In late May, Germany met more than 50% of its power needs from solar PV at midday on two successive days. This astounding success brings a problem with it. How does the country manage to balance its electricity grid as solar electricity ramps up towards noon and then falls away later in the afternoon? Most analysts assume that large-scale natural gas power stations are the logical complement to intermittent renewables. An announcement today (June 19^th 2012) from a small Australian company should make us question this assumption. It has just announced a trial of its domestic-scale fuel cell power plants for grid balancing in the Netherlands. These tiny fuel cells are highly flexible, powering up and down in a matter of seconds. In theory this technology could be the cheapest way of matching supply and demand in a renewables-dominated world. But they need to be in millions of homes to create a large enough buffer and to push the capital costs down to competitive levels.

I wrote the first edition of Ten Technologies to Fix Energy and Climate four years ago. Each of the ten chapters focuses on one or two companies that looked as though they had the technical edge to prosper in a world in which low carbon energy sources take a larger role. The good news is that almost of these businesses are still in existence. The bad news is that most of them haven’t broken through to commercial viability. This probably tells us a great deal about the state of the battle against carbon emissions: even the best technologies have yet to take off because of the difficulties of getting to competitiveness against fossil fuel power stations that have had a century to reduce their costs.

One of the most interesting companies I wrote about was Australia’s Ceramic Fuel Cells. Ceramic, as it seems to be known in its home country, is the owner of the grid balancing technology now on trial in the Netherlands. Ceramic makes what are in effect small domestic electric power plants. These refrigerator-sized devices sit in the kitchen or boiler room generating about one and half kilowatts of power, about three times the average domestic consumption, by splitting natural gas (mostly methane or CH4) into hydrogen and carbon dioxide. The hydrogen then combines with oxygen in air in an electric circuit creating water, an electric current and some heat. Most of the time these units are exporting their power into the local grid and they do so at about 60% fuel efficiency, at least as good as the best full-sized power station. Moreover, the waste they generate can be captured to provide 100 litres a day of hot water, enough for most homes.

The Ceremic technology is still expensive – almost £20,000 to install a device that generates electricity worth (at retail prices) no more than £1,200 a year. (For comparison, a modern gas turbine plant might have a capital cost of about £1,500 per 1.5 kilowatts of peak output). The value of the hot water might be another £3000 at most. Even with hefty feed-in tariffs, the homeowner is unlikely to see a high return. As with many clean technology companies, Ceramic is stuck making small volumes of its products at a high unit cost. To get down to £4-5,000 per installation, the company needs to make several thousand units a year, not the hundreds it is making at the moment. Although many people say that its technology is further advanced than other small fuel cell company in the world, it still has to fight for every sale and is reliant on the support from big utilities around the world which are charmed by the technology.

Fuel cell technologies are not carbon neutral if they use natural gas. But if the gas comes from biological sources, such as anaerobic digestion of agricultural wastes, it can provide genuinely renewable electricity. In addition, the ability of Ceramic’s products to turn up and down at a few seconds notice can provide very valuable grid balancing. At the moment of writing, wind is barely providing any of the UK’s electricity but is expected to generate almost two gigawatts by this time tomorrow. As the wind turbines ramp up, small deviations from the expected increase could be evened out by tens of thousands of Ceramic fuel cells adjusting their output to smooth the power from wind. This service can be worth much more than the standard wholesale price of power and may be the most important single source of income for the owner of a small fuel cell power plant.

Of course the critical thing is to get thousands of fuel cells spread around a country to all respond quickly to a signal to increase or decrease their power output. This is purpose of Ceramic’s trial in the Netherlands with its partners, the utility Liander and IBM. A number of its Blue Gen products will be controlled remotely by ‘smart grid’ software to see how effectively they can be combined to rapidly ramp output up or down to match minute by minute variations in the power from wind and solar.

Whether you believe that the carbon-free future for electricity generation should be based on nuclear or renewables, we all have to face the difficulty of ensuring that the electricity system can match supply and demand minute by minute. Nuclear power stations have to be run at peak power or not at all and wind and solar production can neither be accurately predicted nor managed. We will either need huge amounts of storage (perhaps hydrogen or pumped water or compressed air) or highly flexible generators. As things stand today, Ceramic’s products are the most easily adjustable generators on the market. The company may need another £200m of capital to get its products down to reasonable production costs, but its twenty year old technology is one of the most interesting parts of the low carbon future.