larger than 10 kilowatts (kW), 78% of the systems 

were in the 4–6 kW range. Modules of smaller fuel cell units could be combined to adjust the 

system size to an individual site’s needs. The fuel cells accumulated more than 1,749 hours of 

operation time with one unit successfully demonstrating a continuous run time of 65 hours 

during the data collection period. See Appendix B for a breakdown of capacity and site count by 

state. 

Figure ES-1. Fuel cell backup power locations [1] 

An annualized cost of ownership analysis enables a better understanding of the value proposition 

for fuel cell backup power systems when compared with the incumbent technologies of battery 

and diesel generator systems. Backup power operation can vary widely based on region, end 

v 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
 

 

 

 

 

 

 

 

user, and site-specific requirements, so a number of assumptions are made to compare three 

different backup power technologies (diesel, battery, and fuel cell) operating in similar 

circumstances in four run time scenarios (8, 52, 72, and 176 hours). Each run time scenario 

assumes the system operates for a specific amount of hours annually, for example a system in the 

72-hour scenario operates for 72 hours a year. The 72 hours could be accumulated through many 

shorter run operations or through one continuous operation. It is important to note that the actual 

use of a telecommunication system is not as simple, or as prescribed, as these run time scenarios. 

Cost estimates for capital, permitting and installation, maintenance, and fuel are generated for 

each of the technologies. Data sources for these cost estimates include ARRA fuel cell systems, 

quotes, and facility manager experience. This cost of ownership analysis identifies the factors 

impacting the value proposition for fuel cell backup power and the estimated annualized cost of 

ownership for three backup power technologies. Figure ES-2 displays the annualized cost 

estimates for each run time scenario and technology. The battery cost of ownership increases 

significantly with the higher run time scenarios, and this technology is unlikely to truly be a 

stand-alone solution for situations that require high run times. A battery system is a common 

option when 8 hours or less are needed for backup run time. 

Fuel Cell* includes incentives 

Figure ES-2. Annualized cost of ownership for technology and run time scenarios 

The diesel generator is consistently one of the lower-cost options, but this technology has some 

challenges due to the cost of annual maintenance requirements and attributes not captured in the 

cost of ownership analysis, such as noise and emissions. 

vi 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
 

 

 

 

 

 

 

 

 

 

The fuel cell system with incentives1 (denoted FC* in figures) is cost competitive with the diesel 

generator, particularly in the 8-hour, 52-hour, and 72-hour run time scenarios. The fuel cell 

system has a higher efficiency and less frequent maintenance schedule than the diesel generator, 

and the incentives offset the higher capital and installation costs as seen in Table 1 and Table 2. 

Other backup power technology attributes not tracked in this cost of ownership analysis, but 

which may be key decision factors along with the cost of ownership, include noise, emissions, 

equipment footprint, available installation space, and permitting. 

Fuel cell systems are now cost competitive with the incumbent backup power technologies, 

according to this cost of ownership analysis, especially with incentives. In the 72-hour run time 

scenario, the cost of ownership of the fuel cell system, without incentives, is approximately 1.2 

times higher than that of a diesel generator and more than 5 times lower than that of a battery 

system. In the same run time scenario, the cost of ownership of the fuel cell system, with 

incentives, is approximately equal to that of the diesel generator and more than 6 times lower 

than that of a battery system. 

A reduction in capital and installation costs will result in a stronger value proposition for fuel cell 

systems as backup power solutions. The cost and difficulty associated with the permitting of 

hydrogen systems are other areas that require development for widespread deployment of fuel 

cell systems. These permitting challenges can vary greatly across the country and can be 

addressed by the consistent implementation of codes and standards. For decision makers 

selecting a backup power system, the initial costs are key drivers, but other aspects to consider 

are noise, permitting, emissions, run time capability, ease of refueling, footprint, and user 

comfort with the technology. 

1 “The credit is equal to 30% of expenditures, with no maximum credit. However, the credit for fuel cells is capped 

at $1,500 per 0.5 kilowatt (kW) of capacity. Eligible property includes fuel cells with a minimum capacity of 0.5 kW 

that have an electricity-only generation efficiency of 30% or higher.” [10] 

vii 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
 

 

 

 

Table of Contents 

List of Figures ............................................................................................................................................ ix
 

List of Tables .............................................................................................................................................. ix
 

1 Introduction ........................................................................................................................................... 1
 

2 Backup Power Annualized Cost of Ownership Analysis Assumptions.......................................... 3
 

3 Backup Power Cost of Ownership Analysis Results ........................................................................ 9
 

4 Conclusions ........................................................................................................................................ 16
 

5 References .......................................................................................................................................... 17
 

Appendix A ................................................................................................................................................ 19

Appendix B ................................................................................................................................................ 20
 

Appendix C ................................................................................................................................................ 21
 

viii 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

List of Figures 

Figure ES-1. Fuel cell backup power locations [1] .................................................................................. v
 

Figure ES-2. Annualized cost of ownership for technology and run time scenarios ......................... vi

Figure 1. Early market fuel cell deployments funded through ARRA [1] .............................................. 1
 

