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.

Wrong.

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.

 

Landis+Gyr Adds MDM With Ecologic Analytics Buy

— January 12, 2012

Landis+Gyrannounced this week that it has acquired the remaining stake of meter data management (MDM) vendor Ecologic Analytics, with whom it already has a close working relationship.  Ecologic’s MDMS is already tightly integrated with L+G’s Gridstream advanced metering infrastructure (AMI) solution as the default MDM.  However, both vendors support other products as well – Gridstream has ready-built interfaces with most popular MDM solutions while Ecologic MDMS has ready-built interfaces with most popular AMI solutions.  Landis+Gyr is itself 100% owned by Toshiba.

Pike Research has verified that both L+G and Ecologic intend to continue with a focus on interoperability and partnering – in other words, they’ll still see other people.  Both companies have in the past stated their belief that utilities will continue to require integration with and support for different software systems and solutions.  I believe that such flexibility maximizes the options to be involved in new AMI and MDM ventures.  In such competitive markets, the last thing any vendor wants to write in an RFP response is, “Sorry, we don’t work with those people.”

In our 2011 report, Pike Pulse:  Meter Data Management, we rated Ecologic Analytics as a Contender, just short of the Leaders category.  The report characterized Ecologic as “…a well-run company that addresses all aspects of its business.  The company has also done a good job of phrasing its marketing messages in terms of utilities’ business problems.”  I continue to hold that view of Ecologic as a unit of L+G.

That report also explained that to move into the Leaders category, “Ecologic could expand its business with other AMI vendors, especially those that do not already have their own MDM.  There is also quite a bit of room for the company to improve its geographic reach, which may be accomplished via L+G’s 11 offices in China.”  Ecologic addressed that first point soon after our report was published, by announcing a partnership with IBM to integrate its MDM technology with IBM solutions.  At roughly the same time Ecologic also announced a development deal with L+G to support the SAP MDUS specification and therefore make Ecologics’ technology available to SAP for Utilities customers.   Competitors such as eMeter, Itron, and OSIsoft had already completed MDUS integrations.

Our second recommendation for Ecologic Analytics – wider geographic reach for Ecologic’s products – is furthered with this acquisition.  I continue to be skeptical that China will be an addressable market for external MDM vendors unless some special relationship exists.  L+G’s existing business in China, plus Toshiba’s ownership, could become highly valuable in helping Ecologic penetrate that market.  Still, trying to predict any technology market in China is fraught with assumptions, so I’ll simply state that this transaction should give Ecologic a stronger presence in China.

 

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