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Cleantech Market Review – Recent Developments in Fuel Cells

Major Applications of Fuel Cells

The evolution of the concept of the fuel cell can be traced back as far as 1801. However, the practical usage of fuel cells only began in the mid 20th century and significant commercialization of fuel cell has only occurred in the past decade.  Nevertheless, fuel cells are expected to play a more important role as power sources in the future due to its desirable characteristics. First of all, unlike conventional power sources, hydrogen fuel cells are emission free as they produce electricity by electrochemical reaction instead of combustion. Secondly, compared to other renewable sources, such as solar energy and wind energy, fuel cells are more reliable as they are not dependent on energy sources which might be periodically short of supply. Theoretically, a fuel cell can run indefinitely as long as it is supplied with source of hydrogen and oxygen.

The applications of fuel cell technology can be broadly categorized into three areas including power for transportation, power generation for portable devices, and stationary power generation. Development of the technology in these three areas is described as below:

Portable Fuel Cell Unit:
Portable fuel cells are those that are designed to be moved. Portable fuel cells could be used in consumer electronic products (such as MP3 players, laptops, mobile phones, radios or other handheld devices and auxiliary power units (APU) for leisure products etc.). Applications in the industrial sector include power for remote locations in oil well sites, electronic highway signs and telecom equipment. Military applications include portable power for soldiers or power for unmanned and surveillance equipment.

Stationary Fuel Cell Unit:
Stationary fuel cells are designed to remain in a fixed location. The most common use of stationary fuel cell units is for primary power supply, combined heat and power (CHP) (also known as cogeneration), uninterruptible power supplies (UPS). Primary power systems are those large stationary fuel cell units supplying multi-megawatts of power. They could be used in different ways such as providing power to off-grid sites or providing power to the grid. This kind of unit is mainly manufactured in Japan and the USA. CHP systems are used for the generation of electricity and heat simultaneously. CHP systems could be used in residential and commercial buildings for the provision of electricity and thermal power for space or water heating. According to FuelCell Today, UPS systems are able to provide a guaranteed power supply during grid interruption and there are five sub-sectors in this market:
1.Off-line short run-time systems for telecommunication base stations
2.Off-line extended run-time systems for critical communication base stations
3.Off-line extended run-time rack mountable systems for data centres
4.On-line rack mountable systems for data centres
5.Off-line systems for residential use

Transport Fuel Cell Unit:
Fuel cells could be used in a wide range of transportation including buses, ferries and smaller boats, forklifts and other goods handling vehicles, 2 and 3-wheelers, light duty vehicles (LDVs, such as cars and vans) and trains and trams, etc. Fuel cell electric vehicles (FCEVs) use electric motors for propulsion which allows the vehicle to be accelerated quietly and smoothly. A tank of hydrogen (fuel) can be filled in minutes and a single tank can allow a car to travel for hundreds of miles. Although there is still no fuel cell car for commercial sale in the market, a lot of notable automobile manufacturers have gradually launched prototypes and demonstration fuel cell vehicles since 2009 such as Audi, BMW, Fiat, Hyundai, Mazda, Mercedes-Benz, Nissan and Volkswagen. Furthermore, some automakers, such as Toyota, Daimler, General Motors, Honda and Hyundai, aim at initial commercial sales of their fuel cell cars starting from 2015.


Recent Development of Global Fuel Cell Market

In the past five years, there has been an increasing trend for the shipment of fuel cells in all three categories. Growth is particularly significant in portable and stationary usage. In 2012, the shipment of portable units increased drastically from 16,100 units to 50,500 units, driven by wider usage of fuel cells in consumer electronics and the launch of portable charging devices. The shipment of stationary fuel cells increased steadily from 800 units in 2008 to 24,600 units in 2012 with a compound annual growth rate of 135.48%.

By region, Asia, Europe, and North America saw more significant increases in units shipped unit than the rest of the world. In 2012, shipments in these three regions accounted for 94.6% of the world’s total shipments. In the past five years, Asia has been the region with highest rate of fuel cell adoption. One of the major reasons is the commercialization of micro combined heat and power (micro-CHP) systems in Japan since 2009.

Fuel Cell Market in Asia Pacific Region

In the Asia Pacific Region, more advanced and wider adoption of fuel cell technology has occurred in Korea and Japan. This is reflected in the commitment of their governments and large corporations to fuel cell technology. In the commercial sector, as mentioned, several automakers based in these countries will launch fuel cell cars in the near future.

In the stationary fuel cell sector, the Japanese government encourages the residential use of fuel cells through the Ene-farm scheme launched in 2009. Under this scheme the government subsidises the purchase price. The deployment of residential micro-CHPs (also known as Ene-Farms) has been increasing in the past four years since the commencement of the Ene-Farm scheme. In 2009 the number of units sold was 5,000 and that number increased to 20,000 in 2012. Meanwhile the cost of a single unit has also been decreasing steadily as a result of fewer components being used in production, increased economies of scale and significant reduction in platinum content in the proton exchange membrane (PEM). It is expected that the home fuel cell market in Japan will keep expanding as manufacturers will be offer a wider choice of systems to customers and price become more competitive.

As in Japan, the South Korean government also encourages the deployment of home fuel cell as part of its national policy. In 2010, the National Assembly of the Republic of Korea announced the Renewable Portfolio Standard (RPS) which required 4% clean energy generation by 2015 and 10% by 2022. In 2010, with the aim of encouraging wider household adoption of fuel cells, the South Korean government started to offer subsidies to cover 80% of the purchase and installation cost of domestic hydrogen fuel cells. The objectives of this subsidy scheme were to elevate the sales of home fuel cells and to increase economies of scale for manufacturers. This initiative is also part of the government’s long term goal to establish a “Hydrogen Economy” and reduce the country’s reliance on energy imports. In the city of Daegu the world’s largest fuel cell power plant, with a generation capacity of 11.2 megawatts (MW), commenced operation in November of 2011. This fuel cell system is supplied by FuelCell Energy (a Nasdaq listed US company) and installed by a South Korean local integrator and distributor called BOSCO Energy. The electricity generated by this power plant is sold to the electric grid and the usable heat is provided to a nearby water treatment facility.



Despite its various advantages, fuel cell technology is not yet a major part of the mainstream energy market due to its relatively high cost and low durability. Nevertheless, the demand for fuel cells is expected to grow in the coming decade. The two major drivers of growth will be cost reductions and the demand for low-emission energy. The cost of fuel cell is expected to go down in the near future due to technological advancements and increased economies of scale, as can be observed in the Ene-Farm market in Japan. At the same time governmental subsidies and R&D supports, and technological advancement in manufacturing will also reduce the price of fuel cells. Unlike the traditional lead-acid batteries which need to be disposed carefully, fuel cellstechnology uses non-toxic materials. As a substitute for power supplied through a traditional power grid, the use of residential fuel cells can also lead to less carbon dioxide production by traditional power plants.