Figure 2. Histogram of site capacities [1] ................................................................................................. 3
 

Figure 3. Fill-in place HSM and example fill [11]...................................................................................... 6
 

Figure 4. Example ReliOn fuel cell system with replaceable cylinders and an HSM [11] ................... 6
 

Figure 5. Breakdown of hydrogen storage and fuel cell capital costs .................................................. 7
 

Figure 6. Annualized cost of ownership technology comparison for multiple run time scenarios
 

(battery cost is only plotted for the 8-hour scenario) ....................................................................... 9

Figure 7. Backup power technology annualized cost comparison by run time scenario ................. 10
 

Figure 8. 8-hour scenario annual cost breakdown ................................................................................ 11
 

Figure 9. 52-hour scenario annual cost breakdown .............................................................................. 12
 

Figure 10. 72-hour scenario annual cost breakdown ............................................................................ 12

Figure 11. 176-hour scenario annual cost breakdown .......................................................................... 13
 

Figure 12. 72-hour sensitivity analysis results ...................................................................................... 15
 

Figure A-1. NREL’s aggregated data analysis using the NFCTEC ...................................................... 19
 

Figure B-1. Backup power deployments with station capacity and site count .................................. 20
 

Figure C-1. 72-hour sensitivity analysis results that includes battery values.................................... 21
 

List of Tables 

Table 1. Key Assumptionsa by Technology ............................................................................................. 4
 

Table 2. Capital, Permitting and Installation, Maintenance, and Fuel Costsa for All Technology and 

Run Time Scenarios ............................................................................................................................. 5
 

Table 3. 72-Hour Sensitivity Ranges ....................................................................................................... 14
 

ix 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
 

 

 

 

 

 

 

 

 

 

1 Introduction 

Over approximately a two-year period, more than 1,300 fuel cell units (Figure 1) were deployed 

in stationary, material handling equipment, auxiliary power, and backup power applications with 

American Recovery and Reinvestment Act of 2009 (ARRA) co-funding awarded through the 

U.S. Department of Energy’s (DOE’s) Fuel Cell Technologies Office. This surpassed an ARRA 

objective of deploying up to 1,000 fuel cell units. As of June 2013, 852 ARRA-funded fuel cell 

units were deployed in backup power applications. The prime backup power ARRA awards were 

to Sprint-Nextel and ReliOn,

2 with a small number of demonstrations to Plug Power. Other 

project partners included PG&E, AT&T, Robins Air Force Base, Fort Irwin, IdaTech (recently 

acquired by Ballard), Altergy, Air Products and Chemicals, Inc., Champion Energy, Ericsson 

Services, Inc., A&E Firms, Black & Veatch, and Burns & McDonnell. 

Figure 1. Early market fuel cell deployments funded through ARRA [1] 

These ARRA co-funded fuel cell deployments supported hydrogen fuel cell commercialization 

through an accelerated deployment, impacting many areas of the market, including 

manufacturing, permitting, installation, hydrogen infrastructure, operation, maintenance, and 

support services. DOE’s Fuel Cell Technologies Office awarded 12 projects with approximately 

$40 million in ARRA funding and approximately $53 million in industry cost share; of this total, 

$18.5 million in ARRA funding went to three backup power projects [2]. Project participants 

included technology developers and end users. 

To support the validation and market transformation objectives of the project, the project 

participants collected and submitted data to the National Fuel Cell Technology Evaluation Center 

(NFCTEC) at the National Renewable Energy Laboratory (NREL). NREL’s objective is to 

validate hydrogen polymer electrolyte membrane fuel cells used in early market applications as 

well as their related infrastructure. Building on its experience with the technology validation of 

2 ReliOn was acquired by Plug Power as of April 2014, just before publication of this report. The brand name is 

being retained by Plug Power and will be used throughout this report. 

1
 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
 

 

 

 

 

hydrogen fuel cell vehicles and fueling infrastructure, NREL has been performing technical 

analyses of hydrogen and fuel cell systems for DOE’s Fuel Cell Technologies Office to assess 

the performance and market potential of fuel cell technologies. While individual company data 

are kept confidential, NREL publishes aggregated performance analysis results called 

“composite data products” (CDPs) that show the status and performance of hydrogen and fuel 

cell technologies without identifying individual companies or their performance. See Appendix 

A for more details on NREL’s data analyses. 

NREL uses operational data collected from a number of government co-funded demonstration 

projects to analyze fuel cells used in material handling equipment and backup power to 

characterize their performance, maintenance, and operation and to highlight the business case for 

using fuel cells in these early market applications. This technology validation includes 

identifying the current status of the technology and its evolution over the duration of the project, 

assisting DOE’s hydrogen research and development activities based on information learned 

from this project, and helping industry in evaluating progress toward technology readiness. 

Deployment of fuel cell systems is a practical option for telecommunications operations that 

need reliable, long-running backup power at cellular phone signal relay sites, particularly during 

electric grid power outages. Commercial growth of the wireless telecommunications market in 

the United States and overseas provides opportunities for domestic and international sales of 

backup power fuel cells. Telecommunications backup power expenditures are estimated at more 

than $2 billion annually [3]. Fuel cells for backup power can be installed and operated at new or 

retrofit sites in different regions. 

