Navigant Research Blog

Reviewing Our Top Fuel Cell Trends Forecasts for 2011

— January 24, 2012

As we are publishing our 2012 Top Trend Paper on the Fuel Cell and Hydrogen Sector, now is an opportune moment to look back at 2011 predictions made by myself and my colleagues, Lisa Jerram and Anissa Dehamna, and have a look at how we did.  Were we totally off beam or we spot on?

In our first fuel cell and hydrogen white paper, published in January 2011, we said that in 2011 the following trends were going to be important:

  • The increasing importance of the hydrogen “Juniors”
  • Re-emergence of the private equity firms
  • Tipping points in the stationary fuel cell sector
  • Fuel cell vehicles will continue to see limited, but growing, deployment
  • Necessary consolidation in the fuel cell industry
  • Rising influence of Japan and South Korea in the global fuel cell industry
  • Hydrogen as an energy storage medium
  • Refocusing and rebranding
  • Rare earth restrictions as an obstacle to fuel cell adoption
  • UAVs as a key market for fuel cells

Overall I’d say we got about a 5.4 out of 10, so let’s say a C+.  I will select six critical areas and look at each in turn:

1.  The Increasing Importance of the Hydrogen “Juniors”

The hydrogen production industry is dominated by only a handful of multinational companies, which Pike Research terms the “Majors”.  Going forward, as fuel cells increasingly see commercial deployment across a growing range of applications, hydrogen will start to become visible as a fuel in hydrogen consumption graphs.  How this hydrogen will be produced is an active debate, but one trend we identified during 2010 and we forecast to see grow significantly in 2011 was the critical role of the Hydrogen “Juniors”.  These smaller, more flexible hydrogen producers, the Juniors are developing highly innovative products that have the capability to provide a fast roll-out small-scale distributed hydrogen generation sector.

That is what we said.

What happened was pretty much  as we forecast.  ITM Power, especially, had something of a stellar year.  I aked Dr.  Graham Cooley, CEO of ITM Power if he could sum up 2011 for his company for me and he replied with:

“2011 was a big year for ITM Power.  We launched our Hydrogen On Site Trials (HOST) and showed that hydrogen could be made onsite and was cost competitive with other forms of hydrogen, petrol and diesel.  HOST enabled us to engage with a number of commercial companies who had never been involved in the hydrogen sector before and showcase the reality of hydrogen as a transport fuel.

“We also launched a number of CE Marked hydrogen generation products alongside publishing our cost structure and a sale of our first hydrogen refuelling unit.”

So comparing this with what we said would happen in 2011 I’d say we were just about spot on. 

2.  Tipping Points in the Stationary Fuel Cell Sector

Did we ever get this right, but almost for the wrong reasons.  We said at the start of 2011 that a number of applications and companies are still at the level of tipping points (as opposed to learning curves), with the most important one being the transition from batch manufacturing, which is usually done manually, and continuous automated manufacturing.  We also forecast that as 2011 progressed an increasing number of companies, possibly including major automotive manufacturers, would release reduced cost projections.

What we, and no one could foresee, was the impacts caused in 2011 by a number of extreme geological events.  The Japanese earthquake and tsunami, with the knock-on impact at the nuclear plant at Fukushima, is still being felt in many areas.  For fuel cells, specifically, it saw the sell-out of available subsidies for the purchase and installation of residential combined heat and power fuel cells, and the demand reaching a level that companies manufacturing the systems have had to bring in extra capacity.  We have also started to see the emergence of brand new, very large scale facilities, with the 100MW manufacturing plant from POSCO being a prime example. 

Clearly the impact of exogenous events such as Fukushima are unpredictable, as least by mere mortals such as those of us in Pike Research, but even taking out the impact of these events we can still see that a number of tipping points have been reached. 

3.  Fuel Cell Vehicles will Continue to See Limited, but Growing, Deployment

At the start of 2011 we said that major automakers, including GM, Honda, Toyota, Daimler, ad Hyundai, have pledged to produce commercial fuel cell vehicles by 2015, or even earlier. 

So far we are still on track for this 2015 launch date and in 2012 this is still a valid statement.  We went on, though, to say:

Several automakers have pledged to produce small fleets – in the hundreds – for release to consumers and fleets in this timeframe, so 2011 will see the early stages of this ramp up. 

