Can FuelCell Energy Improve ROI at Fossil Power Plants?

FuelCell Energy’s FCEL carbon capture platform is positioned as a response to mounting economic pressure on aging coal and natural gas assets. Rising emissions constraints are increasing compliance costs, while permanently shutting down plants would be expensive and politically complex.

Many facilities still provide critical grid reliability and thermal output, making early retirement disruptive. FuelCell Energy’s approach focuses on extending the productive life of these assets by integrating carbon capture directly into existing exhaust streams, allowing continued operation with significantly lower emissions while avoiding the financial burden of replacement infrastructure.

Unlike conventional carbon capture systems that consume roughly 20% of a plant’s power output, FuelCell Energy’s carbonate fuel cells generate additional electricity during the capture process. This incremental power creates new revenue streams that improve overall project economics. On-site power and heat production also reduce operating costs by avoiding transmission losses that typically average about 5% on the U.S. grid. High-temperature operation enables combined heat and power applications, allowing facilities to utilize both electricity and thermal energy efficiently at the point of use.

Scalability further strengthens FuelCell Energy’s commercial positioning. The modular design supports deployments ranging from sub-megawatt installations to multi-megawatt fuel cell parks. Individual stacks produce between 250 kilowatts and 400 kilowatts, while four-stack modules net about 1.4 megawatts, enabling flexible system sizing. This stack-level and module-level configuration supports a wide range of industrial and utility applications. Improved capture economics, asset life extension, and scalable deployment collectively enhance FuelCell Energy’s potential demand profile and long-term investment appeal.

While innovative platforms like FuelCell Energy highlight how carbon capture can improve the economics of existing fossil power plants, the momentum behind carbon capture and storage (“CCS”) is not limited to emerging technology providers. Large, established energy companies are also committing capital and decades of operational expertise to scale carbon capture as a core part of their long-term strategy.

Established Energy Players Deepen Commitment to Carbon Capture

Oil and gas major Chevron Corporation CVX sees CCS as a key tool for a lower-carbon future and has decades of experience in this space. Chevron helped pioneer large-scale CO2 injection at its SACROC unit nearly 40 years ago and has safely operated CO2 pipelines like the Chevron-led Raven Ridge line in Colorado for decades. Chevron also leads the Gorgon CCS project, which has injected over 10 million tons of CO2, and is advancing new projects such as Bayou Bend CCS in Texas.

Meanwhile, another energy biggie, Occidental Petroleum OXY, has more than 50 years of experience in carbon storage, making carbon capture central to its climate strategy. Occidental Petroleum believes large-scale carbon capture, utilization and storage can deliver near-term emissions reductions and long-term climate benefits. Through Occidental Petroleum’s subsidiary 1PointFive, the company is scaling Direct Air Capture technology developed by Carbon Engineering. Occidental Petroleum also invests in carbon utilization, storage hubs, and carbon markets to support global CO2 removal and net-zero goals.

The Zacks Rundown on FCEL

Shares of FuelCell Energy have gained 46.4% over the past six months, breezing past the industry's growth.

FCEL currently has an average brokerage recommendation (ABR) of 3.44 on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by nine brokerage firms. 

The chart below shows FCEL’s earnings over the past four quarters.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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