Connecticut has an ambitious goal: a carbon-free power grid by 2040.

The state is inching closer – thanks to a major new fuel cell power plant in Derby – but significant challenges remain.

Nestled among Derby's 19th century mills is a 21st century solution to Connecticut's growing energy needs.

On Thursday, Gov. Ned Lamont helped cut the "cable" on North America's second-biggest fuel cell power plant. Natural gas and air combine to generate electricity – without the pollution that comes from combustion.

The plant was developed by Danbury-based FuelCell Energy, which operates similar facilities around the world. In fact, their Bridgeport plant is the largest on the continent.

"It keeps your lights on, and it keeps them on all the time – whenever you need them," said Jason Few, the company's president and CEO.

At 1,400 megawatts, the new Derby facility can power more than 10,000 homes. While that's good, it's not nearly enough to get Connecticut's electric grid carbon-neutral.

Offshore wind is essential to meet that goal, but a major wind power project is now in jeopardy due to financing issues. Avangrid, owner of United Illuminating, and Eversource recently canceled a contract to sell the state 804 MW of electricity through its Park City Wind project.

"What you're seeing is, some challenges within the supply chain and interest rates," said United Illuminating CEO Frank Reynolds. "Which is why some of the wind developers have tried to really try and reset, and start over, in some cases."

Connecticut plans to re-bid the offshore wind contract early next year.

Meantime, another major wind power project is still moving forward. Revolution Wind – backed by Eversource and Danish company Ørsted – is set to supply Connecticut with 304 MW of electricity by the end of 2025.

"Remember, Ørsted is going full steam ahead for Connecticut," said Lamont. "That's going to be up and operating in less than three years. And along the way, you have things like fuel cell energy right here."

As drivers purchase more electric vehicles, energy demand is expected to jump dramatically.

To meet the need, Few said it's time to think about lots of smaller solutions, instead of one or two big solutions.

"If you think about the cellphone industry today. They're not trying to build bigger towers; they're trying to put nodes closer to where people are," said Few. "[A fuel cell plant] operates at a decibel level less than a hair dryer. So we can put this in urban communities. We can put it in densely-populated areas."

In addition to clean energy, the Derby fuel cell plant could also be converted to a "micro grid," supplying power to critical infrastructure like hospitals during a storm.