In addition to the ARRA co-funded fuel cell backup power demonstrations, DOE supported 

additional demonstration projects with other federal agencies through Interagency Agreements. 

The Department of Defense and the Federal Aviation Administration are two agencies with fuel 

cell backup power demonstrations that also submitted operational and deployment data to NREL. 

All results covered in this report, unless specified as strictly ARRA, will include both ARRA and 

Interagency Agreement fuel cell backup power sites. Almost all sites (~98%) were co-funded 

through ARRA. All results from this analysis project, including any other publications and 

presentations, are available online [4]. 

The majority of sites (78%) tracked by NREL had capacities of 4–6 kW (Figure 2). There were a 

few sites with higher capacity in both urban and rural areas. California had the largest number of 

systems installed. The high concentrations of sites in California and the Northeast are primarily 

due to the location of project partners and population. Other site location factors include impact, 

regulations, use, and grid stability. 

2
 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
 

 

 

 

 

Figure 2. Histogram of site capacities [1] 

2 Backup Power Annualized Cost of Ownership 

Analysis Assumptions 

The technologies included in this analysis are a battery system, a diesel generator with a bridge 

battery system, and a fuel cell system with a bridge battery system. The generator and fuel cell 

system analyzed both utilize a bridge battery system to ensure uninterrupted power during a grid 

outage. A power range of 4–6 kW was selected because 78% of the NREL-analyzed systems 

installed between 2010 and 2012 are in this range. In the diesel generator scenario, a 25–35 kW 

unit was used because commercial-grade diesel generators are not readily available in the 4–6 

kW range. The lifetimes assumed for the battery, diesel, and fuel cell systems are 5, 15, and 15 

years, respectively [9]. These lifetimes are based on replacement schedules from the suppliers. 

All costs are in present value terms, with a discount rate over the lifetime applied to capital 

purchases. Table 1 lists the key analysis assumptions by technology. 

3
 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
 

 

 

 

 

 

 

 

 

 

Table 1. Key Assumptionsa by Technology 

Battery Diesel Generator Fuel Cell 

Capacity (kW) 4–6 25–35 

(operated at 6) 4–6 

Lifetime [9] 5 15 15 

Leased bottles for 8-

Fuel Storage 

Capacity NA Onsite tank capable of 176-hour scenario 

hour scenario 

Fill-in-place hydrogen 

storage capable of 72-

hour scenario 

Efficiency 90% ~20%b 47% 

Fuel Cost 

6.67 cents per kW 

(EIA average industrial) 

[5] 

$3.89 per gallonc [6] 

$10 per kg + $100 fee 

(8-hour scenario) 

$8 per kg + $50 fee 

(all other scenarios) 

Maintenance 4 visits per year 2–12 visits per year 1 visit per year 

Federal Incentive NA NA $15,000d 

Discount Rate 1.5% 1.5% 1.5% 

$600/year for a 6 

cylinder rent (8-hour 

Fuel Storage NA Not separated in provided 

data 

scenario) 

$18,900 capital for 72-

hour storage module (all 

other scenarios) a Assumptions are based on the average of provided data from suppliers and end users, unless otherwise 

referenced.
 b Diesel generator spec sheet references [7, 8].
 c A delivery fee would also be included for the diesel fuel. That fee was not provided in the diesel cost estimates and 

is not included in this analysis.

d The incentive is 30% of the up-front costs (includes capital and install), capped at $3,000/kW capacity. This analysis
 

assumes an average capacity of 5 kW [10].
 

The operation of backup power systems can vary widely due to location, integration design, and 

control strategy. In order to minimize the impact of the variety of operating conditions, four 

annual run time scenarios were selected for analysis: 8, 52, 72, and 176 hours, which are the 

same run times used in the Battelle report, “Identification and Characterization of Near-Term 

Direct Hydrogen Proton Exchange Membrane Fuel Cell Markets” [9]. A 72-hour continuous run 

time scenario was a hydrogen sizing criterion for the ARRA backup power installations. 

Data for the analysis comes from the following sources: 

•	 The first source, and fuel cell data source, is the ARRA co-funded fuel cell backup power 

suppliers. 

•	 The second source is commercial product price estimates for batteries and diesel-powered 

generators. 

•	 The third source is feedback from facility operators, which was used for data validation. 

The reported data are average values from all input sources. See Table 2 for the breakdown of 

capital, permitting/installation, maintenance, and fuel costs by technology and run time scenario. 

