Vancouver-based Ballard Power Systems has raised $18 million (U.S.) to push ahead with the development of its 1 kilowatt co-generation fuel stack, which is designed to provide heat and power to homes that want to reduce carbon emissions and their dependency on the grid. The money is coming from its Japanese partner EBARA Corp. of Tokyo and will be paid out over four years. On top of those funds, EBARA is making an equity investment in Ballard of $11.7 million (U.S.) in two payment — one this year and the other in 2006.

In return, EBARA Ballard, a joint-venture between the two companies that is 51-per-cent owned by EBARA Corp., will “gaint rights, over time, through an exclusive, royalty-bearing license, to assemble, service, develop, manufacture and sell stationary cogeneration fuel cell stacks in Japan.”

Ballard will retains all rights to manufacture and sell these cogen units outside of the Japanese market.

Dennis Campbell, president and CEO of Ballard, said in a statement that Japan, with some of the highest electricity rates in the world, is an ideal place to inititally target cogen fuel cells, which will run on natural gas.

“There are a number of conditions that support cogeneration success in Japan, including the high cost of electricity, the growing demand for energy in the residential and consumer sector, and a strong national energy policy focused on sustainability and energy-independence,” said Campbell.

The Japanese government provides subsidies and support for homeowners who take advantage of such alternative energy products. In 2005 the government is providing for $23 million in subsidies that would result in the installation of 400 fuel-cell cogen systems. Tokyo Gas, Osaka Gas, Nippon Oil and others already have cogen products on the market.

“Given the market scope of 47 million households in Japan, cogeneration will remain a key component of our corporate strategy,” said Campbell.

It’s nice to see Ballard focusing more on non-auto applications for its fuel-cell technology. Clearly, cogen units – whether PEM-based or solid oxide — have a quicker path to market than the fuel-cell car. Japan is an obvious place to focus, but hopefully Ballard can capture interest from other Asian countries where conditions are similar.

Investors didn’t seem to care, however. The stock was slightly down this afternoon, demonstrating a continuing lack of general confidence in Ballard.

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