Navigant Research Blog

Two Faces of the Fuel Cell Industry

Kerry-Ann Adamson — 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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