The company is in talks with Reliance, L&T and Kirloskar for possible tie-ups.

About his plans to set up the first unit in Gujarat, Pinakin Patel, director, special systems and research, Fuel Cell Energy, said the investment could go as high as $500 million to $1 billion.

The Nasdaq-listed company has already received $20 million worth subsidy from the World Bank for promoting fuel cell power generation in developing countries such as India.

"Although in the US the production cost comes to around $3,000 per kw, we expect it to be as low as $1,000 in India given the low cost components available here," said Patel.

Moreover, the power generated there is around 1,000 mw while given the market conditions in India and the huge demand we are looking for an initial power generation of 10,000 mw," said Patel, adding that the company would, however, begin at a lower level of power generation at 10-mw capacity to 100 mw capacity to avoid risks.

Patel mentioned that the company would not be setting up its own subsidiary in India but would rather look private partners.

"We are in talks with companies like Reliance, L&T and Kirloskar, especially in Gujarat since we would want to begin our operations in India from here," said Patel.

Fuel Cell Energy will be operating in India in phases beginning by the end of 2007 or early 2008. "Initially we will be sourcing fuel cells from our US units for power generation in India. After that we will begin R&D for possibilities of fuel cell productions here and later we will begin producing fuel cells too from India," noted Patel, adding that around 50 per cent savings is expected from India.

The company has already achieved a world record in efficiency of 56 per cent at 250 kw/hour for on-site power generation using fuel cells and turbine, claims Patel.

He also mentioned that the fuel cells would be highly efficient with natural gas than hydrogen and cost effective too, given that the setting up of infrastructure is a huge challenge in the country.
Among its several clients are Hotel Sheraton, California, Sterling Hospital, Switzerland, Chevron and Caterpillar among others. Currently, the company has its offices around 50 locations worldwide.