4
 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
 

 

 

 

 

Table 2. Capital, Permitting and Installation, Maintenance, and Fuel Costsa for All Technology and 

Run Time Scenarios
 

Run Time 

Scenario Technology Capital Costb 

Permitting and 

Installation 

Cost 

Annual 

Maintenance 

Cost 

Annual Fuel 

Cost 

8 hour 

Batteryc 

Diesel 

generator 

Fuel cell 

Fuel cell*

d 

$16,800 

$28,300 

$30,700 

$21,500 

$12,000 

$24,000 

$29,300 

$29,300 

$300.00 

$800.00 

$100.00 

$100.00 

$2.00 

$27.00 

$23.00 

$23.00 

Batteryc $70,200 $45,000 $700.00 $12.00 

52 hour 

(~2 days) 

Diesel 

generator 

Fuel cell 

Fuel cell*

d 

$28,300 

$47,600 

$34,200 

$24,000 

$29,300 

$29,300 

$800.00 

$100.00 

$100.00 

$178.00 

$170.00 

$170.00 

Batteryc $88,600 $57,000 $900.00 $17.00 

72 hour 

(3 days) 

Diesel 

generatore 

Fuel celle 

Fuel cell*

d,e 

$28,300 

$47,600 

$34,200 

$24,000 

$29,300 

$29,300 

$800.00 

$100.00 

$100.00 

$246.00 

$216.00 

$216.00 

Batteryc $192,000 $120,000 $2000.00 $42.00 

176 hour 

(~1 week) 

Diesel 

generator 

Fuel cell 

Fuel cell*

d 

$28,300 

$76,000 

$61,000 

$24,000 

$29,300 

$29,300 

$800.00 

$100.00 

$100.00 

$602.00 

$455.00 

$455.00 a Costs are based on the averages of provided data from suppliers and end users, unless otherwise referenced.
 b Capital costs assume the system has enough capability to operate continuously for each run time scenario.
 c Battery installation and maintenance are assumed to scale with the battery capital costs because of the increase in 

support equipment (e.g., cabinets and cooling). The cost to recharge a depleted battery string is included here.
 

Additional costs will be required to maintain the battery charge when not in use.

d There are two fuel cell system scenarios, with (*) and without federal tax credits [10] for fuel cell purchases.
 e The average capital $/kw for a diesel system is between $800/kW and $1,100/kW and for a fuel system (without
 

storage) is $5,700/kW.
 

The incentives for the fuel cell system were calculated as 30% of expenditures and capped at 

$3,000/kW of system capacity [10] (e.g., $15,000 for a 5 kW system if the total system cost was 

greater than $50,000). The eligible costs for this incentive include capital and installation costs. 

The installation and permitting costs are assumed to be relatively constant for the different run 

time scenarios because the largest drivers of these costs are the variability of each site and 

regional permitting requirements. These costs do include estimates for site acquisition. The 

permitting costs are a large percentage of the expense for a fuel cell installation, primarily 

because authorities having jurisdiction may not have familiarity or experience with hydrogen 

fuel cell installations. The incentives for fuel cell systems were applied to capital and installation 

costs. 

5
 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
 

 

 

 

 

 

 

 

The capital costs include all equipment required for operation, for example, the storage tank, 

bridge battery, and transfer switch for a diesel generator. The capital cost for batteries [12] varies 

greatly based on the run time scenarios and operation lifetime. Longer continuous run times 

result in a high battery cost because of the large number of batteries and supporting infrastructure 

required. Batteries must also be oversized to accommodate power degradation over the operation 

lifetime of 5 years. The capital cost for the diesel generator remains constant for the different run 

time scenarios because the generator system, including the tank, is assumed oversized for the low 

run time scenarios. 

There are two changes to the fuel cell system for different run time scenarios that affect the 

capital cost. The 8-hour scenario assumes the hydrogen storage unit is a pack of rented hydrogen 

gas bottles that are swapped out when the gas is low; the other three run time scenarios assume 

the fuel cell system has a hydrogen storage module (HSM) that is purchased and refilled in-place 

instead of using the bottle swap. Figure 3 and Figure 4 display examples of the HSM and the 

replaceable hydrogen cylinders options. 

Figure 3. Fill-in place HSM and example fill [11] 

Hydrogen 

Storage Module 

Replaceable 

Cylinders 

Figure 4. Example ReliOn fuel cell system with replaceable cylinders and an HSM [11] 

6
 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
 

 

 

 

 

 

 

 

 

 

 

 

The 176-hour scenario increases the amount of on-site storage to 2.5 times that of the 72-hour 

scenario. Figure 5 shows a breakdown of the capital cost for the fuel cell system and HSM for 

the four run time scenarios. Note there is a small increase in the fuel cell cost for the 8-hour 

scenario, compared with the other run times. This is due to an enclosure for the hydrogen storage 

tanks. 

Figure 5. Breakdown of hydrogen storage and fuel cell capital costs 

The capital costs of the fuel cell system for the 52-hour and 72- hour run time scenarios are the 

same because the HSM is assumed to be the same size. This assumption is based on available 

data for the 72-hour HSM costs (and not specifically for the 52-hour scenario) because of how 

close the run hours are in the two scenarios. The cost difference between two scenarios is only in 

the cost of the hydrogen consumed. 

All costs are presented as annualized costs per system in present value terms. Capital, permitting, 

and installation costs are amortized over the expected equipment lifetime. Equipment is 

maintained and replaced as necessary, with equipment replacement costs assumed to remain 

constant in real dollar terms. A similar analysis was completed for another key early market for 

fuel cells and reports on the cost of ownership analysis for fuel cell material handling equipment 

[13]. 

