Tag Archives: fuel cells

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.

Hydrogen economy? Maybe not, but Ballard Power is surviving just the same

My Clean Break column in the Toronto Star today takes a look at a former darling of the fuel-cell industry, Ballard Power — remember those guys? Ballard was the hot kid on the block back in the late 1990s, when people still bought the idea that a hydrogen economy built around fuel-cell vehicles was just around the corner and Ballard would take us there. The vision was tempting. There are no greenhouse-gas emissions, no pollutants associated with the use of hydrogen to energize a fuel-cell car. Ballard also had — and still has — great technology. Unfortunately, it was really expensive, and the hydrogen infrastructure to support the introduction of fuel-cell vehicles just didn’t exist, nor was there a rush to make it happen. The company had its believers, including yours truly, and investors were also along for the ride. Ten years ago, the money-losing company had a market cap of more than $8 billion. But as we entered the 21st century, as it became clear that the hydrogen economy was a far-off target, and as excitement grew around battery-powered vehicles, Ballard started its downward spiral. In 2007 it sold off its automotive fuel-cell business and decided to focus on less sexy markets: forklifts and backup power. The company is still losing money, but it may actually break even next year, at least on an EBITDA basis. Revenues are growing. Costs are coming down. It turns out that niche markets can pay the bills. And now the company, a sliver of its former self (in terms of market value) is turning its efforts to distributed generation with a 1-megawatt product that makes oodles of sense, particularly in remote markets that are heavily dependent on diesel generators.

I’m delighted that Ballard is finding its way. It has inspired many spinoffs. It anchors the Vancouver cleantech scene. It’s the rock star that hit it big, rose quickly, then crashed into relative obscurity, only to emerge several years later with a more mature album that, while not having mass-market appeal, is critically acclaimed and attracting loyal followers.

UOIT researchers develop cheaper membrane material for PEM fuel cells

There’s still a bright future for fuel cells, even if the hydrogen economy won’t turn out as many had expected. But fuel cell costs, though they have come down substantially over the years, are still too high for a number of reasons. One is the membrane material in the fuel cells, which today are quite expensive to make and don’t operate efficiently at temperatures under 80 degrees C. Researchers at the University of Ontario Institute of Technology say they’ve developed a new membrane material that is cheap to produce and can function at temperatures ranging from 120 to 150 degrees C, a level that the U.S. Department of Energy is targeting for next-generation fuel cells. Bit by bit, the fuel cell is getting better and cheaper…

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