Few clean energy technologies have seen sharper swings in their perceived appeal and popularity than fuel cells. In the years surrounding the millennium, fuel cells appeared to be making rapid technical and economic progress. Many industry representatives, analysts, and policymakers predicted that fuel cells would soon provide cost-effective power for stationary applications and motor vehicles. Significant venture capital funding and government support flowed into the industry.
But the technical challenges to large-scale deployment of fuel cells proved to be greater than anticipated and many of the early installations turned out to be less reliable or cost-effective than predicted. Investors started to get cold feet and state-level policymakers turned their attention elsewhere.
After the spotlight shifted away, the fuel cell industry continued to make steady, but slow progress. Fuel cell companies become more realistic about the challenges they faced and those states that continued to support fuel cell development retained few illusions about how quickly the technology could be widely commercialized.
There is now increasingly solid evidence that those steady efforts are paying off. Fuel cells are on the upswing, even if less dramatically than the earlier millennial predictions for the industry. A report this month by Fuel Cells 2000 on State of the States: Fuel Cells in America documents many promising developments:
- Over the past year, more than 50 megawatts of stationary power have been either installed or purchased in the United States.
- A competitive, self-sustaining niche for fuel cells has emerged related to forklifts and other materials handling equipment. Since early 2010, more than 1,500 fuel cell forklifts have either been deployed or ordered, and this trend should continue.
- Many of the nation’s most important companies—including Coca-Cola, Walmart, and Whole Foods—have purchased fuel cells and are turning into repeat customers.
- Additional states in all parts of the country, with bipartisan support, have taken steps that show that they view the fuel cell industry as important to economic development.
Last week witnessed the dramatic announcement that Bloom Energy would build a large East Coast factory in Delaware, creating 900 jobs. The Delaware state government is taking various steps, including qualifying natural gas fuel cells for the state’s renewable portfolio standard, to make this development a reality.
One of the significant factors helping fuel cells to gain traction in the marketplace is the increasing use of leases and other financial arrangements that require less up-front money on the part of purchasers. Along with improved warranties, these new financing approaches have shifted more of the performance and reliability risk from end-users to manufacturers and distributors. Although Bloom Energy has received the most attention for using a leasing model, other companies such as FuelCell Energy and UTC Power have also been experimenting with leasing programs.
So it increasingly appears that there is a solid foundation for future growth. Policymakers concerned about economic development have especially good reasons for considering how fuel cell technology can figure into their plans. For one thing, this is a domestic manufacturing industry in which the United States is the worldwide leader. In addition, unlike other clean energy technologies, there are few constraints on where fuel cells can be located. They provide base load power and are a way for businesses and institutions to benefit from clean energy development.
Nevertheless, it remains unclear whether the roller coaster will keep heading upwards. Publicly traded fuel cell companies have yet to be able to turn a profit. Competitors could emerge in other countries or American companies could be lured away to Korea or some other place that offers stronger financial incentives than the US. But, for the moment, the fuel cell industry is on the rise.