As costs are considered in present value terms, a discount rate is applied to capital purchases. For 

this analysis, the discount rate of 1.5% is used, based on U.S. Treasury bond rates as reported by 

the U.S. Treasury. In particular, the 1.5% real rate is the one-year average (from September 2010 

to September 2011, when the cost of ownership analysis was initially conducted) of daily U.S. 

Treasury long-term real rates reported for U.S. Treasury Inflation Protected Securities. The 

Treasury Department [14] notes that the “Long-Term Real Rate Average is the unweighted 

average of bid real yields on all outstanding TIPS [Treasury Inflation Protected Securities] with 

remaining maturities of more than 10 years and is intended as a proxy for long-term real rates.” 

7
 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
 

 

 

 

 

 

 

 

 

 

 

 

 

These investments are generally not directly profitable, but are either required investments or 

hedge against losses due to power outages, which are less quantifiable. 

The annual maintenance can vary significantly by site, even for one technology type. This 

variation is primarily due to ambient conditions like temperature and whether the unit is indoors 

or outdoors. Another factor for maintenance is extended time of inactivity. Fuel cell backup 

power systems are programmed to run periodically (for example every 4 weeks) to ensure the 

system is hydrated and fully operational. Remote monitoring, conditioning runs, and annual 

maintenance have an estimated annual cost of $100 per year for the fuel cell system. Battery 

systems have a trickle charge when not in operation, thus they do not require a periodic 

conditioning run, but they do typically require a maintenance check every 3 months. The 

estimated annual maintenance cost for a battery system is $300 per year and increases relative to 

the increasing battery sizes and capital costs. Diesel generators require the most maintenance of 

the technologies compared in this study; the maintenance expenses vary depending on 

recommended maintenance and actual maintenance practices. The range of estimated annual 

maintenance for diesel generators is from $400 per year to more than 4 times that value. 

Recommended maintenance for diesel generators includes monthly operation and checks as well 

as regular fuel and part replacements. The estimated annual maintenance cost for a diesel 

generator is $800 per year. 

Annual fuel (or electricity) costs are very dependent on the run time scenarios, and the 

assumptions are specific to each technology case. Round-trip efficiency for the battery systems is 

assumed to be 90% with an electricity cost of 6.67 cents. The diesel fuel consumption is assumed 

to be 0.9 gallons per hour with a diesel cost of $3.89 per gallon. An assumption is that the larger 

diesel systems can turn down to this low power level with a low efficiency. The fuel cell system 

case has a few hydrogen cost variations, such as leased hydrogen bottle storage or fill-in-place 

hydrogen storage, and a different per-kilogram price and delivery fee for low or high annual 

hydrogen consumption. An average efficiency of 47% is assumed for the fuel cell system. For 

the run time scenarios greater than 8 hours, high annual hydrogen consumption, a cost of $8 per 

kilogram, a $50 delivery fee, and a fill-in-place HSM are assumed. For the 8-hour run time 

scenario, low annual hydrogen consumption, a cost of $10 per kilogram, a $100 delivery fee, and 

leased hydrogen bottle storage are assumed. The 176-hour run time scenario assumes the onsite 

storage is 2.5 times the cost of the 72-hour storage solution. This option also requires an increase 

in the footprint for storage. If the increased footprint (or increased capital cost) is not preferred 

for the customer, a storage solution could be to use the 72-hour storage option with two 

deliveries of hydrogen to ensure 176-hour annual operation. 

8
 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
 

 

 

 

 

 

3 Backup Power Cost of Ownership Analysis Results 

This cost of ownership analysis serves the purpose of understanding the factors impacting the 

value proposition for fuel cell backup power and the estimated annualized cost of ownership for 

three backup power technologies. Figure 6 displays the annualized cost estimates for each run 

time scenario and technology. The battery cost increases significantly with the higher run time 

scenarios, and this technology is unlikely to truly be a stand-alone solution for situations that 

require high run times. The cost breakdown graphs that follow (except for the 8-hour breakdown 

figure) will exclude the battery to allow for comparison of the other technologies. Note that the 

fourth technology included in these comparisons is the fuel cell system with incentives. 

Figure 6. Annualized cost of ownership technology comparison for multiple run time scenarios 

(battery cost is only plotted for the 8-hour scenario) 

Figure 7 is a radar chart designed to show more detail of the annual cost comparison between 

technologies. The first three run time scenarios have similar costs for the different technologies, 

where diesel is the lowest cost option. The fuel cell cases (both with and without incentives) are 

more expensive than diesel engines in the 176-hour run time scenario and cost competitive in the 

other three scenarios. The higher cost in the 176-hour run time scenario is primarily due to the 

increase in capital cost for the HSM. 

