Tag Archives: Ballard

Has the fuel-cell industry reached a tipping point?

There was a shareholder who stood up at Ballard Power’s annual meeting last week to share her experience with the company’s stock price. It pretty much summed up the frustration shared by most investors in the fuel-cell industry.

This investor has owned Ballard shares for most of 20 years. She sold in early 2000 when the stock hit $140 a share and did quite well. That was when the hype around fuel-cell powered cars was approaching its fever pitch.

Later that year she bought back into the company at about $120 a share, believing the stock was poised for another run. Bad move. The drop continued, to the point where today shares are struggling to stay above $1.

What’s a CEO to say? Ballard chief John Sheridan, who holds 500,000 or so shares himself, said he understood and felt the pain. But he emphasized, as he has in the past, that the market continues to undervalue fuel-cell companies generally and Ballard specifically.

There’s no question the industry has had a history of over-promising and under-delivering, and it continues to pay dearly for miscalculations. German automaker Daimler AG predicted a decade ago that 100,000 fuel-cell car engines would be produced annually by 2005.

Even less ambitious targets—but no less unrealistic—have been missed. Ballard told Time magazine in 1999 that fuel-cell vehicles would be economical by 2010. PricewaterhouseCoopers predicted in 2001 that sales of the vehicles would reach one million a year by 2010.

Of course, we know how that turned out. Around mid-2000 the government and auto industry began shifting attention to battery-powered vehicles. The media lost interest, tired of reporting on yet another pilot project or hydrogen-powered bus sale.

Big investors, more importantly, lost their appetite for the technology. Too much had been spent, and it was taking far too long for the promised hydrogen economy to emerge. Time to move on.

Technology analyst Brian Piccioni, most recently of BMO Capital Markets, said governments are in no mood these days to spend, let alone engage in another wave of support for fuel cell projects. And raising capital from the private sector remains a huge challenge.

Despite this tough environment, there was a true sense at Ballard’s annual meeting that the industry is nearing a tipping point.

No, I’m not suggesting that fuel-cell cars will soon be in a showroom near you. That’s still a long-term dream given existing infrastructure challenges. But fuel cells are seriously beginning to gain traction in certain sectors and for specific applications.

Volumes are building to impressive levels, costs are coming down, and some companies – Ballard among them – are flirting with profitability.

Since 2009 Ballard’s average product cost has fallen by 60 per cent. Revenue is expected to surpass $100 million in fiscal 2012, more than double 2009 results. As a result, the company is projecting it will have positive cash flow in the second half of 2012.

It also expects to hit the breakeven mark for “adjusted” earnings before interest, taxes, depreciation and amortization, which is a sneaky way of measuring operating performance that excludes certain items. It does, however, hint at true profitability within reach.

“It’s a true milestone in our history and our industry as well,” Tony Guglielmin, chief financial officer of Ballard, told shareholders.

In fact, there’s a bit of a race to profitability going on in the industry, with companies such as FuelCell Energy and ClearEdge demonstrating that they’re closing in on that goal.

More telecommunications firms are seeing the benefits of fuel cells for providing clean back-up power. More municipalities are adding fuel cell-powered buses to their fleets, and more warehouses are ditching lead-acid batteries in favour of fuel-cell forklifts. It’s not a tsunami, mind you, but it’s also not a trickle anymore.

This isn’t just because it’s the “greener” option. Products are gaining traction because, in certain applications and geographies, they are cost-competitive and simply better.

Another growth area is the use of fuel cells for distributed power generation, either to more efficiently use natural gas or biogas to produce electricity, or to use surplus or off-peak renewable energy to make and store the hydrogen that powers fuel cells.

As more renewable energy sources are added to the power mix of grids, there will increasingly be a need to store and later retrieve that energy on a large scale. Grid stability will come to depend on it.

For that use, the hydrogen and fuel cell combo might have been too expensive five years ago, but today it fits the bill in many jurisdictions and for many companies. The outlook will only get better.

So is Ballard under-valued? Judging by the direction of its costs, sales and industry trends, there’s a good argument that it is.

We may not see the hydrogen economy that gave shareholders $140 a share 12 years ago, but the fuel-cell market is poised for growth and Ballard – after a long and painful transition – is finally in a good place.

