In the early 2000's, as investors were licking their wounds from the dot.com implosion, the siren song of fuel cell startups like Plug Power and Ballard entranced from afar. Invest in something real, something world-changing, their trumpets announced. For a short while, there was a boom in fuel cells as venture capitalists poured money into the technology. Fuel cells too had their bust, as the technology proved to be very difficult to make cheaply and durable. Now, much like the Internet sector has transfor
If you didn't yet realize we were in the midst of a fuel cell rebirth, today's news should grab your attention: ClearEdge Power, the Hillsboro, Ore. manufacturer of small PEM cells, just announced a funding round of $73.5 million. While we had heard that ClearEdge was on the verge of a new round, we expected it to be in the $5-20 million range. $73.5 million represents a whole different type of money: it will buy a major manufacturing facility, a large R&D investment and a host of lobbyists to push for subsidy reform for fuel cell purchases.
The most stunning piece of news in the ClearEdge announcement is the fact that it is able to produce power at a cost of around 9 cents a kWh. That's roughly 50% less than retail electricity rates in California. Additionally, the ClearEdge device provides heat for water heating (either for pools or for domestic hot water for multi-family dwellings). That means that ClearEdge can make an economic case for its $50,000 5 kWh device even without any subsidies. Add the subsidies (including the federal ITC and the California SGIP program), and you have a very compelling sales pitch.
ClearEdge is set to dominate the small-scale portion of the market, since it is the only company to offer anything smaller than a 100 kW unit. And ClearEdge engineers have told me in the past that they are very confident that they will get the unit down to a $30-40,000 price range sometime in the next few years. That's why investors were so impatient to give the startup cash.
But ClearEdge isn't the only Fuel Cell 2.0 company out there. Bloom Energy, which started mass production last year, was able to sell 20 MW of its units in its first year of production. It expects to expand beyond California in the coming years with a large new plant planned for Delaware. Bloom, which makes a higher temperature solid oxide fuel cell, expects to soon be able to produce electricity from natural gas at a 60% efficiency--equalling the efficiency of the newest centralized power plants--while also reducing the cost of its devices considerably.
Meanwhile, a couple of last generation fuel cell players are also enjoying a revival: FuelCell Energy, the Connecticut manufacturer of molten carbonate fuel cells, has recieved a 75 MW order from a South Korean company and is in the process of moving its manufacturing to that country. And UTC is rumored to be in the process of relaunching its 400KW device targetted at the grocery store market. Other players entering the field are Versa Systems--a fifteen year old "startup" that has received financing from EPRI--and, if rumors turn out to be true, General Electric, which is in the R&D phase for a major product launch in the SOFC arena.
The new era of Fuel Cell 2.0 isn't without its risks. The unsteady state of California finances means that the SGIP program is always at risk. And natural gas prices have to stay low for the economics of distributed generation to work. And for the new devices to really succeed, they must expand into non-California territory. However the companies listed above have a real shot at reviving an industry that appeared to be nearing its death. Instead of writing the obituary for the fuel cell, it's time to send out re-birth notices.