Each Friday Kerry-Ann publishes a blog here, which then gets cross posted on LinkedIn on the Monday.
OPEC – Steady as She Goes Out Till 2040 At Least
Published December 29th, 2015
Over the Christmas break OPEC released their latest World Energy Outlook, and the outlook for fuel cells and EVs is, well, it isn’t great. According to OPEC at least.
Now before the usual suspects start shouting “well what do you expect” etc you have to acknowledge the power of these reports. An organization the size and wealth of OPEC doesn’t get to where it is by sticking it’s head in the sand and humming la, la, la to itself. It undertakes a lot of research and data gathering. This makes the results something that the EV industry and the fuel cell vehicle sector should take note of.
First the headline data. Between now and 2040 there will be the following:
- By 2040 OPEC forecast that there will be 2.2 million fuel cell cars on the road, globally.
- The millionth fuel cell car will not be sold till 2037
- Battery Electric Vehicles will have 4.7 million vehicles by 2040
- In this model CNG vehicles comes out as the “winning” alternative with a predicted 123 million by 2040.
- In 2038 the “alternative” vehicle market overtakes the global diesel vehicle fleet for the first time.
In total the alternative vehicle parc, as forecast by OPEC, looks like this:
Chart 1: Cumulative Alternative Global Vehicle Parc, by Drivetrain, 2013 – 2040
But when you compare this with the forecast for petrol and diesel vehicles you can see why the forecast can be classed as ultra conservative.
Chart 2: Cumulative Global Vehicle Parc, Broken out by Petrol, Diesel and “Alternative”, 2013 – 2040
The questions and issues that I see with this forecast include, but certainly aren’t limited to:
- The auto manufacturers are unlikely to continue to invest in fuel cell technology if global cumulative sales do not reach over 100,000 till 2030;
- This OPEC model implies a significant percentage of stranded assets in both the battery EV and fuel cell vehicles sectors. In battery manufacture, refueling infrastructure etc;
- The model seems to imply that the car companies will accept continued loss of revenue per sales of BEV and FCEV well into the 2040’s;
- The growth of the CNG fleet – where??? So many questions on this one.
- The demonization of diesel, in Europe at least, coupled with the lack of diesel penetration in America implies that the continuation of growth of the diesel fleet, albiet slowly, must come from Asia. With Japan pushing for the Hydrogen Society and China increasingly forcing change towards alterative vehicles where are the forecast diesel sales coming from? To put this into context this week alone Saab announced the sale of 250,000 BEVs to a Chinese car leasing firm. One deal. Worth a cool $12 billion.
- We can only assume that the OPEC model takes into account current policy, and objectives, from an increasingly number of countries and cities on decarbonizing the vehicle fleet by 2050. But if so the implication is that between 2040 and 2050 all proverbial hell will break loose in the automotive sector.
- The report claims that what is holding the alterative vehicle sector, primarily BEVs and FCEVs, back is the number of breakthroughs needed in cost and infrastructure. With the speed of development in both technologies, and the commitments on the table, this is a claim that I simply cannot buy into.
Yes of course people will claim that I am zealot for change. And I will keep my mouth shut on their so-called opinions, but honestly I simply cannot square the OPEC circle on this one. I cannot see how the forecast is possible. At this point the decision making tree is too binary. Cut your losses and back off or go for, hell for leather. The world is changing. At a much quicker pace than this forecast would have us believe.
2016 will show us that.
Don’t forget that the fuel cell forecasts will be out on the 15th January. In short form on here, and as a full length free download version of Fuel Cell Monthly, at http://www.4thenergywave.co.uk/analysis/
12 Fuel Cell Predictions for 2015 – The Scorecard
Published December 14th, 2015
December 8th 2014 I published a blog with 12 predictions for the fuel cell sector. The list, shown here, was specific and did not include any of the weasel words that you see in many so called analyst pieces on my sector.
So, neck on block time, how did I do?
Prediction 1: Investment in the sector will jump from utilities, corporate investors, crown investment funds, and quasi-government investment vehicles. The VC sector will remain cautious;
Assessment: So, so. Obviously I could say that the Bloom Energy deal with Constellation was a sample size big enough to say I’m right but in reality sadly this data point does not a prediction validate.
Prediction 2: A number of medium sized stationary fuel cell companies will declare bankruptcy in the first half of 2015
Assessment. This has really surprised me. The number of companies that are hanging by a financial thread, but still operating, is fascinating. Sad to say though, that if we are too build a viable, profitable, sustainable fuel cell industry then some of them really do need to let go of the thread.
Prediction 3: Government focus will increasingly be on whole chain value creation
Assessment: Oh boy, yes that one was spot on. And it is clear that it is only going to get strong in 2016.
Prediction 4: Emissions and emission reduction potential will join water as the buzz words for 2015;
Assessment: COP21 anyone? VW scandal? Talk of banning diesel in city centres in Europe? You cannot read any paper without news on emissions.
Prediction 5: We will see a jump in the level of professional marketing of fuel cells as more and more agencies are contracted to work with companies.
Assessment: Well it’s starting to percolate through. My genuinely favorite piece of well written marketing this year was the (UK) National Grid report “Future Energy Scenarios”. http://www2.nationalgrid.com/uk/industry-information/future-of-energy/future-energy-scenarios/
I am not saying I agree with the report but that it was accessible and well produced.
Prediction 6: MWs deployed will grow, but the step change will not occur to 2016 – 2017;
Assessment: Sorry that one really was the easiest to write. It is like say, and tomorrow I will need a cup of tea. There is always the potential that that won’t happen, but the odds are really, really, really high it will.
And yes the industry really is growing. MW project delivered here, another 5,000 residential systems there, telecoms over in the corner. Finger in the wind time, it looks like it was about 200 MWs added to the network in 2015. I will of course pin that down a lot more in Fuel Cell and Hydrogen Industry Review 2016. (This year is still well worth a read though… http://www.4thenergywave.co.uk/annual-review/)
Prediction 7: A new prototype laptop with integrated fuel cells will be shown.
Assessment: Yes. And a new phone. Thank you Intelligent Energy.
Prediction 8: R&D funding from governments will decrease as deployment funding increases;
Assessment: Yes in Japan, yes in Germany, yes in California, yes in New York State, sort of at EU level. Empty, meaningless, rhetoric in other places.
Prediction 9: Cost of PEM could see a 10% drop as companies with innovations start to manufacture
Assessment: The best data I have so far is that this has been missed and it has been only about 6% cost out this year. Not good enough.
Prediction 10: Trade relationships between nations become stronger and we will see the announcement of a number of high value uni-lateral JVs
Assessment: Once again thank you Intelligent Energy.
Prediction 11: The residential sector will continue to grow in Japan and South Korea but stumble elsewhere.
Assessment: Bang on. But if I say more I will sound like I am ranting!
Prediction 12: A small handful of fuel cell companies will buy the IP of a number of smaller players, starting to create an interesting dynamic between the players.
Assessment: Ballard and Protonex being the prime example. Or at least the one that springs to mind first. I think we are likely to see this continue in 2016 especially in the supply chain as companies look to de-risk down the pipeline and provide more value add further up.
Overall, could do better. But then again that statement is valid for the entire industry. Could, and should, do better!
Continuing to look forward, the headline 12 Fuel Cell Predictions for 2016 and the free Fuel Cell Monthly with the long hand version of the predictions will be life in the first week back to work in 2016. I will of course post the link on here.
But for Christmas reading try the “2015 Fuel Cell and Hydrogen Annual Review” – still the only analysis to be published on the fuel cell and hydrogen sectors based on primary data from over 100 companies worldwide – http://www.4thenergywave.co.uk/annual-review/
The Known Unknowns that Could Flip Everything in the Energy Industry
Published: December 6th, 2015
It is odd sitting here writing a blog post about the energy industry when The Village I live in is cut off by flood water, thousands across my county have no power or phone lines, the railway network is under many feet of water and many roads have been washed clean away. And I don’t live in India or Nepal, or even Colorado, but teeny tiny, beautiful quiet, Cumbria in England.
On a daily basis we work on business as usual, of tomorrow pretty much being a very similar story till today. But when stuff like this happens you think about what tomorrow might look like if the big stuff happens. If the known unknowns become known knowns.
In the energy sector all models of change as gradual. We don’t dare show the “holy f**k” model of change when something momentous hits the markets and we have to change, fast. But we know these moments could happen, and we all, at least we should if we want to talk about the future, have a top list of market flipping events.
For fuel cells and hydrogen, and in reality renewable energy and energy storage, the big ones include:
- Russia turns off the natural gas pipes to Europe – we are already heading for a slow, protracted, and messy divorce but this could really speed this up;
- A nuclear accident. Or should that be another nuclear accident;
- A storm which knocks out major infrastructure in a capital city;
- A terrorist attack, or cyber-attack, knocking out the energy infrastructure in a county;
- Government scientists admitting that a 1 in a 100 year weather event is now once a decade;
- Basically when the costs of repairing the damage to the current system outweigh the costs of implanting a new one.
These could all push adoption much, much faster. But there are always negatives, which could kill the markets. These include:
- Any fatal accident involving a hydrogen vehicle;
- Any major accident involving a lithium battery fire;
- A market ready invention that removes atmospheric carbon, allowing the continued unabated use of fossil fuels;
- The Japanese government doing an about turn on hydrogen and fuel cells.
Right here, right now some of these look more and more possible. So maybe when we talk about future energy markets we should start including the “holy f**k” models.
Free “2015 Fuel Cell and Hydrogen Annual Review” – still the only analysis to be published on the fuel cell and hydrogen sectors based on primary data from over 100 companies worldwide. http://www.4thenergywave.co.uk/annual-review/
Back to Base – The Tourism Sector, Why Not?
Published: November 23rd, 2015
Yesterday I spent the day riding pillion on an old motorbike, whilst a friend was in the sidecar. Apart from being great fun it got me thinking, as most things do.
The chap, whose name we never found out, asked us what we did and when we explained he asked when it would be time to switch over the noisy, diesel guzzling beast we were currently sitting on. My automatic response was to talk about fleet turn over times, rate of penetration of new technologies etc, but then later on I realised that for him it could be much sooner.
The tourism sector is pretty much being left out of the whole early adopter debate. Apart from the fuel cell trolley bus in Dubai and the whale watching boat in Iceland, which I am not even sure is still operational, the fleets owned by the tourism sector have pretty much been ignored. We talk a lot about fleet owners, and back to base model, but this industry, which runs into the billions per country, is not being engaged with.
The chap, let’s call him Wolfgang* for ease of debate, told us that their little operation had 60 bikes in it and they are out most days. And this was tiny operation. We can all name big tourism operators with fleets around the world, whether it is boats, or buses, or motorbikes.
So the question becomes why haven’t we engaged with them?
* he looked like a Wolfgang
But My Fuel Cell is Better Than….
Published: November 16th, 2015
“So why isn’t it selling?”
