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.