Looking back over the last months, we would like to be able to pinpoint where these micro fleets have appeared, but the reality is that we cannot see them.  2011 in fact was somewhat quiet on the fuel cell electric vehicle front, with the overwhelming majority of releases and attendant, positive and negative, PR going to battery EVs.  On this we were wrong.

4.  Necessary Consolidation in the Fuel Cell Industry

We openly admit that this wasn’t a popular forecast – after all we were openly predicting the demise of a number of companies – but it was, and still is, valid for this phase of evolution in the fuel cell industry.

What we said in January 2011 was that the fuel cell industry is rife with small companies with strong intellectual property that are not well positioned to cross the chasm of death and reach commercial viability.  Conversely, large OEMs, energy companies, and other industrial conglomerates looking to move into the business may find it most appealing to simply acquire a company with an existing product.  Such partnerships have already been formed and 2011 may be the year when they turn into fully-fledged acquisitions.

Here but we were right on the money, with the BIC acquisition of Angstrom Power being the prime example.  BIC, a large multinational, had been working in the area for years but did not have products commercially available.  Angstrom Power, a small innovative company with strong IP, was in need of a large cash infusion.  Marriage made in fuel cell heaven!

5.  Rare Earth Restrictions as an Obstacle to Fuel Cell Adoption

I have to say that we got this one wrong.  We said that as a result of price hikes, and increased demand flow for REMs, SOFC development could be increasingly constrained over 2011, until the full impacts of the hypersensitive REMs markets are fully understood.


6.  UAVs as a Key Market for Fuel Cells

The final prediction we made for the fuel cell and hydrogen industry in 2011 was the continued deployment of tactical fuel cell-powered unmanned aerial vehicles (UAVs), and the move to large-scale adoption and refinement for military use.  Military agencies around the world will continue to allocate funding and resources to the development of this market for portable fuel cells.

We sort of got this right, but really we were about 18 months too soon.  2011 did the see the U.S. military coming out very strongly in support of the further development of fuel cell technology for multiple applications, including UAVs, but deployment was limited.

So for our final prediction we were on the right track, but not quite there.  Now it’s 2012 and of course we are publishing another ten trends – and yes we will critically review these come 2013. 


Energy Storage on the Grid Forecast: North America

— January 24, 2012

Last week, my colleagues Bob Gohn, John Gartner and Kerry-Ann Adamson hosted a webinar on “The Year Ahead in Cleantech: Top Trends for 2012.”.  There were several good questions from the audience in that webinar, one of which specifically asked about the energy storage for the grid forecasts for the North American market.  I’d like to address this question in this blog post. 

Pike Research expects the Smart Energy market to reach nearly $300 billion in revenue in the next year. This includes our entire Smart Energy practice, which comprises a large number of technologies and markets. 

This diversity is reflected in energy storage for the grid, or ESG.  This area alone includes five technologies and five separate applications.  Overall, this market is expected to reach $1.7 billion in revenue in 2012. 

More specifically, North America will be a strong market for a number of ESG technologies.   The region currently has the most activity in the ESG sector as far as the diversity of technologies is concerned.   This factor, paired with the large number of local vendors (and locally held intellectual property in innovative technologies) and the diversity in the supply chain found in the United States, gives North America an advantage over other regions.   

Although the North American market will be lucrative, mechanical technologies will dominate most of the market share, followed by a nearly even split between the battery technologies.   In the case of compressed air energy storage, the United States has the innovation base and willing project integrators.   In the case of lithium ion and flow batteries, the country has a significant number of “next‑generation” developers.   

This expertise should serve the market well throughout the forecast period.   Now, whether the sodium-sulfur (NaS) battery portion of the market will end up being served by NGK Insulators, another NaS battery vendor, or another technology altogether remains to be seen. 


Smart Energy Investments Paying Off

— January 23, 2012

It’s that time of year when everyone makes their predictions for the year, including Pike Research.  I recently attended the World Resources Institute’s overview of the top Stories to Watch in 2012, which is a little different than the typical year-ahead projections.  WRI is not primarily trying to make predictions; instead, the organization tries to provide a “roadmap” of the top issues or events that are likely to be significant in 2012.  It is worth checking out the full list, but there were two that jumped out as being particularly interesting and relevant to Pike Research’s own predictions on The Year Ahead in Cleantech, outlined in our January webinar.  I’ll examine the first one in today’s blog, and cover the second in my next post.

