Earlier this month, I posted a piece on fuel cell power as part of my series on energy: pros and cons. Then there was also a press release from Bloom about their plans to double their production capacity with an East Coast plant which we covered in detail here.
After those posts went up, I got deluged with interview requests from fuel cell manufacturers that couldn’t wait to tell me how much they really have going on.
So I took the bait. Over the past week, I spoke with several top executives of fuel cell companies. Today I share my conversation with Andy Marsh, CEO of Plug Power along with Reid Hislop, VP of Marketing.
The real story here is that fuel cell technology, which was once considered the panacea for all of our energy problems, especially in the automotive arena, was suddenly dropped like so many hot embers when investors learned that it would take a while to develop this technology. Now, several years down the road those hot embers have started new fires of their own, as numerous companies have not only continued improving their technology, but have developed some very interesting, and sizable niche markets that didn’t require waiting for the enormous chicken and egg problem (vehicles, refueling stations, technology) associated with the automotive application, to resolve itself.
Here’s what Andy had to say.
Andy Marsh: A few years back, Plug Power had a sound technology base and a lot of market opportunities. But with limited capital, we had to be selective in our decisions about which markets to go after. We had looked at remote residential power, remote cell tower powering, and backup power, to name a few. The one that really jumped out at us was replacing batteries in fork lift trucks with fuel cells. How big of a market could that be? Well, in the US there are over 1.5 million forklift trucks, and worldwide, the number is 6 million.
One of the questions that we in the sustainability industries have to answer is, sure we can do great things down the road, but how do we create real value for our customers today? Well, it turns out that fuel cells in this application have some unique value over batteries. The main issue is productivity. It can take up to 15-20 minutes to replace a battery (which occurs every 6 hours or so). Fells cells run longer and can be refilled in just a few minutes. Furthermore, battery power declines during a shift, and over its life, slowing the vehicles in the process, while fuel cells can remain constant over their life. Finally, we eliminate the battery room, which can take up 6-7% of a large distribution facility. Our customers are big companies like CVS, Walmart, Sysco, P&G, Mercedes, BMW, Wegmans, Whole Foods.
We chose this market because it was a way to build a profitable business that would allow us to attract large customers in a relatively large market. Because we provide industrial productivity, we don’t have to be on a par, in our initial pricing with batteries or IC engines that run on LNG. But as we continue to drive down our costs, we should be at parity with IC engines in 5-6 years, at which point we’ll be ready to expand into other areas.
TriplePundit: Do you see resurgence in the fuel cell market?
AM: Two years ago, I was steering the conversation away from fuel cells and the industry we found ourselves in and focusing on the application. Today, with the progress made on the automotive side, it creates a much different atmosphere. Without the kind of buzz that is happening now, especially in Europe, a lot of the things that have happened, in terms of capital investment, wouldn’t have happened.
I don’t know enough about what goes on inside Bloom, but I do know a lot that’s been shared by companies like FuelCell Energy and Ballard with visible roadmaps and visible successes and failures and I believe that all three companies will be profitable by the end of 2013. Look at the success that FuelCell Energy is having in South Korea, where fuel cells are really the best alternative energy source. Look at what Ballard has done with fuel cell powered buses in South America, in Brazil. As they drive down their cost, in 3-4 years from now, they’ll be doing a couple of hundred buses a year. These are genuine sparks.
3p: What role have the actions in the auto industry played?
AM: Yes the auto industry has definitely helped to legitimize the fuel cell by their actions and their investments, but we have helped them too. Ninety percent of the refueling that goes on in these stations right now goes into Plug Power’s fuel cells.
3p: What is your position in the market?
AM: We are the premier systems integrator for PEM (proton exchange membrane) fuels cells, under 100 kW. We have more systems out there than everyone else combined. That gives us a significant advantage as the industry matures and grows.
3p: What is your sustainable value proposition?
AM: Our customers are sophisticated. We help them to perform a wells-to-wheels analysis (a form of life cycle analysis for transportation systems), they will look at sources of green hydrogen (derived from waste streams), where they get their electricity to charge the batteries from (coal, gas or wind), how far the hydrogen has to be delivered, and so on. From a GHG perspective, compared to Liquefied Natural Gas (LNG) powered lift trucks, we reduce emissions by about 80%. Compared to batteries, depending on a variety of factors, we reduce emissions by up to 55-60%
3p: How much does sustainability drive your customer’s decision?
AM: Customers invite us in the door to improve their GHG emissions, but the make their buying decisions, based on improving their operation. Given a tie between fuel cells and batteries, our lower emissions will break the tie, but the value has to be there to get to a tie in the first place.
I also spoke with Tony Leo, VP of Applications Engineering at FuelCell Energy. Watch this space for that conversation coming up shortly.
[Image credit: Photo courtesy of Plug Power]
RP Siegel, PE, is the President of Rain Mountain LLC. He is also the co-author of the eco-thriller Vapor Trails, the first in a series covering the human side of various sustainability issues including energy, food, and water in an exciting and entertaining format. Now available on Kindle.
Follow RP Siegel on Twitter.