On March 27th, the Connecticut Clean Energy Fund [CCEF] recommended projects that incorporate 68 megawatts of Fuel Cell Energy's (NASDAQ: FCEL) product as part of Connecticut's Project 100, renewable power initiative. The stock put in a then 52 week high that day at $9.30. For perspective, the Company has an installed/backlog base of 31 megawatts. The potential value of the Connecticut selection is over $200 million and would turn Fuel Cell Energy into a legitimate, commercial stationary power provider. Now the relevant kicker: the Hartford Advocate recently reported that the State's two utilities are scheduled to report to the Connecticut Department of Public Utility Control by August 21 on which projects they recommend building for the Project 100.
Fuel Cell Energy is the only fuel cell pure play you should consider as a long. With the increasing environmental cost of coal consumption and the lack of nuclear traction the U.S., natural gas is a common fuel for new power plants. Fuel Cell Energy's products can run on natural gas as well as methane gas, cooking oils and other renewable sources. They don't have to wait around for a future hydrogen economy, their products work with our current infrastructure with virtually no pollution. As governments and businesses are required to reduce their emission levels, Fuel Cell Energy's products are a tested, reliable and efficient option. Beyond their success and tax breaks in Connecticut and California, South Korea recently passed legislation that favors fuel cells. In February, Fuel Cell Energy signed a distribution and manufacturing agreement with POSCO power that has already resulted in orders of 7.8MW.
The potential Project 100 development in Connecticut would be a huge catalyst for Fuel Cell Energy shares. Trading in FCEL has been erratic over the past three weeks, including a new 52 week high. A move above resistance at $10 would signify a true breakout. The short interest on this stock is insane. It was last reported at 14.5 million shares or 31% of the float. If Fuel Cell Energy were to get a good portion of the recommended 68 megawatts, you'll already want to own shares when the short squeeze starts.
Disclosure: Author has a long position in FCEL
FCEL 1-yr chart