Some reasons could well be -
1. stop trying to sell technology and start selling solutions. Take away the customers problem, not shoehorn another bit of technology into it.
2. Are you talking the same language? If the customer is talking in CAPEX and you are talking lifetime costs you need to understand that that will probably annoy them more than anything else.
3. Education is important, but trying to “educate” them to believing that you are right is not education. See the world from their point of view.
4. Ask yourself, if you were them would you buy from you? If they are a multinational with known and secure supply chains and you are a small start-up with limited track record in product delivery why would they take a risk on you? And you are a risk!
5. Do you have enough funding to ramp up? Seriously. If the order jumps from 10 this week and then 1000 by the end of the year could you cope? If not why would the customer trust you to order from you?
6. Fuel cells are one option in many. If you are stamping your foot and saying but my fuel cell is better than this other fuel cell you won’t last.
BP Technology Outlook 2015 – Not a Big Fan of Fuel Cells or Hydrogen, but Neither are They Energy Storage, System Thinking or Potential for Big Change
Published: November 9th, 2015
Last week BP released, for the first time, a sister document - BP Technology Outlook 2015 - to it’s well known, well-thumbed and well used, Energy Outlook, 2035 and Statistical Review of World Energy.
Energy Consumption by Final Sector: Global, 1965 – 2035
Source: BP Energy Outlook, 2035
According to the BP blub the “BP Technology Outlook marks the first time we have shared the outcomes of our analysis with the wider world. It sets out how technology could shape our energy landscape over the next 30 to 40 years.”
First of all no matter what you think of the company at large we have to acknowledge that the Energy Outlook is by far and away the best free reference document in its class. So the Technology Outlook should be of similar value and standard. In short…. Not yet. But very important for other reasons. More on this below.
The report is clear on a number of fronts:
- We are not running out of energy options. New technologies and improved older technologies are opening up options, not closing them down;
- We have enough resources out to 2050 (the time horizon looked at)
- The pathways are dependant on a mix of factors, including policy!
- Carbon pricing changes a lot of things in the technology mix.
What is interesting is the very steady state world view on everything around the energy mix. The companys’ stance on renewables having low penetration (8% by 2035) is well known, but this report – usefully – unpacks why BP seems to have the oil and gas binoculars on.
The report is very down on energy storage, certainly anything but battery energy storage, and even that is given the long term option status, and this is highlighted in the following quote: “Deployment (of wind and solar) in tandem with (energy) storage technologies could eliminate these issues but at the expense of higher costs and lower efficiencies”. Note text in brackets is my addition. So the focus for renewable energy is back to the issues of intermittency.
For fuel cells and hydrogen the opinion is even worse. Not only are none transport fuel cells only given one sentence, and that is somewhat offhand, the presumption is that fuel cell vehicles are going to remain a costly, niche option out past 2050. The graphic below shows this. Note that tax is not included on the price of fuel and there is no data to show the assumed hydrogen price.
Technical Potential of Transport Vehicles to 2050 (according to BP)
To avoid any calling of twisting of words here is the verbatim quote from the report on fuel cell vehicles: “Toyota and Hyundai have already launched fuel-cell vehicles in certain markets, and some other Original Equipment Manufacturers (OEMs) plan launches soon. Several OEMs have also built up their capability in fuel cell technology. However, given the technical, hydrogen production, storage and refuelling infrastructure challenges, as well as the relative vehicle costs, it is unlikely that significant adoption of these vehicles will take place in the immediate future.”
“Some other” OEMs?? That’s something of an understatement!
In fact the one statement that I can pin to the wall and agree with in the report, on fuel cells and hydrogen, at least is that the capital required for fuel cells / hydrogen could slow down deployment to decades. It is not rocket science to say that we need an infusion of capital. My own company annual report on the health of the fuel cell and hydrogen sectors say so, many times.
Overall though, we, as in the fuel cell and hydrogen sectors, have two choices. We spit our collective dummy out of the pram, and complain that BP doesn’t like us. And sadly I am sure some people will. Or, the second choice, is we prove their assumptions wrong. Shut up and get on with it. That’s what we need to do. Engage with BP, and the rest of the Old Guard, but graft over the next decade, at least, to prove that the world can change, and that fuel cells and hydrogen are a core part of this.
Stationary Fuel Cell Companies Sprinting for the Profit Line…..
Published: November 2nd, 2015
In the last few months Doosan Fuel Cell American announced a 30.8 MW deal in South Korea, Bloom Energy inked a 40 MW deal with Constellation, and FuelCell Energy continued to ramp up the MWs on order from POSCO. Then just last week little known SOFC Dominovas Energy announced the signing of a $1.2 billion deal stating that “Financing will fund the initial phase to manufacture, produce, and deploy Dominovas Energy’s proprietary RUBICON SOFC systems, pursuant to signed and executed guaranteed Power Purchrse Agreements (PPAs)”.
When you add in deals from Intelligent Energy in the telecoms sector and Acumentrics and SFC in the oil and gas industry you can start to see a picture developing of a growing stationary fuel cell sector.
At a recent Hydrogen London event, which I had the pleasure of chairing, the consensus in the room was there a need for four areas that need more work before the industry could start to normalise. These were: we needed more work on policy, the finance angle, data and education. These were all interdependent of each other, and none were only relevant to London. The graphic below is what my company 4th Energy Wave, had done as a wrap up. Instead of death by report a short infographic (the full size version can be sent to anyone who wants it).
Stationary Fuel Cells Needs List – 4th Energy Wave Inforgraphic
What you can hopefully see from this is that none of these points are so critical that they can stop the sector in its tracks. None of them are impossible and none of them preclude working with other sectors, such as the battery industry. It’s just that it is now more imperative than ever that we roll up our sleeves and get on with the job at hand.
The Oil and Gas Industry Should be the Fuel Cell Industry’s Friend
Published: October 26th, 2015
Sounds like an oxymoron right?
Fuel cells = less emissions with the potential for zero emissions if the hydrogen comes from renewables.
The oil and gas industry = dinosaurs, pillaging the planet for non-renewable resources.
I was in a conversation with a potential client about strategy and I asked why they weren’t targeting the oil and gas industry. The answer – they represented the wrong type of industry. Excuse me? The wrong type of customer? Surely the only sectors who can pull out that line are folks who sell weapons, drugs, and alcohol. Not fuel cells!
No matter what scenario, forecast, crystal ball gazing you look at we, as in this planet, is going to be consuming oil and gas for some time to come. Even if the politicians pull a white rabbit out of the hat at COP 21, and I really want them to, and we agree that by 2050 it will be a zero carbon world, then we still have 30+ years to go.
When you look at the oil and gas industry you see that around the world they are increasingly being targeted to reduce pollution. Right from extraction to transportation and processing. There is no business as usual left. One way to doing this is replacing generator usage with fuel cells. Prime power, some fast ramp up, some slow, some MWs, some low kWs. The whole gamete. They need power. Lots of it. They need cleaner power. And they (still) have deep pockets.
So when you look at your product and you look at the market, it really would make sense to get off your moral high horse and go talk to the dinosaurs. They might just surprise you!
Fuel Cell Cars: If They Are Not for Everyone, Who Are They For?
Published: October 19th, 2015
A couple of weeks ago I posted a blog outlining why I wouldn’t be a first adopter of fuel cell cars. This generated a level of reaction, on and off line, which to be honest I wasn’t expecting. Many people seemed to read into it that I didn’t think fuel cell cars are any good. Or that I am somehow now a shortsighted doomsayer.
To be very clear I do think fuel cell cars are good, and will be part of the future mix.
But…. like all new products at the start they are not for everyone.
Let me reiterate and make this very clear – if we try and make fuel cell cars right for everyone at the start they will fail. And this holds true not just for fuel cell cars. The first mobile phone weren’t sold to school children but now a significant percentage of children over 12 have one. At least in Europe. The first use of the internet was not targeting at the scarily large percentage of people who seem to like watching kittens doing daft things on YouTube, but was for the military. So stop assuming that for the next 5 to 10 years fuel cell cars will be everyone.
So if they are not right for me, a rural dwelling, second hand car owner, who are they right for?
- Urbanites – big and small city types. London, Paris, Washington, even little Perth in Scotland.
- Car club users – The asset light generation is flooding to car clubs and car sharing. They are perfect for this new generation of back to base model. Fleet managers take note.
- Techno geeks – the folks who are wealthy enough to simply want the next new “toy” and will pay for it.
- Government fleet users – these really, really should be first adopters. “Do I say and as I do”, really should be the mantra of politicians.
- Companies with fleets which use city centres, such as high end private hire firms.
These are just some of the types of groups I expect to see being the adopters of fuel cell vehicles. It will take at least a decade to sort out the infrastructure – and don’t lambast me for being upfront about this – and longer to normalise the technology.
Everything takes time.
Fuel Cell and Hydrogen Investment Q1 – Q3 2015
Published: October 12th, 2015
According to data from Bloomberg New Energy Finance Q1 – Q3 global investment in renewable energy and smart energy reached $197.9 billion. This includes funding for government R&D. Q3 2015 alone was $70 billion.
If we look at how much investment has gone into the fuel cell and hydrogen sector during this period it is less than 1% of this. And apart from two deals this is all government funding. Just to reiterate in the first 3 quarters of this year there has been 2 private sector deals in the fuel cell and hydrogen sector*.
What does this mean for the sector? When venture capitalists and fund managers are telling me they are interesting in engaging with the sector, but then we see only 2 deals completed in 9 months there is clearly still a major disconnect. When the US DOE, the Japanese government and the European Union Horizon 2020 programme are classed as the biggest “investors” into the industries still then there is clearly a job of work still to be done.
In the fuel cell and hydrogen sectors the chasm of commercialisation seems to include the gap, chasm or whatever word you choose, between bringing the finance sector and the companies together. The companies need the finance. The finance folk are interesting in dialogue but it isn’t happening.
Bridging this gap has to happen. This is not an optional extra. For the sectors to grow finance has to be accessed. Full stop.
* Admittedly the database that I use for deal flow may not be 100% complete but it is as good as I can get access to.
Just Do It…
Published: October 7th, 2015
I haven’t written a blog for a couple of weeks as I have been busy doing a whole heap of “what if” work.
This being the fuel cell industry during the what if work, a couple of the what if’s happened. In fact it seems to have turned into a just do it type of time. Another 300 fuel cells buses for China and over 1,000 fuel cell base stations for India. Oh yeh, and a new fuel cell car from Honda with a 700km range.
So late the other night I ripped up my report and started again. In pencil.
It might make my work harder, but I like this just do it world. I hope it hangs around for a bit.
