Jun. 10--FuelCell Energy Inc. announced Tuesday it has entered into an preliminary agreement with a South Korean power producer that wants to begin assembling fuel cells for sale in that country.

Danbury-based FuelCell Energy, which employs about 225 people at a manufacturing facility in Torrington, said POSCO Power of South Korea has ordered modules and components for Direct FuelCell power plants that can produce 30.8 megawatts of electricity. The deal is valued at $58 million, for delivery in 2010 and 2011. The two companies will negotiate a licensing agreement to allow POSCO Power to assemble the FuelCell Energy fuel cells that would be sold in South Korea.

POSCO Power would purchase $25 million in FuelCell Energy common stock at $3.59 per share, the 10-day average of the stock's closing price through June 8. The stock, which trades on the Nasdaq market under the symbol FCEL, closed up 77 cents, or nearly 19 percent, at $4.83 per share on Tuesday.

R. Daniel Brdar, FuelCell Energy chairman and chief executive, said the licensing agreement is expected to be completed within the next 30 to 60 days, and will require federal approval.

The company hopes the agreement will expand the market in South Korea, "and create more jobs in Torrington and elsewhere," Brdar said.

The modules and components for the fuel cells will continue to be manufactured in Torrington, he said.

Fuel cells are self-contained electrochemical power plants that operate much like large batteries. They convert fuels, such as natural gas, into electricity. They run more efficiently than conventional power plants and without combustion, so they produce almost no pollutants or particulate matter. Their primary byproducts are water and heat.

South Korea is a leading proponent of clean energy generation, and has made stationary fuel cells a top priority.

"We are increasing our commitment to FuelCell Energy power plants because they are ideal for generating highly efficient, ultra-clean electricity and they help us achieve greater energy independence," said Soung-Sik Cho, president and CEO of POSCO Power.

Direct FuelCell, or DFC, power plants are highly efficient, meaning less fuel is needed to generate electricity, resulting in fuel cost savings.

"With South Korea's need for clean electricity to power its economic growth and for greater energy independence, it has quickly become our largest market," Brdar said. "We have more installations and backlog in Asia than any other fuel cell company in the world."

POSCO Power has ordered 68 megawatts of power plants and modules since it became a FuelCell Energy marketing and distribution partner in 2007, the company said. The country has about 18 megawatts of DFC fuel cells operating or in various stages of installation. One megawatt is enough electricity to power 750 to 1,000 homes.

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