Friday, November 30, 2007

Fuel Cell Round Up

The list of fuel cell developers and the attendant materials suppliers and test equipment producers is growing. Note the November 27th post on Ecotality. After reviewing a couple of sites, including that of Fuel Cell 2000, I started my own roster of fuel cell developers. It is still incomplete, but there are already a few insights are beginning to appear.

First of all it is apparent that the group is quite diverse in terms of technology. Fuel cells are not created equal. At the most basic level a fuel cell is an energy conversion device. How is this accomplished? There is a supply of fuel - the anode element - which gets converted in the presence of an oxidant - the cathode side. How is the conversion process triggered? Enter the electrolyte - the catalyst that makes the fuel oxidize.

Now if this sounds like a battery, there is are key differences. Batteries store electrical energy chemically in a closed system. Fuel cells on the other hand consume the fuel source and it has to be replenished. Some might also point to the inherent stability of the fuel cell’s electrodes - the anode and cathode elements - which are stable compared to those in a battery. Battery electrodes are changed dramatically during charging and discharging. That is one of the reasons we hear stories about battery explosions.

Anyway, back to the many varied fuel cells. There are quite a few different combinations of fuels and oxidants used by developers. Developers are chasing greater energy efficiency, lower cost production, lower cost fuels, transportability, safety among other factors that increase the economic value in their product.

Hydrogen is a popular fuel in combination with oxygen as the oxidant. This along with a few design advantages makes the Proton Exchange Membrane (PEM) fuel cell the most common design. PEM fuel cells are fast to start up and operate at low temperatures. Transportation applications are getting up to 60% efficiency.

Indeed, in our list of 84 fuel cell developers, 43 are using PEM technology. The power houses in Japan - Mitsubishi, Toshiba and Toyota - are all working on PEM fuel cells. In North America, 3M is also working on PEM cells. The there are a few pure-play stocks supported by PEM technology.
Ballard Power (BLDP: Nasdaq), Distributed Energy Systems (DESC: Nasdaq), Plug Power (PLUG: Nasdaq) and Millennium Cell (MCEL: Nasdaq) are also hot on the PEM trail.

However, PEM technology has problems. The catalysts are expensive and fuel impurities can be a huge problem. There is waste heat, but the temperatures are not high enough to make it usable for any further purpose.

Some developers have moved on to Solid Oxide technology (SOFC). These cells are slower to start up and less efficient than PEM cells, but there is some flexibility on fuel sources and catalysts. There is also added value since the waste heat can be used in combined heat and power applications.

So far the only public company on our list that is reportedly pursuing SOFC is
Wartsila Corp. (WRTAF: OTC/BB), a Finnish propulsion manufacturer and environmental technologies. Their work is in the nascent stages so the stock reflects its industrial interests. Acumetrics, GreenVolt Power and Ceramic Fuel Cells are three of a dozen or so private companies with SOFC-based products in development.

The third most popular fuel cell technology appears to be Direct Methanol (DMFC). Still in the developmental stage, DMFC is actually a variant of the PEM technology. With DMFC methanol is fed directly into the fuel cell rather than converted first to hydrogen. The appeal is in the lower cost of transporting and storing methanol compared to hydrogen, which requires high pressures and low temperatures. Besides, by volume methanol packs more energy than hydrogen. The problem is that methanol leaks inside the cell, limiting the power the cells produce. One plus for DMFC is high energy in a small form factor. So you probably won’t find DMFC in cars and trucks, but these cells could be good for laptops and mobile phone.

Methanex (MEOH: Nasdaq) and the Direct Methanol Fuel Cell division of Viaspace (VSPC: Nasdaq) are two public players with DMFC technology. PolyFuel (PYF.L) in the UK is another public company. NuVant Systems and DTI Energy are private.

Aqueous Alkaline fuel cells (AFC) use potassium or sodium hydroxide as the electrolyte. Power efficiency is near 60%, making AFC competitive with PEM. Greenvolt is busy here too as is
Astris Energi, Inc. (ASRNF: OTC/BB), a Canadian developer. Most applications for AFC are in the military and aerospace sector. It is expensive to operate since carbon dioxide must be removed from the fuel and air streams. The government is willing to pay the cost in special situations that require the very fast performance that AFC fuel cells can offer.

There are eight-four names on the fuel cell developer list. No doubt more can be added. The next step is to find out which ones appear to have the right strategy to overcome the deficiencies in their technologies and produce a marketable and profitable fuel cell product.

Neither the author of the Small Cap Copy web log, Crystal Equity Research nor its affiliates have a beneficial interest in the companies mentioned herein.