Navigant Research Blog

Japan Fuel Cell Project a Big Step for Bloom

— November 27, 2013

Since coming out of stealth mode in 2010, fuel cell manufacturer Bloom Energy has never been far from the headlines.  Generating more press inches than most other fuel cell companies put together, Bloom has played a careful, and strategic, game with the press and the industry.

With rumors building, again, that Bloom will go public, the timing of this week’s press release stating that Bloom Energy is entering the Japanese market is attention-grabbing.  The installation, a 200 kW solid-oxide fuel cell Bloom Box, is located at SoftBank’s M-Tower in Fukuoka, Japan.  There are no details of follow on orders or scale-up in the country, so this announcement has to be taken at face value: a single initial installation in Japan.

With an investment of over $100 million by European utility E.ON earlier this year, the European market was ticketed by some as the likely first baby step out of the United States for the company.  E.ON, however, made a strategic investment, while Softbank earlier this year formed a JV with Bloom Energy, creating a separate company Bloom Energy Japan Limited.

A Hard Nut

To date Japan has proven a notoriously hard market for non-Japanese fuel cell companies to break into, with companies such as Ballard and Ceramic Fuel Cell having tried in the past.  Alongside South Korea, Japan is still ranked as the most open to fuel cell power generation of any country in the world, and Navigant Research, in the forthcoming white paper entitled “The Fuel Cell and Hydrogen Industries: Ten Trends to Watch in 2014 and Beyond,” forecasts that as of 2014 there will be over 70,000 homes in Japan with a residential fuel cell system installed.  Although the country has been actively developing larger systems, only Fuji Electric with its 100 kW phosphoric acid fuel cell system is currently commercially available in the country.

Going forward in 2014, we can expect more small-scale installations in Japan and a number of high profile announcements from the company.  Outside of Japan and with the resignation in July of Girish Paranjpe, the company’s head of its international operations, it’s anyone’s guess where next for Bloom.  Potential markets include Germany, Russia, and South Korea, alongside India – if another JV is in the cards.

Interest in the stationary fuel cell sector is climbing high again, and companies such as Bloom Energy are at the vanguard of establishing this industry. A successful project in Japan will validate both the technology and the business model.


Fuel Cell Industry Needs Products, Not Education

— November 21, 2013

For years the nuclear industry has suggested that if only the consumer were better educated then the purported benefits of nuclear would then become obvious and public opposition to new reactors would evaporate.

Worryingly, this claim is now beginning to be raised within the fuel cell sector.  At a recent industry event in Brussels, the fuel cell program director of BMW claimed that the industry needs more public education on the benefits of the technology.  This claim was mirrored a number of times during the day – in essence, reflecting the blame away from an industry that in Europe is significantly underperforming onto its potential customers.  Interestingly, of the panel of high-level European bureaucrats, each espousing of the need for the industry to step up, only one of them had actually bought a fuel cell.

Buy, Play, Break, Improve

To be sure, the consumer is a real area of concern.  Not in terms of needing better education, but in terms of needing more product that is available to buy.  Intelligent Energy, which recently announced the release of the Upp portable fuel cell charger, claims that the unit will not be available in the Europe until sometime in 2014.  This was after it was shown to millions of potential adopters via a television slot on the BBC.   There is, in fact, no commercial fuel cell product widely available across the EU28.  FuelCell Energy, an import from North America, is making large strides to being available but is not there yet.  The Horizon fuel cell recharger can be ordered from their website for most countries – but not all – and there is a long way to go before any type of residential or light commercial system is broadly available.

The theory is that if customers understand the benefits of fuel cells but have nowhere to actually go and buy the product, this will create a large pent-up demand.  But, as I have written before, the product buying cycle cannot be shortcut.  By not getting the products in the hand of early adopters, the industry is pushing out its entry into the the mass market even further.  Education and product availability go hand-in-hand.  Buy, play, show, tell, and yes, break, is all part of this.  Show and tell – and shifting responsibility to the customer – is simply not enough.


Google’s Floating Data Center Is No Fantasy

— November 5, 2013

Back in 2009, in what already seems like the technology dark ages, the U.S. Patent and Trademark Office awarded Google a patent for a floating data center that would use the ocean to provide power and cooling.  The original patent reads as if someone at Google was channeling the late, and truly great, Nikola Tesla with plans for using wave and wind power, among other sources, combined in an islanded microgrid.  Since Google has a patent war chest of more than 18,000 U.S.-based patents, it was easy to see the floating islands as nothing more than a vision, similar to Daniel Zubrin’s floating cities as a first step to Mars.  Now, though, it seems that Google may in fact be building two of these floating data centers – so, we could actually see the creation of not only the first floating data center, but also the lowest carbon data center in the world.