9
 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
 

 

 

 

 

 

 

Figure 7. Backup power technology annualized cost comparison by run time scenario 

The next four figures show the cost breakdown for each run time scenario. The cost breakdown 

categories are the same for Figure 8 through Figure 11 and include the amortized capital and 

installation costs and annual fuel and maintenance costs. Figure 8 details the 8-hour scenario, 

where the capital and installation costs dominate the annual cost of ownership. Maintenance 

costs are quite small for the fuel cell and battery systems when compared with the diesel system; 

however, the diesel system has the lowest capital and installation costs of the technologies. This 

scenario assumes the hydrogen storage system is leased bottles that are swapped out during a 

hydrogen fill. The leased bottle storage has a number of challenges in cost and in the actual swap 

out. The next scenarios assume a fill-in-place hydrogen storage system that is much simpler to 

fill than it is to swap bottles, but it does increase the initial cost and footprint. Another option for 

this short run time scenario is to purchase the hydrogen cylinders, adding approximately $2,500 

to the upfront cost, and then only pay for the cylinder swap when needed. The fuel cell system 

with incentives cost of ownership is similar to the diesel generator cost of ownership. The 

incentives offset the higher capital costs, and the fuel cell system has high efficiency and a long 

operation lifetime, all of which contribute to the lowest cost of ownership in this run time 

scenario. The fuel costs for the diesel and battery technologies in the 8-hour run time are actually 

greater than zero (see Table 2). These fuel costs are rounded to zero in Figure 8 because the 

analysis is limited to two significant digits in the annualized cost of ownership. 

10
 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
 

 

 

 

 

 

Figure 8. 8-hour scenario annual cost breakdown 

Figure 9 shows the breakdown of the 52-hour run time scenario. The annualized cost of 

ownership for a battery-only system is more than $18,000 and is not graphically displayed for 

comparison purposes. The breakdown trend is similar to the 8-hour scenario, but the hydrogen 

bottle rental is no longer a high annual cost. In its place is an amortized HSM. This increase in 

initial cost for the fuel cell system is on par with the decrease in annual maintenance cost for the 

diesel generator. The result is an annual cost of ownership that is basically the same for a diesel 

generator and a fuel cell system with incentives. This also holds true for the 72-hour run time 

scenario shown in Figure 10. In both of these scenarios, the fuel cell system only requires one 

hydrogen delivery and utilizes the high hydrogen consumption price option. In both the 52-hour 

and 72-hour run time scenarios, all three system options have a similar annualized cost of 

ownership. The incentives for the fuel cell system are important to offset the capital costs that 

include a fill-in-place HSM. The fuel cost is the lowest for the diesel system, while the 

maintenance cost is lowest for the fuel cell system. 

11
 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
 

 

 

Figure 9. 52-hour scenario annual cost breakdown 

Figure 10. 72-hour scenario annual cost breakdown 

The 176-hour run time scenario cost breakdown is shown in Figure 11. The biggest difference in 

this scenario when compared with the 52-hour and 72-hour scenarios is the increase in cost for 

the HSM. The assumed increase is based on a linear scale-up for the storage cost and results in a 

higher initial cost for the fuel cell system. It is assumed that the diesel generator storage tank size 

will cover this long run time scenario. A diesel generator is the lowest-cost option in this long 

12
 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
 

 

 

 

run time scenario. Additional reductions in cost for hydrogen delivery and storage are needed if a 

fuel cell system is to compete with the incumbent technology in this run time scenario. 

Figure 11. 176-hour scenario annual cost breakdown 

In order to capture the variability of assumptions and input data, a sensitivity study of capital 

costs, installation costs, discount rate, operation life, maintenance costs, and fuel/electricity costs 

was completed for the 72-hour run time scenario. The data ranges (Table 3) are based on the 

input data ranges. 

13
 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
 

 

 

 

 

 

Table 3. 72-Hour Sensitivity Ranges 

Category Technology Low High 

Capital 

Install 

Battery 

Diesel generator 

Fuel cell 

Fuel cell*

a 

Battery 

Diesel generator 

Fuel cell 

Fuel cell*

a 

$78,000 

$27,000 

$41,000 

$29,000 

$53,000 

$20,000 

$19,000 

$19,000 

$98,000 

$30,000 

$54,000 

$39,000 

$60,000 

$28,000 

$41,000 

$41,000 

Discount Rate All 1.0% 2.0% 

Operation Life 

Maintenance 

Fuel/Electricity 

Battery 

Diesel generator 

Fuel cell 

Fuel cell*

a 

All 

Battery 

Diesel 

Hydrogen 

3 

10 

10 

10 

Half 

$0.05/kWh 

$3.00/gal 

$5.00/kg 

8 

20 

20 

20 

1.5 

$0.1/kWh 

$5.00/gal 

$11.00/kg a Fuel cell system with incentives. 

See Figure 12 for the annualized cost of ownership ranges from the 72-hour sensitivity study. 

