An international energy company, a public power utility, a leading fuel cell company and a major automotive company today broke ground on a fuel cell demonstration project that is the first of its kind in the U.S.

Southern Company SO, Alabama Municipal Electric Authority (AMEA), FuelCell Energy FCEL and Mercedes-Benz U.S. International, Inc. (MBUSI) have joined in a historic partnership to field test an environmentally responsible power generation technology as part of the process to bring a clean energy option to the marketplace.

The Alabama Direct FuelCell Demonstration Project, announced by the partners last February, is intended to drive a growing interest in fuel cell technology as demand for cleaner, more efficient power generation increases in the U.S. Because fuel cells use an electrochemical reaction rather than combustion to generate electricity, electrical efficiencies are high and emissions are minimal, making them an environmentally responsible method of producing electricity.

Alabama Power Company, a Southern Company subsidiary, enters into a special customer partnership with Mercedes-Benz, as the fuel cell plant will be located in its service territory. "Southern Company and Alabama Power have a history of environmental commitment and in exploring a full array of energy opportunities," said Dr. Charles H. Goodman, Southern Company senior vice president for research and environmental affairs. "Today, with Alabama Power, we join with our partners to launch a power generation project in testing cleaner, more efficient ways to meet the energy needs of our customers."

"Today's groundbreaking continues one of the most exciting undertakings and advancements in the electric utility industry, and AMEA is delighted to be among the leaders who make this fuel cell field trial possible. The success of, and information gathered from, this project will benefit our members and provide them with the ability to deliver the cleanest, most efficient electric power to their customers," said Bob Claussen, General Manager of AMEA."

We are delighted that these world-class organizations, including Southern Company, AMEA, MTU Friedrichshafen and MBUSI, are joining us to further demonstrate the unique electric power generating capabilities of the Direct FuelCell(TM) power plant," said Jerry Leitman, CEO of FuelCell Energy. "This commercial field trial power plant represents a significant step toward realizing the potential to deliver clean, fuel-efficient electric power to Alabama and the world."

"MBUSI is pleased to be part of this project which seeks to develop alternative, environmentally friendly energy sources as we move forward in the new century," said MBUSI CEO and President Bill Taylor. "Our company has a long-standing tradition of being a leader in environmental initiatives; therefore, partnering with these world-class organizations to explore new advancements seemed like a perfect fit."

The power plant will utilize FuelCell Energy's Direct FuelCell(TM) stack in a unique design developed by MTU Friedrichshafen, a subsidiary of DaimlerChrysler and partner of FuelCell Energy. MTU Friedrichshafen has licensed FuelCell Energy's Direct FuelCell technology while FuelCell Energy has licensed MTU's power plant design, called the "Hot Module." The plant will convert pipeline natural gas to electricity at an efficiency of about 50 percent, compared with 33 percent for conventional generation. The plant will feed the Mercedes-Benz production facility power distribution system. In addition, the entire power plant will be skid-mounted, making it easy to transport to different locations for additional demonstrations. MTU is currently conducting a 250 kW commercial field trial at Bielefeld, Germany, providing electricity to the grid, processing steam for the university and heat for district heating.

Southern Company, AMEA and FuelCell Energy will provide funding for the fuel cell power plant, and Southern Company will serve as project manager. MBUSI will provide the resources and venue for the demonstration site to simulate actual field operating conditions during the project. All partners will share in the knowledge gained in the demonstration of the power plant under actual field operations, and FuelCell Energy will apply the knowledge gained toward the design of future commercial Direct FuelCell(TM) plants.

The fuel cell plant is expected to be fully operational by spring 2001. It will operate for at least one year, and the companies may agree to continue to operate the project on the MBUSI site. Southern Company and AMEA have options to negotiate exclusive arrangements for the sale, distribution and service of FuelCell Energy's commercial power plants elsewhere.