Why it Will be a Long Time Before I Have A Fuel Cell Car
Published: September 21st, 2015
As a fuel cell and hydrogen analyst I have been working in this area a long time. A really long time. I have driven every type of fuel cell car I can get my hands on and I like them. I genuinely think that some of them are good cars. So when I got asked if I would buy a fuel cell car I had to fess up and say I cannot see it. My genuine reasons are:
I live in the middle of nowhere. I am used to travelling to get diesel for my car, so travelling to refuel isn’t a problem. But it will be many years before there is a refuelling station within an hour of me. That said Tesla stations are cropping up round here like some new disease, so maybe it will only be a few years;
I love my car. If I look after it, and I do, it should go round the clock twice. I don’t want to forced to scrap it because of its age or Euro standard so I look after it;
I am one of the daft folk who has an emotional attachment to a brand and a mark and they aren’t looking at fuel cells;
I am the mass market when it comes to cars. If you could buy an integrated fuel cells into a laptop or an off grid home, then I would be an early adopter, but with cars I really am one the 68% who make up the early and late majority;
And I know this is heathen talk, but I don’t like the silence in an all electric drive train cars.
For folks who live in cities, those who use car clubs, those who enjoy the utility of all electric drive train cars I take my hat off to you. But that’s not me.
So when you see a blog from me that I have a fuel cell car as my daily car then you will know that the true mass market has arrived. Just don’t hold your breathe.
The Signs are There That Things are Changing in the Fuel Cell and Hydrogen Industries
Published: September 7th, 2015
Every week when I post a blog the naysayers weigh in with the usual blah, blah. Usually along the lines of “it will never happen, so there”. Over the last few weeks there have been a number of press releases that hidden in the depths are snippets of information that show that it is happening. As I am prepping for tomorrow’s presentation this is just a short blog highlighting some of the best of these:
- The new GM / Honda stack, which is currently in the lab, has a platinum loading of 10 grammes.
- Bloom Energy is moving to a global platform with it’s inclusion in Vapor IO new green datacentre.
- Toyota’s new fuel cell forklift will have the same fuel cell stack as the Mirai, enabling quicker cost out. Cost at product release in 2016 – ~$34,000.
- When you count up announcements of electrolyser sales over the last month it is the best month too date.*
- Since the start of 2015 over 120 MWs of large stationary fuel cells have been ordered*.
- Iwatani and Kawasaki Heavy Industries are developing an ocean going liquid hydrogen carrier.
So, if folks are coming to SHFCA’s partnering event on Tuesday see you there. To the naysayers that will no doubt appear in the comments section.. I really don’t give a flying…. Sorry what was that? My cup of tea is ready…
*these are not from press releases but my data junkie analysis.
12 Fuel Cell Predictions for 2015 – Half Time Scorecard
Published: July 6th, 2015
At the end of 2014 I published a short set of 12 predictions for the fuel cell industry in 2015. As we are now just over half way through the year it is probably a good time to see where we are.
1. Investment in the sector will jump from utilities, corporate investors, crown investment funds, and quasi-government investment vehicles. The VC sector will remain cautious;
Hum! Not yet. Finance flows is slow, with the majority so far coming from government purses.
2. A number of medium sized stationary fuel cell companies will declare bankruptcy in the first half of 2015;
So far this appears to be holding up with a number of bankruptcies announced.
3. Government focus will increasingly be on whole chain value creation;
This is simmering under, but so far this year the focus has been on other issues.
4. Emissions and emission reduction potential will join water as the buzz words for 2015;
5. We will see a jump in the level of professional marketing of fuel cells as more and more agencies are contracted to work with companies;
So far not yet.
6. MWs deployed will grow, but the step change will not occur to 2016 – 2017;
7. A new prototype laptop with integrated fuel cells will be shown;
8. R&D funding from governments will decrease as deployment funding increases;
9. Cost of PEM could see a 10% drop as companies with innovations start to manufacture;
Data still needs to be analysed on this.
10. Trade relationships between nations become stronger and we will see the announcement of a number of high value uni-lateral JVs;
So far not yet.
11. The residential sector will continue to grow in Japan and South Korea but stumble elsewhere;
12. A small handful of fuel cell companies will buy the IP of a number of smaller players, starting to create an interesting dynamic between the players.
So far the first half of this statement has come to pass.
So a quick overview is 6.5 of the 12 has happened. With the industry evolving very rapidly it is likely that at least 10 of these I am still standing behind.
C40 City Clean Bus Programme – So Much Promise…
Published: June 30th, 2015
Yesterday at London’s City Hall, 24 of the 75 cities in the C40 cities organisation* announced that by 2020, the signatories to the Clean Bus Declaration, will have procured over 40,000 “clean buses”.
As with everything the devil is in the detail and here “clean” means everything from hybrid diesel, biodiesel, CNG, LNG, Battery and Fuel Cells. Some cities, especially Oslo, are going one step further and, for example, requiring renewable energy credits (RECs), if say there is a battery bus. Warsaw, on the other hand has been testing CNG buses.
What was interesting from the day was the clear desire of every city to run a series of tests, for themselves, in their own cities. It appears to be not enough that major hub cities are, or have, already run tests, and the test results are fully available. The implications of this in terms of deployment speed, wasted funding, and unnecessary delays is real, but what is clear is that without them the cities themselves will not move forward.
For fuel cells and hydrogen the picture is not great, at least in the short to medium term. Oslo, mentioned above, has plans to have a completely zero carbon fleet by 2025, but within this the projected % of fuel cell buses is 5%. Some 55 buses. London, which is one of the key cities in the programme, has agreed to extend its fuel cell bus trail till 2020, and add a further 2 buses to the fleet, making the RV1 route fully powered by fuel cells. Of the other cities there is still a waiting game, though we expect to hear a number of concrete purchase orders during the upcoming COP 21 in Paris.
So although the 40,000 bus headline is fantastic, overall the promise, for fuel cells and hydrogen at least, is a little bit diluted.
What Actually Is the Fuel Cell Industry?
Published: June 22nd, 2015
After a long, and very interesting chat with person X the comment was made “well the fuel cell industry needs to do this…” .
What fuel cell industry?
Does it include the hydrogen industry?
What is it?
Where are the boundaries?
As with everything the answer is it depends. It depends on who you talk to and what their position is.
The industry, as such, is a loose conglomeration of companies making and distributing products into over 60 discrete and disparate market segments, worldwide, using a basket of technologies. Lobbying at government level is for everything from a special feed in tariff for renewable heat (define renewable) from resCHP specifically from fuel cells, to ensuring zero tax on the sale of hydrogen for fuel cell vehicles, to the continuing debate of using portable fuel cells in the air.
But we are still falling into the trap of seeing a fuel cell as a technology solution in its own right, instead of being part of a spectrum, and part of an overall solution including renewable energy and batteries. Many of associations and special interest groups which abound like a global rash in this “industry” are lobbying for their slice of the pie. But if we don’t start learning to work together and across the sectors and approaching this from a solution, rather than a technology, the pie will dwindle and die.
I make no bones about this, one of the (highly possible) 4th Energy Wave scenarios looks square into the death of any fuel cell industry within the decade.
Sorry, but it is up the current players to make this scenario defunct. And to do that will require a lot more collaboration, understanding and less techcentric thinking.
Who Should Get Married in the Grand Fuel Cell and Hydrogen Courtship
Published: June 8th, 2015
A couple of weeks ago NEL Hydrogen and H2Logic got “married”. And they aren’t the only ones looking to form partnerships. But what partnerships would I like to see? Here are just a few:
ITM Power and Shell or BP – one has the tech and one needs a much better footprint
GE and Acumentrics – both good companies but GE will drive down cost at a much quicker pace
Tata and Riversimple – just think about it. Revolutionary fuel cell car in the Indian market
Panasonic and myFC – kick start the personal electronics revolution.
Tesla and…….. :0)
Obviously these are just my Monday musings and should not be read as anything other than my opinion.
I Don’t Agree With Your Forecast on Fuel Cell Cars…..
Published: June 1st, 2015
Right now it feels like there are more forecasts on the number of fuel cell cars that will be deployed than there are actual fuel cell cars on the roads. And pretty much each day there is some person contacting me to say my forecast numbers are wrong.
For reference these are 17,500 by 2020, and 66,500 by 2025. Both of these numbers are global and for annual deployment of fuel cell cars.
And that’s ok with me.
A forecast, by definition, is one group’s model results of potential future events. As we don’t have a crystal ball – though some people clearly think I am a witch* and do – and we operate under imperfect information any forecast has to be clear of the assumptions behind the model and the implications of the forecast.
We are seeing a lot of big numbers floating around, including 1.6 million by 2030, and that is ok. These numbers are bullish, and surely must have much more aggressive deployment of hydrogen infrastructure that I am modelling.
The point is that the markets are in flux, and we are in a long period of transition from one energy infrastructure to a mixture of options. Quibbling over the fine detail of is it going to be a million in 2030 or 250,000 is not a game I am going to play. But ask me about the implications of the difference and that is a much more interesting conversation.
* W people. That’s a W!
Why the Time is Right for Virgin Energy
Published: May 25th, 2015
As more and more finance and investment vehicles divest there fossil fuel portfolios and the more and more emphasis and focus is place on renewable and low carbon generation options, maybe we won’t be surprised by the big names to come into the energy industry.
After all, historically it is the incomers that disrupt traditional markets, not the incumbents trying to reinvent themselves. Companies such as Tesla are a prime example of a company threatening to disrupt. But even with all the might of the Musk he is limited by size and growth capacity.
What the energy market needs to someone with the size and capacity to break in and push the (r)evolution to profitability in the short term. A company known for big thinking and not being afraid of taking on a challenge is Virgin. So how about a Virgin Energy?*. Richard Branson is already championing the cause of climate change mitigation through the Carbon War Rooms, but this is a charity. Having a group that proves that distributed clean energy, using renewables, batteries, hydrogen and fuel cells can make a profit would be a very, very strong lever in the debate.
I have argued for many years now* that the role of the utility is going through a period of change. A Virgin Energy could be a power aggregator, run power purchase agreements, provide energy arbitrage or many other options.
We need a company which brings together the strengths of the component parts from all the four complimentary options, and champions change. Virgin already has the brand equity that I talked about last time. They also have the ability to disrupt markets and they have proven that they don’t shy away from the big challenges.
So the only question remains is how long till a Virgin Energy?
*I hope if anyone from Virgin is reading this they are not offended by my use of their company name. It is done with utmost respect.
**I know there are many people who would suggest I just put a full stop here and leave it alone, but hey why break the mold!
What Can the Fuel Cell and Hydrogen Industries Learn from Tesla?
Published: May 11th, 2015
Last week saw a flurry of declarations about the Tesla Powerwall, with many declaring it not economic, or not feasible, or best to wait another couple of years as a better technology is just round the next bend in the road.
Less than 10 days after it was launched the company reported that 40,000 systems had been reserved, representing over 90 MWs of installed capacity.
What can the fuel cell industry learn from this
1. Stop waiting for a better, improved version and start shipping. eZelleron and myFC are two companies who are doing just that. eZelleron have pre-booked orders of over 15,000 systems, and myFC launched Gen 1 and 2 whilst building up to what looks like could well be their breakout product of the Jaq. There are so many companies stuck in “half a percent” better land it isn’t even funny.
