Connecticut-based FuelCell Energy, Inc. will supply fuel cell modules to be used at biofuel plants owned by Abengoa S.A.

Rather than to be used to power its refineries, Abengoa will develop a fuel processing system that will enable the use of liquid biofuel as a fuel source for a fuel cell power plant using technology from FuelCell Energy.

FuelCell's modules, called Direct FuelCell, produces power through an electrochemical reaction. Its chief source of fuel is oxygen from air and hydrogen coming from renewable sources like natural gas, biogas or methane produced through wastewater treatment.

The initial pilot installation will be at the Abengoa headquarters in Palmas Campus in Spain using a 300 kilowatt fuel cell fitted with plant designed and manufactured by Abengoa.

Completion of a distribution agreement for the deal is expected within the next six months, according to a statement.

Following the announcement, FuelCell stocks climbed 14.7 percent to $1.09 at the close in the New York Stock Exchange December 12.

Both companies plan to establish fuel cell power plants in for markets in Europe and Latin America. They are targeting municipalities, large industrial power users and facilities that generate renewable biogas, according to a statement.

Biofuels is especially attractive in Latin American countries such as Brazil where sugar cane is plenty widely used as a feedstock to create ethanol. Fuel cells also emit little emissions as it generated power without burning fuels, a technology utilities pressed by stringent European standards will probably opt to use.

"The fit is natural between our organizations and we look forward to growing the market for ultra-clean and efficient distributed generation fuel cell power plants in Spain as well as in Europe and Latin America, where we already have a presence, said Javier Brey, general manager of Abengoa Hidr'ogeno.

Abengoa is best known for building huge solar farms called solar towers but its interest in renewable energy is varied. It has a biofuel unit called Abengoa Bioenergia that owns and operates five bioethanol facilities throughout the United States and Europe with a total production capacity of 195 million gallons.

FuelCell Q4 performance

Business in FuelCell fared well in the fourth quarter, with total revenues of $34.7 million compared to $19.7 million in the same period last year. Product sales and revenues in the fourth quarter increased 94 percent to $33.3 million compared to $17.2 million in the prior year quarter.

The company attributed to higher demand for its Direct FuelCell power plants. Around $25.1 million of its sales came from power plants and fuel cell kits.

This lead to a narrow net loss of $7.9 million as compared to $12.1 million for the comparable prior year period as higher sales volume drove cost improvements. – Oliver M. Bayani