Caterpillar signs deal to develop, distribute fuel cell-powered gen sets

DANBURY, Conn. (April 30, 2002) — Caterpillar has signed a 10-year contract with FuelCell Energy to distribute and develop ultra-low emission fuel cell generators through its dealer network in North America.

The agreement builds on a deal signed last November, when Caterpillar and FuelCell Energy, a Danbury, Conn., producer of high efficiency fuel cells for electric power generation, agreed to develop Caterpillar-branded power plants in the 250kW to 3MW size range using FuelCell Energy’s fuel cell module. For reference, 1kW represents enough electricity to power an average home.

The companies will also explore development of a hybrid power system using Caterpillar’s turbine engine technology and FuelCell Energy’s products.

“The alliance between Caterpillar and FuelCell Energy marks another significant milestone in Caterpillar’s growth strategy to invest in socially responsible energy solutions. We’re pleased with the expansion of our product line, adding FuelCell Energy systems as an additional clean power solution,” said Jim Parker, Caterpillar vice-president with responsibility for the company’s power systems marketing division. “We continue to strengthen our position as the global leader in distributed power, thanks to Caterpillar’s broad product line which delivers low operating costs, proven reliability and global distribution and support.”

FuelCell Energy’s Direct FuelCells generate electricity with no combustion. Fuel cells are similar to large, continuously running batteries, using natural gas or other fuel to generate electricity through electrochemical reactions. They provide steady power to industrial and commercial customers such as hospitals, hotels, factories and telecommunications facilities.

Caterpillar said it anticipates marketing fuel cell power plants both as separate units, and as parts of more comprehensive base load, peaking and backup power generation systems.

As part of this agreement, Caterpillar will receive warrants to purchase 1.5 million shares of FuelCell Energy common stock. The agreement calls for the warrants to be issued on a graduated scale as order commitments are received up to a maximum of 45 megawatts of fuel cell power plants. The exercise prices of the warrants range from $16.69 to $23.37 and the warrants will expire in April 2005.