2. Brand Equity – at All Energy this week we talked about the PowerWall and the session chair said “Tesla aren’t alone doing home energy storage systems, but I cannot remember who the others are”. And that’s exactly the point. Tesla have a brand equity, like Apple, and people aspire to own a bit of them. I would argue that no company, not only single one, in the fuel cell or hydrogen industries has any level of brand equity. And we are hurting because of it.
3. Leadership – whatever you say about Elon Musk, like or not, he is an old school leader. Who does the fuel cell and hydrogen industry have? No one. I have written before about the need for the industries to have a leader and champion and that still stands.
4. Make lots of them and make them cheaper. The Gigafactory has the ability to produce a lot of batteries and will in itself drive down costs. Many companies are still footling around with batch manufacturing, which is keeping the prices high, and with no public move to volume for these companies, there are no clear market signals that they will be able to drive out costs.
5. Marketing and promotion – if nothing else I doff my cap to Elon Musk’s ability to promote not just Tesla but batteries. A good well funded marketing campaign really would do the fuel cell and hydrogen industry the world of good as well.
Yes he thinks that fuel cells are “so full of b******t”. Well let him. But that doesn’t mean there aren’t many things we can learn from him!
Published: May 4th, 2015
We live in a world of disruption
We live in a world where business models are being ripped up and reshaped.
We live in a world where technological lock-in could become a thing of the past.
We live in a world where consumers are becoming producers and producers aggregators.
We live in a world where the fastest rising mode of transport is car sharing and car clubs.
Now imagine a world where car companies stop selling cars and start providing mobility.
A world where utilities become energy aggregators, constantly spinning and weaving to keep the energy network in balance.
A world where there is no such thing as new technology, just new solutions.
A world where all solutions work together, and the balkanisation between the battery industry and the fuel cell industry is (rightly) consigned to the “bad old days”.
A world where cars are community assets, in the same way as wind turbines are becoming in many places in the world today.
A world where apps link zero carbon transport to allow you to travel without dipping into your carbon allowance.
A world where the community, whether it is a village, a city or a collective of like-minded people work and act together.
When this is a world that can really happen why are the models of our tomorrow assuming that we will look and act and consume like yesterday?
Small but Huge Potential – Fuel Cell Company To Watch List
Published: April 27th, 2015
With ElectroPowerSystems (EPS) bursting back into the news last week, raising over € 14 million in an IPO, this is a good time highlight some other quieter companies with large potential.
In no particular order:
New Enerday (SOFC, stack and system company, stationary and portable) – cracking potential for a small company
Altergy (PEM, system company, stationary) – building up after tough times
Riversimple (PEM, system company, automotive) – working on new model of car and car useage
Serenergy (HT PEM, stack and system company, stationary and portable) – nothing seems to daunt this company
Powerdisc (PEM, component and stack company) – high growth potential company based on redesigned flow field plate
Advent (HTPEM, component company) – watch this space
Microcab (PEM, system company, automotive) – amazing ideas, terrible at telling the world what they are doing.
IRD Fuel Cells (PEM, stack and system company, stationary) – another company which seems to rely on osmosis to tell people about success stories
Hydrogen and Fuel Cell Group Exhibit 2015 – The Winner is…… Power to Gas
Published: April 20th, 2015
Last week was the annual Hydrogen and Fuel Cell Group Exhibit, which is part of the much larger Hannover Fair. Now happily ensconced in Hall 27 this event is clearly on the must do list of a growing number of companies. And it continues to be on mine. Not only are the exhibitors shaping up to be a cracking cross section of the global industry, but the folks attending now are much more focused on business, and away from education.
As a microcosm of the global industry it represents a bell weather of what are hot topics. This year Power to Gas* were clearly the winners. Proton Onsite released the press release on their first Californian order, ITM Power had their 1 MW system on show, Giner’s Hector Maza gave a cracking presentation on the podium and all the chaps** from the electrolyzer industry provided a really interesting 1 hour debate and kind of elevator pitch session on the industry.
Even sitting down in the coffee area for client meetings the feeling and excitement is around this area. I think I might have been hinted to that in the next Horizon 2020 call there will be more on this area as well.
The other area that seems to be bubbling under nicely is France. I just get the sense that this country is starting to put some good stuff together. Nothing concrete yet, but a definite watch this space.
For those who weren’t there and want to watch the podium discussions they are on YouTube, and a small plug for my discussion with the lovely Brian at: https://www.youtube.com/watch?v=roLqFf7XF1s&feature=youtu.be&a
Next years Fair is the week of the 20th of April. See you there. http://www.h2fc-fair.com/hm16/index.html
*covering power to power, power to fuel, power to energy and power to gas
**yes all chaps still
How, Will, or Could Fuel Cells be the Uber of Energy?
Published: April 12th, 2015
“In 2015 Uber, the world’s largest taxi company owns no vehicles, Facebook the world’s most popular media owner creates no content, Alibaba, the most valuable retailer have no inventory and Airbnb the world’s largest accommodation provider owns no real estate.”
We live in an age of disruption.
We live in an age where business models are being broken and reshaped.
We live in an age where connections are critical.
We live in an age where the emerging transport model (in the west) is car sharing and car clubs.
We live in an age when energy is becoming a democratised, real time, distributed commodity.
We live in an age when traditional businesses are working out their play to remain viable.
Where will fuel cells play in their new world?
Will they be a game changer, a game maker or sitting on the side as a sub?
Residential Fuel Cells and the Tesla Home Energy Storage System
Published: April 6th, 2015
Last Month Elon Musk announced that Tesla would be making a battery based system for the home energy storage (HES) market. Nothing else is known about the system, but as with anything labelled Tesla there is a lot of rumour.
A home energy storage system is not the same as a residential combined heat and power system. The first takes excess power, primarily produced by renewables, and stores it. The second produces power and heat for the home, from a range of fuels. For resCHP to use renewables its needs to include an electrolyser to take the electricity and convert it into hydrogen.
Too date global sales of resHES systems are tiny, as they are still very much on the fringes. Sales of resCHP systems are on the up, but are very concentrated in geographical pockets, such as Japan, South Korea, and to a much, much lower extent Germany, the UK and Denmark.
With Elon Musk’s very public opinions on fuel cells cars not being, shall we say glowing, it is unlikely that his opinion on fuel cells for resCHP systems will be much higher.
Taking into account that in the US there is no company – none – that is making a play for the fuel cell powered resCHP market and Tesla being able to play the “made in America” badge then any company planning on entering the fuel cell resCHP market is likely to have a much harder time of it going forward.
For more analysis on this please see the May edition of Fuel Cell Monthly. http://www.4thenergywave.co.uk/fuel-cell-monthly/
Hydrogen and Fuel Cell Group Exhibit 10 Years On
Published: March 30th, 2015
This is a time of anniversaries for me. Not only was my company, 4th Energy Wave, one last week, but I realised that this year is going to be a decade of me spending some of springtime at the Hydrogen and Fuel Cell Group Exhibit at the annual bash that is the Hannover Fair.
As well as being a good excuse to celebrate with a mug of good coffee it is a good time to go for a run and think about how the industry has changed over the last decade.
Using the Hydrogen and Fuel Cell Group Exhibit as the baseline, 5 things that really stand out for me are:
The hydrogen and fuel cell industries have grown substantially over this time. This is not just in terms of companies involved in the sector, but the size and mix of the companies. If you look back at the 2005 exhibitor list it was populated, in the main, by micro companies. Now the 2015 exhibitor plan shows a real mix big players, such as Abengoa and Air Liquide, alongside growing companies such as Greenlight, Vairex and Cella Energy as well as the micro companies.
The type of audience the industries are engaging with has changed. Back in 2005 most of time on the stand was spent telling people what a fuel cell was. Now when I go it is about orders, delivery times, volumes and customers. The public forum is also a good example of this. 10 years ago the moderators would get the folks to talk to about the benefits of the technology, and use the time to educate the audience. Now it is much more about timelines and debating routes forward. But yes there is still the occasional softly softly question.
One of my big bugbears at Fuel Cell Today was that there was no-one who would actually talk price. Not cost, but price to the consumer. This has changed. Now if you go, and can show you are a genuine potential customer, most of the exhibitors at this year’s group exhibit will talk prices.
The interaction between the hydrogen and fuel cell sector and the rest of the Hannover Fair has changed beyond recognition. At the start it was a corner of Hall 13 were, in reality, we would go to talk to our ourselves. Now the mix between the different industries, renewable especially, is very strong. With the growth in Europe, at least, of the energy storage market this bridge between the traditional renewable sector and the fuel cell and hydrogen sectors is understandable.
So in a couple of weeks when my alarm clock goes off at silly o’clock to get the first flight out of Heathrow to Hannover I will be looking for many more positive signs. I will be there Monday and Tuesday, so get in touch if you have time for a chat about your business and mine.
Who Could Buy Bloom Energy?
Published: 23rd March, 2015
I spent the weekend* noodling over a line from a press release last week. Paraphrasing, it was that they expect Bloom to either IPO this year, or be sold. Ok, so we have seen commentators expect Bloom to IPO for years now, but it was the could be sold part that had me thinking.
Who could buy Bloom and why would they?
If we look at the potential candidate list, I think we can dismiss big oil straight away. Although their war chests are still big enough to swallow Bloom, the volatility in the oil markets is making them increasingly skittish about investments.
Car companies are still focusing on their core competencies and increasingly dabbling in mobility. It is probably still a couple of decades before we have a joint mobility and energy company.
China? No. Again I think we can dismiss Chinese companies. From this specific question at least. It won’t be long before an indigenous large stationary fuel cell appears out of China.
So this narrows it down to tech companies, utilities and a handful of others.
General Electric could afford it but is working on its own fuel cell programme. Siemens is also on the list of could afford it, but…. . A couple of months ago I would have had Areva on the list but not now.
The long short list therefore, if anyone is to buy Bloom Energy, is Google, Microsoft, Amazon, Virgin, and the utilities Constellation and maybe EON.
Google and Microsoft are no brainers for the list. Amazon is making a big play to provide services to just about every part of your life, and energy could be the next one. Same with Virgin. As a company they are highly diversified but they have a strong figurehead in Richard Branson. With his recent press release saying that they are working on electric cars** it shows that they are looking at the next tranche of innovation. Would Virgin Energy be such a stretch?
On the utility side Constellation and EON both have already invested in Bloom Energy. Constellation have a build out deal of 21 MWs, providing the equity financing to Bloom and EON invested €91.5 million ($100 million) in Bloom in 2013. EON is also going through a period of restructuring to split into 2 companies. One with its fossil assets and one focusing on renewable activities, regulated distribution networks and tailor-made energy efficiency services.
