A Department of Energy project will test how refrigerator-size fuel cells fit a niche in the energy system of serving up heat and electricity to businesses and schools.

The Pacific Northwest National Laboratory will administer the $2.8 million program to install 38 fuel cells from ClearEdge Power at 10 businesses. The program provides up to 50 percent of the total cost of installation and will gather data remotely on the performance of the fuel cell-equipped systems, which will range between 5 and 100 kilowatts of power.

ClearEdge Power&39's fuel cell deliver 5 kilowatts of electric power and the equivalent of 5.8 kilowatts of heat.

ClearEdge Power's fuel cells use natural gas as a fuel to generate 5 kilowatts of power and the equivalent of 5.8 kilowatts of heat. The machines capture the heat from the chemical process of making electricity to heat water.

The companies involved in the pilot include a hotel, a community college, a swimming pool and tennis court, and a distribution center, said Michael Upp, the vice president of marketing for ClearEdge Power. In one case, a nursery will have fuel cells to generate electricity and use the heat for the greenhouse. The goal is for these companies to validate the use of fuel cells in their industries.

Commercial fuel cells have been available for many years but their use remains limited and few fuel cell providers have been considered profitable, fast-growing companies. But fuel cells continue to have strong supporters, who see a role for them in vehicles and for stationary heat and power.

ClearEdge Power originally went after the residential market with its unit, but because of the cost--each unit costs $56,000--that market is limited to people willing to spend money on cleaner energy. Its fuel cells do not emit any air pollutants, and they reduce carbon emissions by 35 percent to 40 percent, said Upp. Because they generate both heat and power, they are 90 percent efficient.

The company, which started shipping its product last year, continues to pursue the residential market, particularly in places like South Korea where there is a mandate to use fuel cells as a way to reduce oil imports. But it sees the light commercial area the most promising in the near term, Upp said.

Commercial customers can typically use all the available energy, whereas a single home might not, and many businesses are interested in reducing their environmental footprint.

ClearEdge Power's products, which are made in Oregon, are relatively small compared to other providers, such as Bloom Energy and FuelCell Energy. It hopes that focusing on business customers with a smaller product will bring up its production volume and bring down costs since grid-supplied electricity and heat are cheaper.

"Those other companies are like mainframes. We're like Compaq or Dell. If you look at PC adoption, it was in businesses first. We think fuel cells are going to go the same way," Upp said.