Heading into the 2015 launch of commercial fuel cell vehicles (FCVs) from Toyota and Honda (Hyundai’s is already out), California and Japan appear to be leading the race to build infrastructure. In the past 12 months, the governments in California and Japan have each made a firm commitment to support extensive refueling networks. Japan set a target of building 100 stations by March 2016. California has committed to providing up to $20 million annually in support of a 100-station network.
Those timelines are aggressive given that, up to now, hydrogen stations have taken 18 months or more to build. In California in particular, the timeline for building a hydrogen fueling site has been very lengthy, 24 months and even more. This is one reason that the state has lost its leading position as a first market for FCVs. A year ago, it looked like Europe was going to step up, with the United Kingdom announcing its own H2Mobility program to follow on the one that Germany established to develop and execute a hydrogen roadmap. However, both of these programs are moving rather slowly. By contrast, California secured a funding commitment from the state of up to $20 million per year in September 2013. Now, the state is moving forward at a much faster pace. In May, the California Energy Commission (CEC) announced awards for 28 stations, to be built by November 2015, for a total of around $46 million.
Of course, being first also means being a guinea pig for this market, which still faces a good deal of uncertainty in terms of potential demand. I’ll be outlining FCVs sales prospects through 2023 in my upcoming report, 2014 Fuel Cell Annual Report. Participants in the buildout of California’s first nine stations learned some lessons that are now being implemented. One of the most critical differences is that the CEC is using its funding to provide support for operations and maintenance in addition to station construction. This represents a tacit admission that the stations will be a cost center for owners and operators for the first years of the market. The CEC awarded $300,000 to four current stations to support ongoing operations.
Another striking difference with the new 28 stations is that only 3 of the 28 awards are going directly to industrial gas companies (IGCs). In place of IGCs, new entities have sprung up specifically to build and manage retail hydrogen fueling; these entities were given 23 awards. Startup FirstElement Fuel received awards to build 19 stations. The company was launched with funding support from Toyota and IGC Air Products but is open to working with any IGC that wants to use a third party to operate a retail station. The company plans to become an operator of hydrogen fueling networks, similar to electric vehicle (EV) charging network operators. FirstElement secures a retail gas station where there is real estate available to add a hydrogen pump and takes responsibility for the station once it’s up and running. This removes risk from both the gas station owner and from the IGC providing the hydrogen.
Quite a bit of risk remains for the CEC in placing much of the responsibility for stations needed in 2015 on one company. But the good news for the FCV market is that some early lessons learned are paying off in terms of new ways to tackle the problem of providing fuel to potential FCV drivers.
Tags: Alternative Fuel Vehicles, Clean Transportation, Energy Storage, Fuel cell vehicles, Smart Transportation Program
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