Each of the companies and utilities are big enough, have enough market leverage and vision to take on Bloom and increase roll out. Could they buy Bloom? Yes. Will they buy Bloom? That’s the billion dollar question.
*not all the weekend you understand. I do have a tiny attempt at a life away from building 4th Energy Wave!
**if you haven’t seen it yet go get a mug of tea and take 10 minutes out of your day to read and think – http://www.wired.co.uk/news/archive/2015-03/20/virgin-electric-cars-(1)
Hawaii to Join Denmark and Scotland with 100% Renewable Target
Whilst a large percentage of government leaders dither and the world continues to burn smaller, more forward looking countries, and States, are starting to emerge as the next generation energy power houses.
Scotland already has a 100% renewable electricity target of 2020; a renewable heat target of 11% by 2020, and critically, a reduction in energy consumption of 12% over the same time period. Denmark has a 100% renewable energy target, including heat and transport, by 2050. Now the Hawaii House and Senate have both unanimously recommended that a bill be introduced which would see the state’s Renewable Portfolio Standard (RPS) increase from 70 percent by 2030 to 100 percent by 2040. This is for electricity only.
One of the key differences between the northern cousins and Hawaii is that Scotland and Denmark are fully embracing community energy schemes, whilst Hawaii still seems to seeing utility scale as a solution.
For the hydrogen, and fuel cell, industry, these nations, and State, should be prime targets for roll out of electrolysers and hydrogen storage systems. But so far, outside of the odd heavily funded demonstration project, these first movers into the arena of 100% renewables are too quiet and often overlooked in favour of other regions.
Heat Joins Water as a Driver for Fuel Cells
Back in November, 2014, I blogged how water was going to become a driver for the adoption of fuel cell technology. In January I predicted that one of the hot topics in 2015 would be heat and now, in March, it is clear that heat will become a major driver for the adoption of fuel cell technology in a number of countries. Like water, this is not a global one size fits all, driver, but will have different nuances in different countries and regions.
Countries like Scotland and Denmark, which already have a written in stone renewable heat targets, should see more of our Nordic cousins joining them, as well as the UK government, in Westminster, and possibly even at EU level, in the not so distant future.
In cities heat islanding is becoming such a clear concern that in the medium term the issue of heat dumping, where we don’t capture and use waste heat, will become a real political, and policy, pressure point.
Both of these highlight that the CHP capability of fuel cell technology, which has been massively underplayed too date, will a real defining point for the technology. Whilst there is clearly still major gains to be made in market share for prime power movers, such as Bloom, companies such as Doosan, and GE (once they get to market), as well as FuelCell Energy will be on the front line of shipping large fuel cell CHP units.
As to the residential sector, it has a long, long, way to go, and it is going to be a hard sell, on ground level. But the political compass is starting to shift.
Game Changing is Not for Fuel Cell Dreamers
Last week once again proved the fuel cell industry is still going through growing pains.
On the upside:
Intelligent Energy bought the fuel cell and hydrogen cartridge assets from BIC and announced UPP2 for the second half of 2015;
myFC launched the much improved gen two of its portable fuel cells, the gorgeous “Jaq”;
Nedstack came back from the brink with a 2 MW PEM fuel cell power plant order from China;
Ballard announced it was working on portable fuel cell with Ardica and
The Mirai FCV went into production
But this was also the week that, sadly as predicted, Ceramic Fuel Cells went into liquidation. Apart from Nedstack, the difference between CFCL and Intelligent Energy, myFC and Ballard is that these second set of companies are not going after one huge entrenched industry. They are going into multiple, smaller markets and focusing on short term revenue and long term expansion. The short term is as important as the long term.
CFCL, which was going after the residential sector, has proved, sadly yet again, that if you are focusing on the “game changing” option for an embedded market you are going to need very, very deep pockets, probably be part of a large corporation with a long term mission and vision, and be working in a country with a long term stable financial package to help you. In other words if you are a pure play, small fuel cell company, focusing on the residential market in Europe, no matter how much money you manage to get out of the FCH JU you are likely to struggle.
Why Tomorrow Will Probably Look Like Today
This time tomorrow BP will be doing a live webcast* on its long term projections for energy demand.
As an analyst and forecaster of technological change, one of my mantra’s is that unless there is a fundamental reason otherwise then tomorrow will look like today. We won’t be using Jetson style vehicles, we won’t be living under the sea** and by 2035 there won’t be a hydrogen economy.
We are likely to see less private vehicle ownership in Europe and America as Generation Light reacts against car ownership the same way they have reacted against ownership of CDs, DVDs etc, and we will see more renewables. But the energy revolution is far from over.
Many moons ago I wrote a paper on the “eine hundert jahre aufgabe”, a notion the German nation has of a 100 year undertaking. And in terms of switching from one form of energy to another it works. It will take generations to accomplish. So tomorrow when BP talks about tomorrow looking like today, don’t be disheartened. It is steps along the way.
**but wouldn’t that be amazing.
Bridging The Chasm Between University Based Fuel Cell & Hydrogen R&D and Industry
With over $10 billion been spent on fuel cell and hydrogen R&D since 1980 why is there still less than 400 companies globally?
One part of this is because universities, the recipients of a lot of this funding, are brilliant at R&D and not so good at commercialising product.
Outside of the US, and especially in Europe, linking the university R&D sector and the commercial sector is somewhat abysmal. In Europe we have a long successful history of university R&D and often companies have a preferred university for commercial R&D but these teams often also generate their own IP. Under the EU’s FP7, and now Horizon 2020, fuel cell and hydrogen R&D success metrics don’t even include the number of start-ups created.
Last week I was given a tour of a university team’s labs. Along the way the Professor opened a drawer and pulled out what turned to be a high density micro stack. Packaged and ready. When I asked what they were going to do with it, he just dropped it back in the draw and said they had no time or ability to take it to market. I was somewhat speechless*. Noodling over this again and again since I cannot help but see it from his side**. University teams are set up to be good at delivering on what is required by the academic system, and they are not measured by commercial metrics. So where is the push or incentive to set up companies, find VC investment, managers etc.? Nowhere.
After a couple of jet lagged nights I cannot help but think that in the EU, with all the money that Horizon 2020 has, and the management by the FCH JU, that we need to change this. We need to be including as standard, commercial metrics of success. Not asking the university teams themselves to change their focus, but to set up of network of posts across the 28 member states, working to bring to market university generated IP. In the UK, for example, 2 full time posts could be set up with the remit to catalogue what the universities have, and create a number of small companies based on the most promising of these. By doing so bringing more entrepreneurs and tapping into the start-up funding available, and working with the universities to educate the undergrads and researchers in bridging and closing the knowledge gap. Some universities are ahead of the curve on this but there is no specific fuel cell and hydrogen facilitator for the academic sector. Two people in the UK is not expensive. And to this the value add that they would help push the fuel cell and hydrogen sectors along the innovation and adoption curve much quicker, then to me this is a no brainer.
*first time for everything!
** another first.
Has Investment in the Fuel Cell and Hydrogen Sectors Returned?
With Bloom Energy going after a further $160 million in investment and Powercell and Borit recently closing successful investment rounds the question has to be asked if investment is starting to come back into the fuel cell and hydrogen sectors.
According to data from Cleantech.com 2014 saw over $100 million VC and equity investment in the fuel cell and hydrogen Sectors. Add to this listings such as Intelligent Energy ($94 million), myFC ($40 million), McPhy Energy (estimated at over $40 million) and Powercell ($14 million), then it could be said that 2014 was a successful year.
When this is compared though with Bloomberg New Energy Finance number of the overall investment in the clean tech energy sector of $310 billion, then you can see that $160 million is peanuts.
With Bloom closing on $160 million in Q1 of 2015 we can say with some confidence that 2015 will see an increase in investment but there is still some way to go.
The One Gigawatt of Fuel Cells Has Been Shipped
The fuel cell industry, quietly, and without most folks even realising this, has passed the 1GW shipped mark.
Records starting in 1990 show that it took 13 years for the first 100 MWs to be shipped and then another 11 for another 900 MWs
Is this cause for celebration? No. We are not yet over the Valley of Death. That is on the next bend in the road.
What Does Toyota, Lego and the Fuel Cell Industry Have in Common?
I know, I know. It’s Monday and am sure anyone reading that will wonder if it isn’t in fact a trick question. And to be honest it kind of is, as the answer is nothing. Yet!
Like millions of others I spent hundreds and hundreds of hours when I was younger building things in Lego. Castles, space stations, my favourite moon base and an early attempt at the Millennium Falcon. No one had to tell me that the building blocks were the same sizes and shapes. That they were standardised, leaving my imagination to work on the rocket to the moon.
Toyota build cars*. They also build million, upon millions of standardised engines which they use in many different product lines.
The fuel cell industry? The fuel cell industry is bespoke. Almost everything in the stack and system is built to order. To date there are so very few standardised bits and pieces that I could write them in a short, dull to read, list. And like anything that is bespoke, it is expensive.
But this is changing. Car companies are teaming up together to work on a common drivetrain, or at least chunks of the drivetrain, and now Toyota has gone one step further and opened up their patent book. With much talk being made of the free royalties, at least until 2020 for the stack patents, and the potential implications of signing a contract with Toyota, there is a lot of missing the bigger picture.
Toyota, which has invested tens of billions of dollars, pounds or euros, to create these patents are now saying, here come play. Come play with us. Let’s build something. Let’s build our own new moon base, because together we could create a standardised building block, which will be cheap, and everyone can have one to play with.
So maybe, just maybe within the decade Toyota, Lego and the Fuel Cell Industry will have one thing in common – standardised building blocks!
*just in case you hadn’t noticed!
Does eZelleron’s Success on Kickstarter Show a Public Appetite for Fuel Cells?
In under one week Germany company eZelleron has raised over half a million dollars on crowd sourcing giant Kickstarter.
At the time of writing this blog there is still 52 days to go, so it will be interesting to see how far this bar will be raised. The so called “rewards! for the “Kraftwerk” portable fuel cell system ranges from a big thank you, right up to a distributor package.
According to the blurb on the Kickstarter page the finance will be used to move the product from prototyping to production. With no product due for shipment until the end of 2015 there is clearly some risk for backers, but with the number of backers already topping 4,000 this is a risk people are clearly happy to take.
Whilst they are not the first fuel cell company to go the crowd souring route, Neah Power used Indiegogo in 2014, but only reached 11% of its target, it is the first to tap to post such an overwhelming success.
Using Kickstarter is clearly a clever move for the company, as it cuts out of the middle finance man, going straight to the customers and being upfront about price, shipping time etc.
What does this mean about us, the consumers?
For one, they are a switched on bunch. Just flick through some of the comments and it is clear that they aren’t backing the project due to some misplaced fealty to a technology, or being swayed by the pretty colours. There are some good questions in there.
Secondly, there is an appetite for a product that larger companies would swat away as unneeded, or too niche to work on. myFC, Intelligent Energy and Horizon have already proven this assumption wrong, with combined shipments in the many tens of thousands annually. But this is the first time we have been able to see in advance of product launch.
