Date: Jul 13, 2009 Author: Jackie Noblett Source: bizjournals (
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The U.S. Department of Energy's recommendation to slash funding for some fuel cell development projects could be seen as a blow to the industry, but executives at local fuel cell companies are hoping the public does not paint the entire industry with the same brush.
Fuel cells, which generate electricity by forcing a fuel to undergo a chemical reaction, were at one time seen as an answer for emission-free cars. But as hybrid and electric vehicles based on lithium ion batteries have made significant technological gains, the industry suffered from the perception the technology was too costly and technologically challenging.
If the Energy Department gets its way, the budget for fuel cell research would be cut by about $101 million to $68.2 million in the 2010 fiscal year. Much of those cuts would affect projects in the transportation arena, which Energy Secretary Steven Chu has said publicly are further away from large-scale deployment. The changes would refocus funding on fuel cells for power generation and storage as well as transportation, and would not be tied to any particular fuel source such as hydrogen.
Locally, the fuel cell industry focuses on applications that are practical, cost-effective and close to large-scale commercialization. The influence of equity investment played a large role in that shift, and in turn, many players in the area believe they may be able to scoop up a larger portion of the smaller fuel cell funding pool.
"The biggest change to the fuel cell industry in the last decade was the introduction of venture capital," said Brad Bradshaw, president of the Massachusetts Hydrogen Coalition and interim CEO of Hy9 Corp., a Hopkinton maker of hydrogen purifiers for fuel cells. "With the money came a severe focus on achieving financial results and profitability."
Bradshaw said the focus on results is not a bad thing, and it has steered companies to focus on areas with greater near-term promise like distributed generation systems and uninteruptable power supplies. These areas are likely to receive greater attention from the Energy Department as officials there look to get the fastest return on investment.
"We're shovel-ready, we can solve today's energy problems," said Scott Pearson, chief executive of Southborough-based Protonex Technology Corp., which is developing portable power systems for the military. He said in the next year or two Protonex could deploy several hundred to 1,000 fuel cell systems in unmanned vehicles and other applications.
Billerica's Nuvera Fuel Cells Inc. is already benefiting from DOE funding. In April, it received a federal stimulus grant to bring 10 fuel cell-powered forklifts and hydrogen refilling stations to market. In total, the American Recovery and Reinvestment Act allocated $41.9 million for installation of 1,000 fuel cells and development of prototype fuel cell generating systems. Yet the company still plans to invest in vehicle applications for its technology, with or without DOE financial support.
"It does not change our business plans in any shape or form," said Bill Mitchell, Nuvera's vice president of marketing. "That is still part of our long-term plan."
The complexity of the government's strategy on fuel cells, supporting some applications while slashing others, has the potential to confuse the public and investors on the technology's overall potentials, industry watchers say. Some in the fuel cell world point to early failures in the automotive industry as a source of confusion.
"The whole industry took a black eye for that," said Bob Tomasetti, vice president for business development at Westwood-based Acumentrics Corp. "We have been very judicious about not putting product in the market that doesn't work."
Acumentrics received a $15.6 million energy department grant last year to further develop the company's solid-oxide fuel cells. Its executives believe its technology, which can use a range of hydrogen-rich fuels from pure hydrogen to ammonia, has a market in combined heat and power energy generation systems for commercial buildings.
Both Acumentrics and Protonex are also taking advantage of the military's interest in alternative energy as an additional source of capital. Pearson said he spends much more time with the U.S. Department of Defense working on potential contracts than with the energy department, although many of the defense projects have commercial applications.