WRI asked whether 2012 might be the year that investment in renewables surpasses fossil fuel investment.  This idea pivots off of a Bloomberg New Energy Finance report that estimated global investment in renewables in 2010 at $211 billion – and, more importantly, not far off comparable investments in fossil fuels for that year.  The growth trends for renewables vs. fossil fuels were dramatically different, with investments in renewables showing roughly a 30% compound annual growth rate (CAGR) from 2004 to 2010, compared to fossil fuels at around a 7.7% CAGR.  The Bloomberg analysis includes all biomass, geothermal and wind generation projects of more than 1MW; all hydro projects of between 0.5 and 50MW; all solar projects of more than 0.3MW; all marine energy projects; and all biofuel projects with a capacity of 1 million liters or more per year. 

It’s interesting is to compare this to Pike Research’s forecasts for revenue from renewables.  Interesting, but somewhat challenging, as Bloomberg looks at a slightly different set of renewables than Pike Research does – for example, Bloomberg includes small hydro, which is a relatively mature market and therefore not part of Pike’s global forecasts for new energy.  Even so, we can expect to see revenues somewhat lagging the investment numbers, as it will typically take several years for investments to bring returns.

Pike Research has projected total 2012 revenue for the Smart Energy sectors that we cover as $298 billion.  If you take out the sectors that are definitely not in Bloomberg’s numbers – energy storage plus energy efficiency applications like combined heat and power (CHP) and fuel cells – you get projected 2012 revenues of around $235 billion.  This is still not apples to apples, but it does suggest that previous years’ investments are showing major returns. 

The graph below shows the total projected revenue pie broken out by sector.  Solar is still the biggest revenue generator – not surprising given that it is a comparatively “older” technology that has been seeing major investments for many years.

But it’s also important to note the sheer number of clean energy options not counted in Bloomberg’s investment figure, like energy storage (ESS), CHP, fuel cells, and virtual power plants.  (Bloomberg’s report does reference other sectors but does not focus on them.)  While the traditional “renewable vs fossil fuels” comparison is cleaner to make and easier to explain, it’s important to keep an eye on these other applications and technologies.  They may not be the major revenue generators yet, but they’re all showing serious growth that will have an impact on energy markets.


A Fuel Cell By Any Other Name

— January 23, 2012

To my chagrin, both flow batteries and fuel cells are often referred to as “fuel cells.”  Neither term is incorrect, strictly speaking, but this usage causes confusion about what each technology can do.

The misunderstanding has been compounded since the fuel cell industry began rigorously promoting hydrogen and fuel cell technology for energy storage.  There have always been discussions of energy storage and fuel cells, especially for island systems and large-scale renewables integration.  However, there has been more market activity in this sector recently, on the fuel cell side. 

For the sake of clarity, what exactly is a fuel cell? And what’s the difference between a fuel cell and a flow battery?

A fuel cell – such as the ones that helped power the space shuttle – generates electrical and thermal energy much like the engine in a car does (point of clarification: a fuel cell is a more efficient generator than a car engine but the basic function is the same).  For example, the Honda Clarity is a car with a fuel cell instead of an engine. 

The other type of “fuel cell” is actually a flow battery. 

In the case of a flow battery, the “fuel” is in fact an electrolyte mixture that passes through a cell, or many cells, as the case may be.  The battery is rechargeable, meaning it can charge and discharge energy over and over again.  Conceivably, with an additional supply of the electrolyte mixture, you could keep “fueling” the battery.  On its own, a flow battery does not generate any energy; it stores and releases energy from another source.

In the case of a fuel cell, the “fuel” is hydrogen, natural gas, methane, or any number of hydrocarbon fuels that undergo an electrochemical reaction.  A fuel cell also has an electrolyte, in the membranes that the fuel passes through.  This is where the electrochemical reaction occurs that generates heat, electricity, and water (along with other emissions, depending on the fuel).  Without fuel, a fuel cell will not run. 

Both are exciting technologies with profound implications for the grid, renewables, air quality, and energy security.  For the sake of clarity, I promise to refer to fuel cells only as fuel cells, and flow batteries as flow batteries. 


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