Thirdly, consumers are picky. After all the Neah Power campaign wasn’t a success. So don’t take it for granted that the consumers are there.
Now what would help this market? How about a company like BIC coming in with global distribution of fuel cartridges….. If we could get a systematic approach on the fuel side then I suspect we would see these pioneer companies move forward even faster.
For a full disclaimer I am one of the backers of this project. As I already have pre-purchased a Neah Power system, and I already have a myFC system and a Horizon system I do not see any conflict of interest in backing this project.
Is Ballard & Azure Hydrogen Parting Ways a Red Flag for the Chinese Fuel Cell Market?
Last week Ballard Power announced the ended of (some of) its relationship with Chinese firm Azure Hydrogen.
First announced in Q1 2013 the original agreement was announced as:
Azure acquired a 10% ownership position in Dantherm Power, Ballard’s telecom backup power subsidiary, for $2 million;
Licensing by Ballard to Azure to allow the assembly of the telecoms backup power module in China, for the Chinese market.
Azure placed an order with Ballard for a 175 kilowatt ClearGen distributed generation system that it plans to deploy in China; and a
Non-Binding MOU With Azure Hydrogen For Fuel Cell Bus Development
This was followed in September 2013 by multi-year definitive agreements to support Azure Hydrogen’s zero emission fuel cell bus program for the China market. As part of this Ballard agreed to provide a license, associated equipment and Engineering Services to enable assembly of it’s FCvelocity bus power modules by Azure in China. As per the agreements, once this assembly capability was established, Azure would assemble modules with fuel cell stacks to be supplied exclusively by Ballard.
At the time of signing the expected value of the contract to Ballard over the initial 12-months of the first phase was approximately $11 million.
Now, in January 2015, some 5 quarters later, Ballard announced that it has given termination notice on the two licensing agreements in the China market as a result of material breaches of these agreements by Azure Hydrogen. These are for the bus module and the telecoms backup power module. This termination does not impact the financial stake in Dantherm Power or the deployment of the ClearGen system.
Whilst it would be very easy to say that this is yet another example of how hard it is for non Chinese fuel cell companies to operate in China, the reality is “material breaches”, the reason given, can occur between any two sets of partner companies. China remains, on paper at least, a very attractive market for, especially for fuel cell backup power companies, and increasingly for fuel cell CHP and prime power generation companies.
But as Ballard has just proven, you can have all your ducks in a row, you can be financially sound* and have your company head screwed on the right way round, not have all your business plans focused on one market and still come unstuck.
Fundamentally China is a long term market play. Yes it is exciting and yes the pot of gold at the end of the rainbow could be huge. But the risks are also high. Any fuel cell or hydrogen company that is forecasting a significant revenue stream from the Chinese market could well heed the Ballard experience and in 2015 look to other geographies as Plan A, and a new bit!
*as sound as any fuel cell company can be!
Key Words for the Fuel Cell Sector in 2015
4. Renewable Energy
5. Energy Efficiency
7. Energy Storage
HAPPY NEW NEAR from Kerry-Ann @ 4th Energy Wave.
12 Hydrogen Predictions for 2015
More companies will enter the electrolysis sector than mothball or sell off their development;
Increase in interest, and investment and funding, into other hydrogen production methods;
Focus will increase on linking up the early hydrogen refuelling stations into more of a co-ordinated “map”. Especially the Denmark – Germany and California – Vancouver corridors;
The UK DECC development of a green hydrogen standard (kgCO2 per kWh) will generate significant global interest;
Focus on developing verifiable updateable costs of hydrogen production from different fuel sources;
Bifurcation between Europe and the US will become clearer; with Europe focusing on renewable hydrogen and the US focusing on hydrogen from natural gas;
Private investment in hydrogen production companies will remain patchy;
Propane as a source for hydrogen will become increasingly called for;
Cost of hydrogen turnkey hydrogen refuelling stations will post a genuine decrease, as designs start the process of standardisation;
Hydrogen for use in the marine sector, including at ports, will see a return of interest. Core focus area is Japan and China, though California will also post an interest;
Energy storage projects will see orders top 40 MWs in 2015
PEM electrolysers will increasingly take the lead in deployments.
The full version of these and next week’s predictions will be published in the January edition of Fuel Cell Monthly.
12 Fuel Cell Predictions for 2015
Investment in the sector will jump from utilities, corporate investors, crown investment funds, and quasi-government investment vehicles. The VC sector will remain cautious;
A number of medium sized stationary fuel cell companies will declare bankruptcy in the first half of 2015;
Government focus will increasingly be on whole chain value creation;
Emissions and emission reduction potential will join water as the buzz words for 2015;
We will see a jump in the level of professional marketing of fuel cells as more and more agencies are contracted to work with companies;
MWs deployed will grow, but the step change will not occur to 2016 – 2017;
A new prototype laptop with integrated fuel cells will be shown;
R&D funding from governments will decrease as deployment funding increases;
Cost of PEM could see a 10% drop as companies with innovations start to manufacture;
Trade relationships between nations become stronger and we will see the announcement of a number of high value uni-lateral JVs;
The residential sector will continue to grow in Japan and South Korea but stumble elsewhere;
A small handful of fuel cell companies will buy the IP of a number of smaller players, starting to create an interesting dynamic between the players.
The full version of these and next week’s predictions will be published in the January edition of Fuel Cell Monthly.
Will the New EON be A Stronger Partner for Fuel Cells and Hydrogen? Probably!
At the weekend European utility giant EON announced a fundamental shake up of its business. It will be splitting into two, with the fossil and nuclear being parcelled into one company and the renewables, and assumingly any energy storage and fuel cell activity, into another.
As part of the breakup, Australian giant Macquarie has already paid 2.5 billion euros ($ 3.11 billion) for the Eon fossil and nuclear assets in Spain and Portugal.
Whilst this statement of intent on moving into the new energy world might be odds with the announcement on the 28th November that Enerbridge has paid $850M for 80% majority stake in two US EON controlled wind farms, it is clear that the company is going through a root and branch overhaul.
Splitting into two legally separate companies reduces risk of the fossil fuel portfolio, an issue that the Bank of England is starting to look into, and should allow the new EON renewable company to take a more integrated approach to energy investment. Don’t forget that EON already has made a 100 million Euro (US$125M) strategic investment in Bloom Energy and the purchase of a Hydrogenics 1 MW PEM electrolyser for future energy storage project in Hamburg (Germany).
What can we expect to see from the new EON renewables group post the 2016 divorce date? I would forecast that we will see a ramp up in investment in integrated technology solutions. Not just solar and wind farms, but wind + energy storage + fuel cells. To do this though they could well need to invest into a number of technology companies, pushing them to mass manufacturing and higher roll out. The new EON won’t be a cash cow for the fuel cell and hydrogen sector but they are likely to be a much more active player.
Made In. The Non Hyped Up, Real Next Big Thing in the Fuel Cell and Hydrogen Sectors
Last week buried deep in the many virtually identikit news headlines about fuel cell cars was a small press release, which touched on a trend that is going to be one of the core development areas over the next decade. The “Made In” trend.
The press release talked a locally made fuel cell generator from the University of the Western Cape, in South Africa. Not going to change the world, no photos of cars and no overnight game changing potential so overlooked by most. Mistake.
Both the fuel cell and hydrogen sectors are growing, we know that much. We also know that too date manufacturing has been in batches, and fairly centralised, with countries, or parts of countries, often offering large financial sweeteners to companies to manufacture there. Setting aside the political considerations of potential cronyism, what this has done has created pockets of manufacturing, often in very different location from the majority of the adoption. So in the US manufacturing is strong on the East coast, whilst adoption is on the West. In broad brush terms.
Recently though I have seen the start of a trend which I forecast will become the norm over the next decade. The need to understand what is made where, and where the local value add is. “Made In” will not just become a badge of honour, but likely be a requirement for funding.
So going back to the Uni. of Western Cape announcement what they are saying is that there is the potential for a locally made product for the home market. With the return this week of load shedding by Eskom, and the related blackouts a locally made fuel cell generator could be a very attractive proposition in the not too distant future.
Water, the New Driver for Adoption of Fuel Cells and Hydrogen
At the end of last week’s Fuel Cell Seminar it was clear that two new trends are starting to emerging in the fuel cell and hydrogen sectors.
Water and jobs.
Paraphrasing Kent McCord, from Doosan Fuel Cell America, the energy sector in the US is second only to agriculture in terms of its fresh water use. To put some numbers on this, according to a recent report from the IEA, the global energy sector already accounts for about 15% of the world’s total water use. Or to be even more shocking, in 2010 the IEA estimated that energy production consumed 583 billion cubic metres (bcm) of fresh water. 66 bcm were not returned in the process. This is the equivalent to just over 233 million Olympic sized swimming pools.
For the fuel cell and hydrogen sectors though the use of, or in actual fact, the reduced use of, water has been significantly underplayed and undervalued until now. Coming up with an easy to understand lexicon of water savings is probably part of it. The reason I quoted swimming pool size above is that that was the metric Kent used, and to me it made sense.
If we can quantify how much water would not be used for transitioning to increased use of fuel cells and electrolytic hydrogen, and start quoting this as standard beside reduction in emissions, then policy makers and adopters are given another tool to quantify the benefit of using these systems.
To be honest though with water becoming an increasingly hot topic in many areas, maybe therefore it is surprising that this the first time I have heard it so clearly applied to the fuel cell and hydrogen sectors.
Dear Fuel Cell Industry, I Want a Divorce. It isn’t Me, it Really is You!
Hydrogen. For a long time the growth of the any market for not industrial hydrogen was completely slaved to the growth of the fuel cell sector. How much would be needed was dependant on how many hydrogen fuelled fuel cell units were deployed. Because of this we saw trade associations merge to become fuel cells and hydrogen association and we started to see talk of “hydrogen cars”. Now though the hydrogen industry is needed not just for fuel cells but for the increasingly energetic energy storage market.
With hindsight the electrolytic hydrogen market is crystal clear. We know that in Europe we will have increased deployment of renewable energy, reaching a minimum of 27% of EU total energy consumption, by 2030. To get there though some form of grid balancing will be a market necessity.
In the UK, for example, it was reported that in 2013, £32 million (~$50 million) was paid to wind farmers to load shed and not put power into the creaking grid. For reference this payment was up from £6 million (~$9.5 million) in 2012 and £174,000 (~$275,000) in 2011. The increase in payments is due to the substantial uptake of wind power over this period and increase grid constraint. Although we do not have the same level of information for other countries in Europe the trend is clear. Unless something is done then the more constrained renewable energy will be produced, and the higher these payments for inefficient use of renewable energy will increase.
