Which fuel cells will sell?
It was interesting to see last week’s brief disclosure that highly secretive fuel-cell venture Ion America — yet another John Doerr/Kleiner investment — has raised $102 million (U.S.) in a Series D round of financing. Rob Day at Cleantech Investing says that brings Ion’s overall VC funding up to $165 million. That’s not bad for a company we know little about. What we do know is that Ion is focusing on solid-oxide fuel cell technology for stationary, distributed energy generation. One can imagine the markets would include back-up power for businesses and homes and primary co-generation systems (heat and power) for the same markets.
The size of this investment contrasts with an announcement three weeks ago in which the European Fuel Cell Forum, at its annual international conference in Lucerne, Switzerland, said it would be discontinuing its European PEFC Forum. The PEFC (polymer electrolyte fuel cell) — also known as the PEMFC (proton exchange membrane fuel cell) — lays at the core of Ballard Power’s and Hydrogenics’ fuel cell technologies and is widely believed to be the fuel cell that will eventually drive hydrogen-powered cars.
Or will it?
Ulf Bossel, chair of the highly respected global conference, said it’s more efficient and economical to use electricity straight from the grid (say, in a battery-electric vehicle) rather than convert water or a fossil fuel into hydrogen to run a PEFC system. The “hydrogen economy,” he said, can never compete with the “electron economy.”
“The best sustainable solution is obtained by linking renewable electricity sources directly to the energy needs of consumers by means of efficient power transmission lines,” wrote Bossel in announcing the forum’s cancellation. “A hydrogen infrastructure is not needed for solving the energy problem.”
Then, in thanking the companies and scientists who participated in the PEFC forum, Bossel made this compelling statement: “You and your colleagues have developed a magnificent technology, but the fuel needed to make it work is not offered by nature. The energy problem cannot be solved by creating artificial fuels. The laws of physics speak against a hydrogen economy, and physics cannot be changed by wishful thinking, political initiatives, research programs or venture capital.”
Bam! Pow! Uppercut! 10-count… talk about a comment that hurts. An energy analyst who forwarded me Bossel’s statement had this to say: “That is why Ballard doesn’t matter, nor Chinese collaborations on fuel-cell cars. Glad to see some scientists finally admitting it.”
Interesting, of course, is that forums related to solid-oxide, molten carbonate, and phosphoric acid fuel cells for stationary applications remain alive and well. It seems that increasingly, the new “thinking” on fuel cells is that they will help us use existing fuels more efficiently, rather than become a machine whose raison d’etre is to support a hydrogen economy. Solid Oxide Fuel Cells, for example, are high-temperature fuel cells that can use a number of fuel inputs — including natural gas, propane, paint fumes, etc. — to generate power and produce waste heat that can be recycled. Two bangs for the fossil-fuel buck.
So this may explain Ion America’s ability to raise so much venture capital, while Ballard tries to figure out what it wants to be to the world beyond fuel-cell provider for the forklift industry. I’m not dissing Ballard and Hydrogenics, which are both great companies with great technologies. I’m just questioning whether the “hydrogen economy” we had a vision of 10 years ago has a role in a world where momentum is on the side of hybrid and biofuel technologies that take advantage of existing infrastructure.
Tyler Hamilton is senior energy reporter and columnist for the Toronto Star, Canada's largest daily newspaper. In addition to this Clean Break blog, Tyler writes a weekly column of the same name that discusses trends, happenings and innovators in the cleantech market. This blog is a personal project started in April 2005. It is not an official blog of the newspaper. Tyler can be reached at tyler@cleanbreak.ca
August 6th, 2006 at 4:52 pm
Another possibility is that PEMFC people are tired of going to conferences and are getting on with commercialisation. Ulf Bossel (met him and like him) has been beating up on PEMFC people (and hydrogen) for years – maybe he has simply been successful in turning them all away from his event?!
Just because Ion America has been kept a “secret” does not make it special. And just maybe the address of IA helped it raise $165m – Sunnyvale, Calif.
Try getting that kind of money in Michigan.
But IA is called a “hydrogen fuel company” and this makes the IA SOFC/SOEC technology and approach even more interesting.
August 6th, 2006 at 5:18 pm
Possibility, not probabilty. I’m not suggesting Ion America is special, since we haven’t a clue what it’s about. But with that kind of money flowing into it, there must be something there. Also, if you read the full link you provide, Doerr himself dismisses the hydrogen economy angle and Silicon Beat confirms that the input fuels are natural gas and other fossil fuels, not the compressed hydrogen gas behind Ballard’s and Hydrogenics’ model. It doesn’t really make sense to call it a “hydrogen fuel company” in this sense.
August 6th, 2006 at 10:17 pm
There is a wonderful amount of double-talk around IA. At the DOE Merit Review the presenters could barely contain their disdain for their funders but gladly proclaimed the cost-effectiveness of co-producing hydrogen for a transportation fuel. It will be good for them to push aside the government funding and get on to real products.
And you (and Ulf and Redstone) are absolutely right: there will never be the “hydrogen economy” that we dreamed aloud about during the Stuart Energy heyday!
But even the best SOFC is just another DG technology to make CHP a little better – add hydrogen and you get to cover all those dreamers!
August 7th, 2006 at 11:45 pm
drmartin,
I’m only now realizing, having read some of the links you sent me, the approach Ion America is taking. If they truly have the ability to produce electricity/heat from a fossil-fuel source AND produce hydrogen, then perhaps an IA system in every home and business will help the PEFC/PEMFC fuel cells guys fulfill their transportation dreams, as you said. Storage is still an issue, mind you, but at least you get around some of the larger infrastructure issues. It sounds promising, but I still have to hold a healthy dose of skepticism before I see some more concrete data. I do like the idea, however, of having a flexible system that can produce more or less hydrogen based on how much electricity you need at the time. Would love to see projections on what this technology will cost a few years down the road, assuming it works as touted.
August 10th, 2006 at 6:29 pm
Ulf is the perfect example of what happens when scientists who have done well in their fields begin to believe that they have something to say regarding social policy. Ulf does not understand that the choices to be made in energy policy have little to do with what’s ideal from a scientific point of view, or that the economic valuation of those choices are not made on precise calculations of efficiency or the best use of thermodynamics.
Hydrogen is no more a manufactured fuel than crude oil. We don’t fill our vehicles with it. Yes, we find oil in nature, but then what must be done, and expended to get it to the end user? Gasoline is net negative in an energy balance equation, as is nuclear. Solar power’s number is something like 0.15. Does that stop us from finding them valuable?
Ulf’s comment reminds me of a bumpersticker I used to see in Germany in the 70’s. Roughly translated, it said “I don’t need nuclear power- I get my electricity from the wall socket.” What gets consumed to generate all that electricity that he expects to “fuel” vehicles?
The right question to ask regarding valuation and policy is whether or not we are taking full consideration of the full cost of any choice – and for oil that means the costs of energy security and the health costs associated with emissions.
Stationary fuel cells, by the way, are not simply a more complicated replacement technology for combustion based DG. In addition to the societal values noted above, they also provide a number of benefits to the end user that combustion technoogies don’t.
We can no longer plan our future using today’s yardsticks and metrics – otherwise we recreate the past.
August 2nd, 2009 at 3:14 pm
fuel cell will continue to remain as upbeat and more research should be encouraged to support the development of it. just look at what toyota has done with electric car prius, many people are sceptical about hybrid cars but someone got to do it and make it work economically and affordable. i believe with the cotinuous effort by toyota would come out a perfect model one day…it goes the same with fuel cell…