Fuel Cells are Reaching the Market, in What Could be a $100 Billion Industry
Depending on whom you talk to, the fuel-cell revolution is either 20 years down the road or right around the corner. In a sense, both views are correct. Fuel cells are no longer tomorrow’s technology, the stuff of science fiction and space travel. Annual investment in fuel-cell research tops $1 billion per year. Within the next two years, the first fuel-cell cars will be on the road, fuel-cell power plants large and small will become commonplace, tiny cells will begin to replace batteries in many household uses, and a start will have been made on creating a global hydrogen-fueling infrastructure. J.P. Morgan Securities estimates that the consumer market for fuel cells could reach $100 billion by 2020.
All that progress can present a misleading picture, because most experts agree that it will take until at least 2010 or 2015 before the much-touted "hydrogen energy economy" can be even partially realized. What takes time is not so much the fuel cell itself, but the consumer acceptance and support structure to make hydrogen as familiar a commodity as gasoline is today. Among other things, we need to agree on standards for the production of environmentally friendly, low cost and easily deliverable hydrogen; gas stations have to be turned incrementally into hydrogen stations; reliability standards must be established and cost goals met for fuel-cell battery replacements; and fuel-cell vehicles must become affordable, with a range, reliability and cold-starting performance that exceeds their internal-combustion counterparts.
All these things are proceeding, though on widely varying timetables. Here’s a rundown of progress to date:
There is a neck-and-neck race underway between Japanese, American and German carmakers to get a fuel-cell car on the road, with a number of manufacturers planning to launch small test fleets this year. This doesn’t mean that consumers will be able to buy fuel-cell cars anytime soon, or that obituaries should be written for the internal-combustion engine.
According to the Japan Automobile Manufacturers Association, Toyota and Honda will sell or lease fuel-cell vehicles in the U.S. and Japan in early 2003. Toyota’s fuel-cell car is based on the Highlander, a small sport-utility vehicle (SUV). Honda’s small FCX, which has a top speed of 90 miles per hour and can travel 220 miles between hydrogen gas fill-ups, became the first fuel-cell vehicle in the world to receive government certification from the U.S. Environmental Protection Agency (EPA) and the California Air Resources Board (CARB). Honda plans to have 30 fuel-cell vehicles (FCVs) on the road in the U.S. and Japan by 2005. Nissan is also fielding a fuel-cell vehicle in 2003.
Many of the early hydrogen-powered cars will be equipped with fuel cells from leading automotive fuel-cell provider Ballard Power Systems. According to a spokesperson, the company’s products are in some 38 vehicles, including 25 cars and 13 buses. That number is likely to increase dramatically, as 60 Ballard-powered DaimlerChrysler FCVs will also appear in 2003, based on small Mercedes A-Class vehicles. Ford’s FCV, based on the Focus, has a range of 200 miles and will be entering test fleets in Europe and California in 2004; it is slated to reach the public by 2008.
General Motors (GM) has emerged as a major U.S. fuel-cell player. The Hy-Wire sedan it recently unveiled on the auto show circuit is a refinement of its earlier skateboard-shaped AUTOnomy FCV chassis, which was designed to accommodate several body types. Not only does the Hy-Wire use space-age drive-by-wire steering electronics, but it also incorporates a high-pressure 5,000-pound per-square-inch (psi) hydrogen tank that allows it to travel 300 miles on a fill-up of gaseous hydrogen. What’s more, GM is experimenting with 10,000-psi tanks that, if safety questions can be addressed, would put range questions completely to rest.
In a major switch, almost all of the world’s carmakers are now focusing on direct storage of hydrogen gas on board the vehicle. GM and DaimlerChrysler had earlier championed the concept of extracting hydrogen from methanol or gasoline, which would have required the use of an expensive, bulky on-board chemical "reformer."
Direct hydrogen fueling is only possible with a global network of hydrogen filling stations, which fossil fuel critics claim is a $400 billion proposition. But C.E. "Sandy" Thomas, president of H2Gen Innovations and a former consultant to Ford, points out that switching to a hydrogen-based system would actually save $840 billion to $1.1 trillion over the next 40 years when the cost of maintaining the current oil-based grid is fully considered. H2Gen is developing a $375,000 gas station-based hydrogen generator and pump that will use steam reformation of natural gas. Thomas estimates that 10 percent of U.S. gas stations can be equipped with hydrogen pumping units for a relatively modest $2 billion.
In 1998, when it was commonly believed that residential fuel cells would take large numbers of electricity consumers off the grid before the first FCV car was on the road, a New York-based company named Plug Power took journalists on tours of its demonstration house, a brick-faced ranch connected to a seven-kilowatt natural gas-powered fuel cell. The unit, about the size of a copy machine, was able to keep up with an average residential load. The cell promised trouble-free electrical power by 2001 at a price that would beat the utilities at their own game. Plug Power believed that 25 million American households with high-priced electricity or no access to the grid could benefit from fuel-cell energy.
Four years later, despite some new testing programs at U.S. military bases and in 10 California homes, residential fuel cells remain a dream. Plug Power signed a much-ballyhooed distribution deal with General Electric (once itself a fuel cell pioneer) in 1999, but several dates for the cells" launch have come and gone. A major obstacle is reducing costs, including that of expensive platinum catalysts. Unless utility rates spike upwards, natural gas comes down and fuel cell efficiencies and costs improve, residential units aren’t likely to become competitive with the grid.
Peter Bos, a Pacific Palisades fuel-cell analyst, predicts that conditions will soon become more favorable. He estimates that one percent of U.S. homes will have residential fuel cells between 2006 and 2010. When cell prices fall more a few years later, the units will be in half of all homes, he says. And by 2031 we"ll all be off the grid.
Fuel Cells as Batteries
Tired of laptop computer batteries that fade after three hours of use? Does 20 hours sound better? That’s the promise of the miniaturized fuel cell, which could end the long run of the storage battery. Like the residential fuel cell, the battery replacements were supposed to be a vanguard product in the hydrogen revolution. But while the first products are imminent, rechargeable alkaline, lithium and nickel-metal-hydride batteries (currently a $5 billion annual business) will remain on the shelf for the foreseeable future.
Smart Fuel Cell began production of its 25-watt Remote Power System in 2002, and it is already powering traffic systems and camping equipment. The next product to hit the
market will likely be Coleman Powermate’s 1.2-kilowatt, $8,000 AirGen fuel-cell generator, a portable unit running on bottled hydrogen without the noise and pollution of traditional generators. The Ballard-powered unit, intended to provide backup power, can run a computer, phone, fax machine and lamp for about eight to 10 hours before a $100 refueling. Licensing and distrubution issues have delayed the launch.
Other fuel-cell battery players include Motorola, Samsung, NEC, Toshiba (which plans a cell-powered notebook computer by 2004) and Manhattan Scientific, and they envision a thriving market by 2007. Early products could serve as backup power for existing batteries, or as built-in rechargers. Startup companies are also vying to get into the battery replacement market, including Seattle-based Neah Power Systems.
There is widespread agreement that standard lithium ion and nickel-metal-hydride batteries have reached their limits and that fuel cells represent the future. Methanol, for instance, a common hydrogen source for small fuel cells, has 10 times the energy potential of lithium ion batteries. Chris Dyer, a fuel cell analyst and former Motorola executive, recently told the Grove Fuel Cell Symposium in London that fuel cells could replace batteries in most applications by 2006.
JIM MOTAVALLI is editor of E and the author of Breaking Gridlock: Moving Toward Transportation That Works (Sierra Club Books).