Enter energy storage and power-to-gas, or power-to-energy or even power-to-fuel. The electrolytic production of hydrogen from excess renewables. In Germany, for example, the power-to-gas market has already deployed tens of MWs of projects, something that took the global fuel cell sector many years to achieve. And we are expected to see projects in many other European countries, notably France and possibly the UK, soon and I would forecast an announcement from China and California in the not too distant future as well. With all this market movement in the production of hydrogen, and countries such as Japan making big plans for the development of a hydrogen based economy then having the sector so closely aligned with the fuel cell industry might actually now be doing it a disservice.
Going forward the two sectors will remain cousins but I would suggest that now is the time for the two sectors to have their own voice and their own futures mapped out.
Profitable Fuel Cell Company Coming to a Reality Near You…
Profit Now on the Horizon for Fuel Cell Companies.
So it’s official. The race is on. The race to the first fuel cell stack or system company profitable over a financial year.
Odd, rare word to use for the sector, so let’s try it again.
Yes, quite nice, isn’t it?!
But, what is surprising to many is that we are facing a brave new world. We have a basket of companies which are close to profit in the short term, 12 months say, a second tranche looking at this as 2 -3 year project and yet another who, with a following wind, could get there within say 5 – 6 years. What is important about these numbers is that they are all with the standard investment cycle of the private equity markets.
So as well as soon have a profitable fuel cell company, we now have upwards of 15 companies which could, with all things being equal, and should be profitable within the requirements of the VC world. Oh, how the world has changed!
Focusing down on who will be past the post first, and remember that I have no investments in any company, and am a completely neutral party, to me it is clearly between FuelCell Energy, Ballard Power, Intelligent Energy, Bloom Energy, SFC and Plug Power.
Aside from a real product on the market place these companies have some clear points in common:
Long term cost out programme. None of these companies have made the “one” breakthrough that will enable a cheap product, and all have some way to go with cost out. But they have been working on this issue for a long time and have focused money and brain power into it. Too many companies are focusing on finding the one thing that will take cost out – platinum anyone – and not on the long slog that is the actual product development cycle.
Stable management structure. It is easy to underestimate the value of a good team at the top, who are committed for the long haul. If these guys didn’t believe in the value prop of their companies it would have shown, and they would have jumped ship. (But guys, it is really, really not on that it is all guys.)
Moving along the value proposition chain. It is clear that a number of companies are focused on just one market and not deviating left, right or centre. Sometimes this might work but not when we are trying to change the world. Companies which are working out how to remove the barriers along the way are thriving. Take Plug Power, for example. Adopters were not having the easiest time getting the hydrogen, so Plug sets up a system to get them the fuel. Oh, and look, Plug now has a second, potentially very lucrative revenue stream, hydrogen!
None of these companies are focusing on changing the world. At some level we are *all* in this because we are scared stupid for the next generation. But we know that to ensure that our species doesn’t go lemming like off a cliff we need to focus on the here and now. To do this we need to get better, more efficient, cleaner, and financially sound products out there. FuelCell Energy sell power plants, not carbon reduction schemes. SFC sell being able to monitor a well head safely from thousands of miles away, not fuel cells. Intelligent Energy sell, amongst other things, gorgeous looking bikes, not a cool PEM stack.
Put these things together and these companies are at the vanguard of what more and more of the sector will look like within five years.
What will happen when we get a profitable company is that it is likely to start the thaw of the, understandable, distrust and disdain from the private equity world. At the minute access to capital is hobbling a number of companies. Although we have a clear increase in cash flowing into the sector from the corporate equity world we need the private world to come back in, bringing with the stricture of focusing on product and profit and pushing companies out their comfort zone quicker.
But who will be first to profit?
Of all the companies Ballard is probably the least likely. A new CEO is on the horizon and new CEOs tend to like to make their mark at the start. Either buying a new asset or divesting one, or some such shift in focus. If the Ballard new boss fits this picture, and we have already have the revenue projection downgraded, than Ballard is the least likely. As to Bloom; because they are not listed we cannot unpack their financials to a level that folks like me would like. We can glean data from what is said in public but that is all. So assessing their time to profitability is dicey and putting them at the head of the pack is unlikely. So that leaves Plug Power, SFC, Intelligent Energy and FuelCell Energy. And of those my analysis shows that it is likely to be……….. .
China and the EU Add to Fuel Cells and Hydrogen Adoption Drivers
Last week was a corking week for emerging energy technology policy watchers. The EU voted for 40% carbon reduction by 2030, including binding energy efficiency and renewable energy targets, and China announced plans to attract more private investment in key sectors including energy and telecoms.
In anyone’s model of adoption of emerging technologies these should be socking great levers. They represent hefty opportunities for both fuel cells and hydrogen, in the short, medium and long term. Not only are they providing new rules of the game but they are both long term policy actions that investors like to see. Although this is not the right forum for a full discussion on how the technology markets will react there is some points that can be predicted:
Surge in increase in interest in linking renewable energy to hydrogen for energy storage. Both in Europe and China.
First large scale demo project of power-to-gas announced in China within a year.
Renewed push for the fuel cell sector into the telecoms sector. Though I maintain that this is a long term market and will cause significant attrition in the fuel cell sector.
In the short to medium term increase in large scale stationary fuel cell installations. If and only if other companies understand the importance of this EU action. Bloom, Doosan, Hydrogenics, Fuji, FuelCell Energy, and others, really need to take note of this.
Increase in JVs with Chinese companies to demonstrate stationary fuel cells in China.
When these policy movements are coupled with the “resilience” driver in North America, and the basic need for more power across Africa, then drivers for adoption of both fuel cells and hydrogen have never been at such a high. It is therefore, now more than ever, beholden on the fuel cell and hydrogen sectors to take this opportunity and go to market with a realistic offering and a good, sustainable business strategy. If they don’t then this is not just a missed opportunity, but possibly the last great opportunity that it will have.
Detailed analysis of these policies from the EU, and China, and the potential opportunities they represent for fuel cell and hydrogen companies will be in the November edition of Fuel Cell Monthly. More information on this monthly report can be found at: http://www.4thenergywave.co.uk/fuel-cell-monthly/
The Heritage Sector, a Minimum Winning Game Market for the Fuel Cell & Hydrogen Industry
This is late being posted as yesterday I was looking at a castle. A castle to live in*, being rented out by a large heritage agency in the UK. I know that too many that sounds decadent but in the UK we have many, many such buildings of all shapes and sizes. Over 3,000 castles alone, including, where I am from in Cumbria, lots of pocket sized ones.
The point of this ramblings is not to act as a UK Tourist Board infommerical** but because to me the overall heritage sector is facing a number of problems, which fuel cell technology and hydrogen fuel can help address. And because of this is an obvious MWG for our industries.
As covered in the Fuel Cell Annual Review, the minimum winning game theory is defined as “defining the first major market opportunity that is limited enough to provide a clear target for technology and product development efforts in the short-to-medium term, and sufficiently large that successfully pursing it provides a foundation for long term corporate development”.
In other words, a bounded market that the technology, in its first generation, can be sold into, raising revenue which can then be used to further refine the product and move the company into a second, larger/more profitable market. It should be emphasised that this first market is not to test the technology, but the first market it is sold into once a system is ready for the first market.
Going back to the Heritage sector, and take just one organisation. The National Trust in the UK. Across England, Wales and North Ireland (there is a separate body for Scotland) it has ownership of 300 buildings, including 59 entire villages, 49 churches, 9 monasteries and 61 pubs and inns. It also has strong sustainability policies in energy, building, transport and conservation. In short it needs good, clean, low or zero carbon fuel, heating, electricity which is secure and sustainability sourced. For everything from vehicles such land trains, small buses and boats, and all types of buildings, including the requisite tea rooms!
But as an organisation on its own its demand is limited, or in other words bounded. It isn’t enough to provide growth for a company for the next 10 years but it is enough of a market to enable to good end-to-end company to get a large well known customer on side, start to deploy, bring in much needed revenue, and generate some fantastic marketing and PR.
If companies are serious are growing and hitting revenue and profit targets, then thinking outside the traditional boxes and starting to look at opportunities such as the heritage sector is now more critical than ever. Talk to them, drink tea with them and take away their problems. There really is a opportunity that is waiting to be grabbed.
*no butler included – damn it!
** but the UK is gorgeous, friendly and easy to travel around……
Why the Fuel Cell Industry Needs a Champion Now, More than Ever
Writing the forward looking Fuel Cell Annual Review 2013 – 2023* I caught myself thinking “maybe I need to set up the model to include all the potential products in the mix”. In other words, fake it. But then if I did that I would be as bad as some analysts houses I could mention (but won’t). The reason why I thought this is that the model numbers are crap. Sorry to not pull any punches but they are really crap. I showed that at a conference and was asked why I was so pessimistic about the sector. ME! Pessimistic!! And yes that does deserve a double exclamation mark. Bloody hell, I thought it would be a cold day in hell before I was told I was being pessimistic about the fuel cell sector.
After leaving the conference this kept swirling round in my head but it turned into, what does the industry need so that next year when I update the data the numbers aren’t so bad. I started scribbling a list of everything that needed to happen and most of this was nitty gritty in the weeds stuff. Not big glamourous problems that a spot of multi billion dollar marketing could help with.
But one thing was on the list that really stood out. We need a champion. We need a rolex wearing, uber confident, Chanel suit carrying, erudite, smart, champion. Gender – frankly I don’t give a damn. Someone who will go out and represent the entire sector. Not just the cars, not just the units with or without platinum in, not just the one made in the US, or China or Germany. But the whole schebang. Get fuel cells into the lexicon, the thought process of influences, provide a sounding board for the investment community, for governments and for everyone else who we badly need to educate and to have turned onto the idea of what this sector could represent.
To date each company is trying to do this themselves and with little or no revenue, this is sometimes financial suicide. And they can only really promote their own niche, their own product, so this leads to mixed or contradictory messaging. The trade associations, as much as some of them are doing a really good job, are there to promote their members and each has their own agenda. We need someone who is technology and country neutral. An advocate but not an apostle.
And then maybe, just maybe, my realistic forecast for the sector wouldn’t be seen as pessimistic.
*Now out and a snip at £300. Order from http://www.4thenergywave.co.uk/annual-review/
Is Consolidation of the Fuel Cell Sector a Good Thing?
18 months, maybe a year ago, I would have said that consolidation of the fuel cell sector was a necessary evil. Growing pains, but not something to be cheered on. And to make it work we needed a raft of companies from SMEs to large corporates, and we needed as many as we could get.
Today though my opinion is very different. Not only is consolidation happening but it is necessary to make this sector work. There are a raft of companies sitting happily in R&D mode, or who are actually just smoke and mirrors, with no intention of doing anything of use to anyone. Unless they find a rich backer, and then of course they will spring into profit. Right!
Countries with the best intentions are supporting entrepreneurship, which are creating start-up’s left, right and centre. But these start-ups are so comfortable being just that, a start-up, that actually getting them to market is going to be nigh on impossible.
