Enbridge Enters Global Thermoelectric Fuel Cell Deal

Enbridge said yesterday it will invest $25-million in the Calgary-based fuel cell maker in return for Canadian distribution rights.

It will also help design and develop the technology to launch it commercially for the residential market.

Jim Perry, Global's president and chief executive, said its fuel-cell products, fuelled by natural gas, could be in homes within three to four years.

News of the deal pushed Global's shares to $34.10, up $3.60. Its shares have traded between $51.25 and $7 over the last 52 weeks.

"This is what the company needed. It needed a distribution partner," said Sarah Hughes, an analyst with Sprott Securities Ltd. in Toronto. "We believe this type of fuel-cell technology has significant advantages in the home."

Under the deal, Enbridge will take cumulative redeemable convertible preferred shares that can be converted into common stock.

Through its subsidiary Enbridge Consumers Gas, the energy firm owns and operates the country's largest natural gas distribution system. It also distributes electricity.

"Fuel-cell technology is rapidly evolving to the point where it can provide a clean, economical alternative to large power plants in meeting homeowners' needs for reliable electric power," said Brian MacNeill, Enbridge's president and chief executive.

Global, which has successfully tested a prototype of its solid oxide fuel technology, is one of a number of firms led by Vancouver-based Ballard Power Systems Inc. racing to capture a potential market for the emissions-free energy to fuel electrical power generation and vehicles. Fuel cells produce energy through electrochemical reaction instead of combustion.

Global's technology is capable of running on natural gas or gasoline in vehicles by using a simple and inexpensive reformer and is said to be more efficient than some other technologies because its cell operates at a higher temperature.

Mr. Perry said Global is optimistic that Enbridge will also help the small Calgary firm to establish partners in the United States, where the cost of electricity in some parts is skyrocketing.

He said discussions with some companies are already underway.

"The economics are best where you have high electricity prices and lower gas prices. For instance, the northeast U.S. is a very attractive market," he said.

Global recently raised $25-million and has built the first solid oxide fuel-cell manufacturing plant in Canada. Field testing is to begin next year.

The company expects to target remote homeowners first who must produce their own expensive power through generators and then expand into urban areas as manufacturing costs come down.

Ms. Hughes said the market potential for fuel cells in homes is growing rapidly as a number of utility companies look for alternative ways to meet growing electricity demands outside of the traditional power grid.