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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 4, 1998
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Mechanical Technology Incorporated
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(Exact name of registrant as specified in its charter)
New York
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(State or other jurisdiction of incorporation or organization)
0-6890 14-1462255
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(Commission File Number) (I.R.S. Employer Identification No.)
968 Albany-Shaker Road, Latham, New York 12110
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (518) 785-2211
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Item 5. Other Events.
Plug Power, LLC ("Plug Power"), a joint venture between Mechanical
Technology Incorporated and DTE Energy Company, recently received
preliminary approval from its Board of Managers concerning its
understanding with GE Power Systems, to brand, market and distribute Plug
Power's residential fuel cells through a joint venture marketing subsidiary
("GE Joint Venture"). Negotiations concerning the GE Joint Venture are
progressing, however, certain key business terms remain unresolved. There
is no assurance these business terms will be resolved or that the
transactions contemplated by the GE Joint Venture will be successfully
completed. Below is a press release issued by Plug Power and GE Power
Systems on September 10, 1998, announcing their intention to enter into the
GE Joint Venture.
Press Release
GE POWER SYSTEMS, PLUG POWER FORMING
"GE FUEL CELL SYSTEMS" TO MARKET FUEL CELLS WORLDWIDE
SCHENECTADY, NY (Date) - GE Power Systems and Plug Power have signed a
memorandum of understanding to form "GE Fuel Cell Systems," a joint venture
that will sell, install and service Plug Power-designed and manufactured
fuel cell systems. Today's announcement follows Plug Power's recent
demonstration of a prototype residential fuel cell system that produces
more than enough power to meet the energy requirements of an average-sized
home.
Under the terms of this understanding, GE Fuel Cell Systems will distribute
Plug Power fuel cells for residential and small commercial power
applications. GE will be Plug Power's exclusive distributor for fuel cell
systems worldwide, except for Michigan, Indiana, Ohio and Illinois. As
part of its fuel cell commercialization approach, GE plans to partner with
a select number of gas distribution companies, electric utilities, electric
service companies and power marketers. All fuel cell products sold by GE
will carry both the GE and Plug Power brands.
"Commercializing innovative new technologies is part of our strategy to
build the GE brand across a wider range of product and service solutions
for the entire energy industry," said Robert L. Nardelli, president and
chief executive officer of GE Power Systems.
Fuel cells offer a clean, quiet and cost-effective alternative for
customers looking to eliminate the cost and inconvenience associated with
unexpected power outages. In many areas, fuel cells also will provide an
attractive alternative to grid-supplied power, with 3 to 5 year paybacks
possible.
Fuel cells operate by converting fuels such as natural gas or propane to
electricity through an electrochemical process, rather than combustion. The
benefits of fuel cells include high electrical efficiency and reliability,
low operating and maintenance costs, and near zero emissions of particulate
matter and other pollutants. Fuel cell systems can be sized to match
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consumers' specific energy requirements.
"Plug Power's mission has always been to bring to market the highest
quality line of fuel cell power systems, and provide world-class customer
support," said Gary Mittleman, Plug Power president and CEO. "Partnering
with GE gives us access to the technical expertise, market presence,
service infrastructure and brand recognition of the world's leading energy
technology and services company."
In June, Plug Power demonstrated its proprietary Plug Power 7000, a 7-
kilowatt (kW) residential power system. The demonstration marked the first
time a fuel cell has been used to meet a home's complete electricity
requirements. The sale of test units is expected to begin early next year,
followed by commercial units in the year 2000.
Plug Power said that its initial units will operate on natural gas, propane
or methanol and can achieve 40% electrical efficiency in simple-cycle
operation. When excess heat generated by the fuel cell is captured and re-
used, overall efficiency can reach 70% - 85%. To date, fuel cells have not
been a desirable option for on-site power generation due to their
relatively high cost. Prices are expected to fall dramatically, however, as
production volumes increase and manufacturing efficiencies are achieved. In
mass production, a residential fuel cell system is expected to retail for
$3,000-5,000. At these prices, fuel cells can generate electricity at 7-10
cents per kilowatt hour, depending on the fuel costs in a given market.
About Plug Power
Based in Latham, NY, Plug Power is a joint venture between DTE Energy
Company (NYSE:DTE), parent company of Michigan's largest utility, and
Mechanical Technology Inc. (OTC BB: MKTY), an early developer of fuel cell
technologies. Plug Power was formed to develop and manufacture fuel cells
for electric power generation in residential and automotive applications.
Formed in June 1997, Plug Power has grown from 22 to more than 135
employees, and expects to expand to 300 when it begins mass manufacturing
of commercial units. The National Energy Resources Organization awarded
Plug Power the 1998 Research and Development Award for its fuel cell
breakthroughs.
About GE Power Systems
GE Power Systems is one of General Electric's major businesses and is
the world's leading supplier of power generation technology, energy
services and energy management systems. GE Power Systems serves customers
globally through a network of local offices and service centers.
The MOU with Plug Power is the latest in a series of actions by GE to
broaden its participation in the small power generation market. In 1994, GE
acquired Nuovo Pignone, an Italian-based manufacturer of small gas
turbines, pumps and compressors. In early 1998, GE completed the
acquisition of Stewart & Stevenson's Gas Turbine Division, which has
significant experience in packaging and servicing small power generation
equipment. That business now is known as S&S Energy Products. In May 1998,
GE entered into a distribution agreement with Elliott Energy Systems, which
provides GE global rights to sell and service Elliott's line of Turbo
Alternatorsr. With the Plug Power relationship, GE's portfolio of power
generation products will extend from 7 kW up to 450 megawatts (450,000
kW).
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MECHANICAL TECHNOLOGY INCORPORATED
Date: September 10, 1998 By: /s/ Cynthia A. Scheuer
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Cynthia A. Scheuer
Chief Financial Officer