Tyler Hamilton, author of Mad Like Tesla, writes weekly about green energy and clean technologies.

A Canadian roundup of underappreciated cleantech happenings

Toronto-based RuggedCom continues to defy the economic downturn and prove the smart grid is the market to be in by posting a 52 per cent increase in fourth-quarter revenue and 49 per cent increase in same period profits. For the fiscal year, the company’s profit jumped 154 per cent. The company’s annual revenue now tops $60 million, 63 per cent of which is coming from the utility industry through sales of smart-grid networking gear. Find me another company that has seen its stock value jump 75 per cent higher than what it traded at just before the October 2008 market crash. RuggedCom is indeed a rare bird. It’s why I’m always amazed to see the U.S. media ignoring this story. There is so much attention to Cisco getting into the smart grid that nobody has noticed that little RuggedCom leads the market in the sale of networking equipment for the grid, or that RuggedCom plans to leverage that leadership position and expand its presence throughout other aspects of grid modernization. In fact, I wouldn’t be surprised if Cisco is doing its due diligence on RuggedCom as a possible acquisition. It fits the Cisco purchase profile, and compared to other smart-grid plays its P/E ratio isn’t that rich.

Another company that’s overlooked by U.S. media is Ottawa-based Cyrium Technologies, which just announced record performance from its commercially manufactured multi-junction solar cells, which are based on quantum dot technology. “Cyrium’s first generation solar cells offer efficiencies of 40 per cent or higher together with a nearly constant conversion efficiency for solar concentrations from 200 to greater than 1,000 suns,” the company said. This is a big deal, given that the other “records” touted to date, which range from 40.8 to 42.8 conversion efficiency (these claims are in dispute — see Wikipedia entry), have been limited to the lab. Cyrium, on the other hand, is actually manufacturing limited quantities of its cells for testing by potential customers. And the company isn’t resting on its laurels, either. “Cyrium anticipates its second generation product will reach 43 per cent efficiency within one year and third generation products are targeted to be at 45 per cent within two years,” the company said.

Meanwhile, Montreal-based Enerkem has been granted a permit to commence construction of what it’s calling the “world’s first commercial municipal waste-to-biofuels facility.” The $70 million facility, located in Edmonton, Alberta, will take municipal solid waste that’s left over after recycling and composting and will convert that waste into ethanol using Enerkem’s process. The project is a joint-venture between Enerkem (technology supplier) and Greenfield Ethanol (ethanol producer). “This unprecedented project is set to change the dynamics of the waste and fuel industries by making waste — that would otherwise be landfilled — a resource for transportation fuels,” said Enerkem CEO Vincent Chornet. I know I won’t be the only one following this project closely.

Finally, honorable mention goes to Toronto-based WhalePower, which has just made it as a finalist at the prestigious INDEX international design competition in Copehagen, Denmark. You may recall WhalePower’s new wind-turbine blade design, which is inspired by the humpback whale’s tubercle-line flipper. This bumpy leading edge gives the whale more agility in water. WhalePower has adapted the design to turbine blades, allowing for more efficient capture of wind energy and access to this energy at lower speeds. There are five categories in the Copenhagen competition, and the winner of each category gets 100,000 Euros. Winners will be selected in August and the winning designs will also become part of a touring show through Asia and Europe. WhalePower is competing in the “community” category against some tough competition, including Shai Agassi’s Better Place.

But enough with the bragging Canuck — let’s end on a more negative note. Continue reading A Canadian roundup of underappreciated cleantech happenings

Ballard: a sliver of sunshine on another stormy day

Working in the business section of Canada’s largest daily newspaper, I have to say it’s been tough watching the markets. If you think the U.S. has been getting battered, Canada’s commodity-heavy exchanges are getting crushed. So on yet another day that oil sands and potash producers got their teeth knocked out, it was great to see Ballard Power standing out from the crowd with a 4 per cent gain yesterday. The Vancouver-based fuel cell developer, no stranger to tough times, announced it had landed a contract that will see 10,000 5-kilowatt fuel cell units sold to India’s ACME Group and IdaTech, which will form a joint venture aimed at deploying the fuel cells for back-up power in the telecom industry. Continue reading Ballard: a sliver of sunshine on another stormy day