If this is the case, how would this data center be powered and cooled?  First, Google will not be the first company to apply shipping container architecture, along with water cooling, to servers.  Rackable has designed a unit containing 28 server racks, with up to 1,400 servers, in a standard 40-foot shipping container.  Using water for cooling reduces energy demand, it is claimed, by 25 kilowatts (kW).  If, due to better cooling, the average server consumes 800 watts per hour at 28 servers per container, each container would require 268 kW of power per day.

A Tidy Fit

One photo shows 12 shipping containers going onto the potential Google barge.  If each is a server box, then this represents 3.2 megawatts (MW) of power demand, not including the power needed for the barge and any living compartments.  Let’s say the total power per day is 4 MW.  Assuming there is not going to be four 1 MW wind turbines and some heavy-duty energy storage on board, we are likely looking at some combination of solar and fuel cell power.

We already know Google understands this combination; it has operated a solid oxide fuel cell Bloom Box and has had solar panels at its headquarters since 2008.  Handily, fuel cells also can come in 40-foot shipping containers with solar panels attached to the top.  So, this would fit neatly into the configuration of the barge.  Using figures from a recent study looking at powering a barge in the United States with polymer electrolyte member fuel cells, 4 MW of fuel cells and solar would likely require between six to eight containers, with some built-in batteries for energy storage.  This would take the grand total up to 20 containers – 12 for the servers and eight for the power plant and fuel.  If the Pelamis offshore wave energy converter system, which was also mentioned in the grant, was working, this could be reduced somewhat. In other words, suddenly, these plans stop being visionary and start to be doable.  Using fuel cells, solar, and batteries, we not only could see the first floating data center, but also the first near-zero carbon data center.


Two Faces of the Fuel Cell Industry

— October 11, 2013

Some segments of the fuel cell industry are starting to accelerate, with order books bulging, high-visibility installations going in, and success stories piling up.  In others, this increasing visibility is leading to press releases full of promise, but not much substance.

Compare and contrast these two recent press releases:

“FuelCell Energy Announces Teaming and Co-Marketing Agreement With NRG Energy”  – This release describes a concrete agreement that includes all the necessaries, such as financing options, the right to run under power purchase agreements (PPAs), etc.  Not exactly sexy stuff, but critical and, more importantly, real.

“Can the Cube corner the market on fuel cells for buildings?” – This involves a 1-year old company called Redox Power, and its product, The Cube, which is full of, well, nothing.  For a start-up, Redox Power has managed to garner an incredible amount of headlines, without actually releasing any details.  Important stuff, such as time to market, availability, and capital needed to get from here to there, are totally missing.  My favorite is the much parroted statement, “costs 90% less than fuel cells currently on the market,” which means absolutely nothing.  Fuel cells on the market today range from $120 for a Horizon Minipak to a couple of million dollars for a ClearEdge Power Purecell Model 400.  So, 90% less than what, please?

Game of Fluff

Other companies are also playing the very early-stage fluff game.  GEI, which I wrote about in an earlier blog, also announced a long-term letter of intent way before the market release of a product.  Aquafairy, a 5-year-old company, now, in 2013, being referred to as a start-up, has been talking about a commercial portable fuel cell recharger since 2010, but has yet to release a product.

Unfortunately, the hard work of building the fuel cell industry is just not very glamorous.  For one headline-grabbing installation at eBay, many hundreds of hours of work on financing, optimization, supply chain agreements, grid interconnection concerns, etc., need to happen.   But these items simply do not make good headlines.  Big pronouncements about 90% less cost and 100 MW power plants grab attention.  With these, though, come raised expectations within the finance community, which has already lost its shirt once on the fuel cell sector, and which the sector badly needs to engage with.

The fuel cell industry today really is split in two.  One half includes companies with real products, real costs, and real market opportunities.  In the other half are companies playing a risky game of raising expectations through carefully worded statements based on long-term ambition at best, or, at worst, spin.  Understanding the difference between the two is critical for anyone looking to understand the sector and where the real opportunities for investment are.


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