The inputs that have the largest range in cost of ownership are capital costs, install costs, and 

operation life. These three have the greatest variation with input data and uncertainty. For 

example, the fuel cell operation life of 15 years is an input assumption that has not been 

validated through NREL’s technology validation activity of fuel cell backup power systems in 

real-world operation. Fuel cost, discount rate, and maintenance have relatively small ranges and 

impact on the annualized cost of ownership. These have a small impact on the annualized cost of 

ownership partly because the systems operate for very little time during a year. This emphasizes 

the importance of the initial capital and installation costs on the perceived and actual cost of 

ownership of backup power systems. For reference, the average annualized cost of ownership 

(see Figure 10) has been identified as a red line. Appendix C includes the battery cost ranges in 

addition to those shown in Figure 10. 

14
 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
$10,000

$9,000$8,000$7,000$6,000$5,000$4,000$3,000$2,000$1,000

$0

NREL cdp_bu_32 

Created: Aug-29-14 1:52 PM | Data Range: 2010Q1-2013Q4 

AnnualizedCost Sensitivity

72 hour 1 runtime

Diesel

FC

FC*

Capital

Diesel

FC

Install

FC*

Diesel

FC

FC*

Discount Rate

Diesel

FC

FC*

Operation Life

Diesel

FC

FC*

Maintenance

Diesel

FC

FC*

Fuel

1) Refer to the report for complete analysis details and assumptions (http://www.nrel.gov/docs/fy14osti/60732.pdf). 2) Fuel cell system with incentives (FC*), calculated as 30% of expenditures and capped at $3,000/kW of system c

Figure 12. 72-hour sensitivity analysis results 

15 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/p
 

 

 

 

 

 

 

 

4 Conclusions 

This annual cost of ownership analysis provides an understanding of the different costs 

associated with three different backup power technologies: battery, diesel generator, and fuel cell 

systems. Data for the analysis comes from a few sources. The first source, the fuel cell data 

source, is the ARRA co-funded fuel cell backup power system suppliers. The second source is 

commercial product price estimates for batteries and diesel-powered generators. The third source 

is feedback from facility operators, which was used for data validation. The reported data are 

average values from all input sources. The capital and installation costs for each technology were 

amortized over an operation period of 5, 15, and 15 years for battery, diesel generator, and fuel 

cell systems, respectively, and in a target power range of 4–6 kW, except for the diesel generator, 

which had a power range of 25–35 kW because of commercial product size constraints, 

reliability requirements, and purchase standards. Four run time scenarios were selected—8, 52, 

72, and 176 hours—and the technology case included a fuel cell system with and without federal 

tax incentives. 

The diesel generator is consistently one of the lower-cost options, but this technology has some 

challenges with the cost of annual maintenance requirements and attributes not captured in the 

cost of ownership analysis, such as noise and emissions. Operating a diesel generator at low 

loads is inefficient and may also increase costs not addressed here, such as required load banks 

for turndown limitations, very low efficiency, and/or poor reliability. The fuel cell system with 

incentives is cost competitive with the diesel generator, particularly in the 8-hour, 52-hour, and 

72-hour run time scenarios. A battery system is a likely selection for telecommunication sites 

that require 8 hours of run time, but the annualized cost of ownership quickly gets very high for 

the longer run time scenarios. 

Fuel cell systems are now cost competitive with the incumbent backup power technologies, 

according to this cost of ownership analysis; however, a reduction in capital and installation 

costs (including hydrogen storage costs) will result in a stronger value proposition for fuel cell 

systems as backup power solutions. Another area that requires development for widespread 

deployment of fuel cell systems involves the permitting of hydrogen systems, specifically the 

inconsistency of how requirements are implemented from site to site and how long the process 

takes. For decision makers selecting a backup power system, the initial cost is a key driver, but 

other aspects to consider are permitting, emissions, run time capability, ease of refueling, noise, 

footprint, and user comfort with the technology. 

16
 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
 

 

 

 

 

5 References 

1.	 Kurtz, J.; Sprik, S.; Ainscough, C.; Saur, G.; Post, M.; Peters, M. Fall 2013 Composite Data 

Products – Backup Power. NREL/TP-5400-60949. Golden, CO: National Renewable Energy 

Laboratory, December 2013. http://www.nrel.gov/docs/fy14osti/60949.pdf. 

2.	 Highlights from U.S. Department of Energy’s Fuel Cell Recovery Act Projects. Washington, 

DC: U.S. Department of Energy, February 

2014. http://energy.gov/eere/fuelcells/downloads/highlights-us-department-energys-fuel-cellrecovery-act-projects. 

3.	 Colbow, K. “Fuel Cells in Extended Duration Emergency Backup Power.” Ballard Power 

Systems presentation, October 2010. http://www.fuelcellseminar.com/media/5229/dem42-

1_colbow.pdf. 

4.	 “Early Fuel Cell Market Demonstrations.” National Renewable Energy Laboratory, 

2013. http://www.nrel.gov/hydrogen/proj_fc_market_demo.html. 

5.	 “Electric Power Monthly. Table 5.6.A. Average Retail Price of Electricity to Ultimate 

Customers by End-Use Sector.” U.S. Energy Information Administration, November 20, 

2013. http://www.eia.gov/electricity/monthly/epm_table_grapher.cfm?t=epmt_5_6_a. 