Now though with an increasing order book, a handful of companies threatening profitability this year, and more and more consumers becoming aware of the fuel cells we need companies to put up, or shut up.
Consolidation gives us that. Doing some beer mat math I would say that we need a minimum of 10 – 15 strong companies to make this work. That is stack and system. So including the full supply chain this at least doubles. And, again, using beer mat math, alongside the far more rigorous analysis I actually do in my reports, I forecast that between 2022 – 2025 we could well see a situation were 10, maybe 13, stack and systems companies, globally, supply GWs of power to the stationary, transport and portable sector. These companies will then become what the start-ups are looking to sell into, not become.
What will these companies look like? They will exhibit at least the following characteristics:
Stable headcount. Headcount grows over time, but there is no boom or bust;
Large volume manufacturing, or uses contract manufacturing, either of which shows a clear cost out path;
Standard products available;
Very low government funding;
R&D clearly focused on product improvement and new product creation;
Stable finance and profitability;
Global footprint through strong distributors
Solution providers, not fuel cell companies;
The rest of the industry…… bit players. Brutal but my honest opinion.
With Topsoe Fuel Cell Bowing Out What Next for SOFC?
The announcement last week that Topsoe was putting it daughter company Topsoe Fuel Cell on ice was a surprise. Asking around it wasn’t just me that was somewhat flat footed by the announcement. Topsoe Fuel Cell had been on the companies that didn’t play the marketing equates to news game, had manufacturing capability, and shock horror, even had customers.
Instead of providing a post mortem on the company it is more interesting to look at this from a SOFC market perspective. Topsoe FC is certainly not the only SOFC company that has gone through hard time. Ceres Power was a knats whiskers from going bankrupt not so long ago. Due to the feedback from the SOFC developers the heavily funded American SECA programme has had to rejig its targets a number of times, Lilliputian Systems has recently, officially, been declared bankrupt, Acumentrics haven’t lived up to their early promise, and Siemens pulled out of the market some time ago.
So what is so hard for SOFC companies? Probably one of the biggest hurdles is lack of standardisation. There are more varieties, sizes and flavours of SOFC than any other fuel cell type. Learnings in the tubular micro SOFC end of the scale are not transferable to the MW planar type. Manufacturing is not standard and how to manufacture is still being worked out. Sometimes from scratch. R&D is great, but taking the product to market is clearly a challenge that is being vastly under estimated.
There are success stories, and I am sure everyone reading this will be saying “but what about Bloom”. Yes they are working, and they are shipping. AMI (now sold to Ultra Electronics) could also a success story, developing military grade SOFC systems. But the unit is now classed as a development activity. Also Ceramic Fuel Cells are shipping systems and, seem at least, to have cracked the manufacturing nut.
Overall then whilst there is clearly a lot to done, in terms of creating a stable SOFC industry, the announcement from Topsoe is not a death knell.
If someone with a background in high-tech manufacturing would start to produce a standard high volume, high quality SOFC in key sizes then I can see a long list of potential customers coming forward.
Solid Oxide Fuel Cells, down but not out.
The 4th Energy Wave Revolution – Why it is Happening From the Ground Up.
A 2013 PWC “Utility of the Future Survey” (1) reported that in the US 94% of utilities predicted complete transformation of their core business model due to distributed generation. The only surprise in this result is that it wasn’t 100%.
Distributed generation, in all of its types, sizes and variations, is the foundation of the 4th Energy Wave. It represents a movement to a living breathing, resilient energy network. But the incredible, challenging and genuinely exciting about this is that this (r)evolution is happening from the ground up.
Fuel cell communities are starting to spring up around the world and these so far few are just the first wave in what will be a tsunami over the next 20 years. People who, banded together in small groups, take control over their energy future. So far island and isolated communities are the first adopters, understandably, as many of them already live off grid, or pay so much for energy that they are statistically classed as living in fuel poverty.
Over the next few years expect to see bigger islands, more communities and more groups of people band together, and take control. And that is why utilities see their core business model start to evaporate before their eyes.
It’s Not Just About the Fuel Cell Cars, Pretty Though They Are
So the new Toyota fuel cell vehicle is going to be called “Mirai”. Nice. I agree with giving cars names. My car is called Matilda. No reason, except to me. But that’s not the point. When reams of press releases excitedly report the name of a car, yes I know it’s a fuel cell car, but c’mon it is still a car, then the rest of the sector has to take a back seat.
But the fuel cell sector really is about much more than cars. And in the next decade we are going to see some currently very niche markets come centre stage. Although they won’t get anything like the press coverage that Mirai and her sisters will get they are certainly going to be important in terms of revenue, entrance of new companies, and tying together traditional markets with the fuel cell sectors. Here are just 5 that I see going stellar over the next decade:
- Anything to do with the marine sector. It’s huge. It’s dirty and there are some very rich people in it. Recipe for new technologies and fuel cells really do fit into this sector in so many ways.
- Remote sensing. Teeny tiny systems to tens of kilowatts systems, for everything from monitoring of wildlife to gas and oil well heads. This could well be the chance for the fuel cell sector to make friends with the oil industry.
- Remote microgrids. Working with everything available, including solar, diesel, batteries, these joined up thinking projects will make serious strides forward over the next decade.
- Off grid homes. Everything from earth ships in California to eco lodges in Kenya to converted lighthouses in Scotland this is a market just ripe for the taking.
- UUVs. Huge growth industry. Has a problem with range. Queue fuel cells.
What makes me so sure? For that you will just need to wait until the Fuel Cell Review is out.
Why “Game Changer” Means You Don’t Know your Fuel Cell from your Money Pit
Another day, another fuel cell or hydrogen start up telling me confidently that they have a “game changer”.
Or to put it another way
Another day, another start up with pre series A funding who thinks they are going to change the world and make millions, but will probably struggle along, and if really good make it to market within 5 years, sell a couple of thousand systems over the next 5 years and have at least 2 total changes of management along the way.
The “game” we are all involved in is decades long and no one widget will suddenly change it. If you think your widget can change this you are either over optimistic or looking for a rich backer who is excited about cleantech.
Even if fuel cells became 60% cheaper overnight, and somehow mythically increased their longevity in the process, you still would not all of a sudden sell millions. You are still facing the standard turn over rates of whatever product area you are selling into. For example the average UK home replaces their boiler every 7 years. If you want to install a fuel cell resCHP in a British home the homeowner is unlikely to rip out a perfectly serviceable boiler in a much shorter period, even if the fuel cell option is cheaper. In the car industry only a very small percentage of people replace their cars every couple of years. Cheaper product means that when the customer comes to replace what-ever-it-is it is more likely to be a fuel cell (if we can sort out much better marketing for the sector, but that’s another issue). That’s all.
We also have to face up to the fact that there are simply not enough companies selling products for adopters to buy. Five hundred companies right up and down the global fuel cell supply chain and so far less than 12% of these selling systems. It will take time for these companies to expand. Those that are not fully commercial moving into the high volume, high quality manufacturing phase. Those that are manufacturing still have oodles of room to grow.
The bottom line is that for the next couple of decades, and probably till I retire, the game will be incremental. I welcome any company who wants to work in the fuel cell or hydrogen sectors with open arms. But don’t come to me telling me you are going to change the game. It just tells me you don’t understand the challenges we are facing.
Kerry-Ann, 21st July 2014
The 1 Millionth US Residential Fuel Cell is Switched On
Today’s date is 16th June, 2027 and we are at the official switch on ceremony from the 1 millionth home in the US to have an installed fuel cell. Situated in leafy upper New York State the 3kW system works in tandem with the homes solar panels, keeping the home powered as well as pumping excess onto the grid. The New York State Governor is at the ribbon cutting were she is praising the forward looking policies implemented in 2014 and 2015.
Although there are now over a million homes in the US now partly, or fully, powered by fuel cells globally the installed base now tips over 4 million homes, equating to an installed capacity of over 7 GWs.
Looking back at 2014 it is now easy to see why this very sharp adoption rate in the US was possible. With increased grid instability and utility after utility moving towards an increased role as an aggregator of DG resources, it took just one more major Hurricane for average Americans to look at other options. Adoption was slow at the start as manufacturers played with best fit sizes and prices were still considered high for the average home owner. But as resilience and weatherization funding and increased tax relief was released from the Federal budget adoption really took off.
Outside of America, Japan is still leading in global adoption in the residential fuel cells with Germany, Denmark and the UK not far behind. Canada, Scotland and South Africa’s R&D teaming for development of systems for remote communities, signed way back in August 2015, is really starting to bear fruit, with adoption now taking off in many more African nations, and in remote communities as far flung as New Zealand and Russia.
But it is not just about residential fuel cells. In terms of large systems we are seeing more and more institutions, around the world, moving to decentralised power generation with fuel cells part of the mix. Working in tandem with solar, wind and natural gas, zero carbon datacentres have moved from cutting edge to mainstream and hotels, the food industry and education facilities are continuing to decarbonise. The military is one area though were original potential has yet to be realised. In-field maintenance and concerns over robustness is still holding back mass deployment.
Finally, fuel cell power plants for the grid continues to dominate in South Korea, and some States of the US, with adoption also seeing growth right around the globe.
The 5 MW fuel cell park powering the upgraded McMurdo base in Antarctica still remains the most exotic. This though is due to the surpassed in 2030 by the fuel cell to be installed at the planned moon base. Next week sees the launch of the very first joint private industry and government funded space ship, the United Nations Starship Enterprise. No bloody A, B, C or D.
Signing off from upstate New York, here in 2027.
(Back in 2014 – to sign up for the 4th Energy Wave weekly newsletter drop me a line with your email address)
10 Simple Guidelines for the Fuel Cell Industry
- STOP over promising and under delivering. Not all companies do this by a long way. But there are still companies out there who say yes first and then down the line come back and say “ooopps, no”. This is damaging all around.
- It is not about batteries or fuel cells. It is about batteries and fuel cells. Actually it is about batteries and fuel cells and solar and wind and biogas and natural gas, and, and, and. The more we can do to work with other industries the better for the overall energy sector in the long term.
- If you are not a university R&D should lead to product, not more R&D. A company should move away from living off the drip feed of government research grants into selling product.
- Customers want solutions, not technology. Only in a very, very few cases do customers invest in something because of the gadget value. For fuel cells it is all about the utility that they bring to a range of people. Bloom Energy, SFC, FuelCell Energy etc all sell solutions first and will then tell you about the technology, if you ask. If you are focused on selling the technology first then you haven’t identified the problem you are trying to solve.
- The world today is different from yesterday. The desire for resilience could change everything. The industry should be much better prepared for this.
- Which country is leading the world is the wrong question.
- Adoption = local manufacturing = jobs = growth.
- The current hoohaa over share prices is white noise.
- A small number of companies can make a robust industry. But they need to large and sustainable. The industry needs to grow in girth as well as volume.
- The investment community are critical and if you don’t engage with them they won’t engage with you.
Kerry-Ann, 9th June.