The San Bernardino County, Calif.-based Inland Empire Utilities Agency (IEUA) has entered into a purchase agreement (PPA) with UTS Bioenergy LLC to install, operate, and maintain a 2.8 Megawatt (MW) DFC3000 stationary fuel cell power plant over the next 20 years.

The energy produced from what will be the largest unit of its kind will provide power and thermal energy to IEUA's largest water recycling plant in Ontario, Calif. The agency provides water and wastewater services to 850,000 residents.

"IEUA is very proud to augment its already successful renewable energy program with the addition of a combined heat and power fuel cell system" says Terry Catlin, IEUA's board president. Currently the agency has 3.5 MW of solar power installed and 1 MW of wind power under design.

IEUA will purchase power generated from the fuel cell plant and will use the generated heat to heat the biogas-producing anaerobic digesters at the water recycling facility. Fuel cells produce high-quality heat and water as byproducts, which boost efficiency rates up to 90%. The fuel cell plant is expected to be online by late 2012.

Located 35 miles east of Los Angeles, the agency was formed in 1950 to import water from the Metropolitan Water District of Southern California to augment local stream and groundwater supplies. Since then, IEUA has added wastewater treatment, producing and delivering disinfected tertiary recycled water, composting biosolids, and generating energy to its list of services.

The agreement moves the agency closer to its goal of using renewable resources to generate all of its power needs onsite.

This PPA isn't the agency's first: Through another power purchase agreement (that one being a solar project), the agency is financing the necessary equipment through Morgan Stanley and the California Solar Initiative. The agency invests nothing but agrees to buy all of the generated solar power from the financier, which owns and operates the system, at a predetermined rate of 10 to 14 cents/kW for the next 20 years.

According to CEO and General Manager Richard Atwater, the latest moves prove the agency's long-term strategy is working. "You need to be strategic, look at long-term trends, and pick your targets carefully," he says. "Options need to be carefully studied by a diverse team to confirm that there's a reasonable return on investment and limited downside risk."

About 19% of all electrical consumption in California is related to pumping, treating, and distributing water. Energy use will only increase with population growth. The service area of the IEUA is expected to grow by an estimated 50% over the next 20 years to about 1.3 million people.

The IEUA has adopted a goal to be off the electric grid by 2020 through maximum use of renewable energy, optimizing energy usage, and implementation of new generation technologies. Current total electrical usage is about 13 MW annually and will increase to 18 MW as a result of the increased pumping of recycled water to customers.