6.	 “Gasoline and Diesel Fuel Update.” U.S. Energy Information Administration, August 

2013. http://www.eia.gov/petroleum/gasdiesel/. 

7.	 “Kubota Diesel 25,000 Watt.” Central Maine Diesel, 2014. Accessed March 

2014: http://www.centralmainediesel.com/stats/PRINTABLE/KB2500.asp?pa. 

8.	 “28EOZD 1-Phase Diesel.” Kohler Power Systems, 2014. Accessed March 

2014: http://www.kohlerpower.com/onlinecatalog/pdf/g2143.pdf. 

9.	 Mahadevan, K.; Judd, K.; Stone, H.; Zewatsky, J.; Thomas, A.; Mahy, H.; Paul, D. 

Identification and Characterization of Near-Term Direct Hydrogen Proton Exchange 

Membrane Fuel Cell Markets. Columbus, OH: Battelle, April 

2007. http://www1.eere.energy.gov/hydrogenandfuelcells/pdfs/pemfc_econ_2006_report_fin 

al_0407.pdf. 

10. “Database of State Incentives for Renewables and Efficiency.” U.S. Department of Energy, 

2014. http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US02F&re=1&ee= 

1. 

11. Maxwell, M.; Painter, D. “PEM Fuel Cell Systems Providing Power to Commercial Cellular 

Towers and an Electric Utility Communications Network.” Presented at the DOE Hydrogen 

and Fuel Cells Program 2012 Annual Merit Review and Peer Evaluation Meeting on May 16, 

2012. http://www.hydrogen.energy.gov/pdfs/review12/h2ra006_maxwell_2012_p.pdf. 

17
 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
12. Gagge, J.; Shaffer, D. “Energy Storage Options to Meet the FCC Katrina Mandate.” The 

Battcon 2008 Proceedings; 2008, Marco Island, 

Florida. http://www.battcon.com/PapersFinal2008/GaggePaper2008PROOF_3.pdf. 

13. Ramsden, T. An Evaluation of the Total Cost of Ownership of Fuel Cell-Powered Material 

Handling Equipment. NREL /TP-5600-56408. Golden, CO: National Renewable Energy 

Laboratory, April 2013. http://www.nrel.gov/docs/fy13osti/56408.pdf. 

14. “Resource Center: Daily Treasury Real Long-Term Rates.” U.S. Department of the Treasury, 

2014. www.treasury.gov/resource-center/data-chart-center/interestrates/Pages/TextView.aspx?data=reallongtermrate. 

18
 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
 

 

 

 

 

 

 

Appendix A 

Working in collaboration with DOE and industry project partners, NREL acts as the central data 

repository for the data collected from fuel cell demonstration projects, including assessments of 

fuel cell electric vehicles, fuel cell buses, fuel cell powered material handling equipment, 

stationary power, and fuel cell backup power. To protect proprietary and business-sensitive data 

that have been supplied by industry partners, DOE’s Fuel Cell Technologies Office within the 

office of EERE established a National Fuel Cell Technology Evaluation Center (NFCTEC) at 

NREL to house sensitive data and enable data analysis (see Figure A-1). 

Individual system, fleet, and site analysis results are aggregated into public results called 

composite data products (CDPs) that show the status and progress of the technology without 

identifying individual companies or revealing proprietary information. Prior to publication, the 

project’s industry partners review the CDPs and provide their input and approval. CDPs enable 

NREL to publish in-depth analyses without identifying individual companies or their 

performance. These CDPs report on the progress of the technology and the deployment projects, 

focusing on the most significant results. 

While the raw data are secured by NREL to protect commercially sensitive and proprietary 

information, individualized data analysis results are provided as detailed data products (DDPs) to 

the partners who supplied the data. These DDPs identify individual contributions to CDPs and 

are intended to assist companies as they refine and improve fuel cell technologies but are not 

made available to the public. Those interested in providing data or updates may do so 

via techval@nrel.gov. More information is available 

at www.nrel.gov/hydrogen/proj_tech_validation.html. 

Figure A-1. NREL’s aggregated data analysis using the NFCTEC 

19
 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
 

Appendix B
 

Figure B-1. Backup power deployments with station capacity and site count 

20
 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.
Appendix C 

$60,000$50,000$40,000$30,000$20,000$10,000

$0

AnnualizedCost Sensitivity

72 hour runtime1 

Battery

Diesel

FC

Capital

FC*

Battery

Diesel

FC

Install

FC*

Battery

Diesel

FC

FC*

Discount Rate

Battery

Diesel

FC

FC*

Operation Life

Battery

Diesel

FC

FC*

Maintenance

Battery

Diesel

FC

FC*

Fuel

NREL cdp_bu_31 1) Refer to the report for complete analysis details and assumptions (http://www.nrel.gov/docs/fy14osti/60732.pdf

Created: Aug-29-14 1:50 PM | Data Range: 2010Q1-2013Q4 2) Fuel cell system with incentives (FC*), calculated as 30% of expenditures and capped at $3,000/kW of system 

Figure C-1. 72-hour sensitivity analysis results that includes battery values 

21 

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/p