Fuel cells are here today, available for purchase and already taking off in early markets such as the telecommunications industry, materials handling equipment, and combined heat-and-power stationary systems.

State of the States: Fuel Cells in America

Elizabeth Delmont | Fuel Cells 2000

The United States is currently home to major fuel cell manufacturers and start-ups, fuel providers, as well as hundreds of component suppliers and end users involved at one point or another on the development and manufacturing spectrumFuel Cells 2000 estimates that there are more than 630 active companies and laboratories in 47 states involved in the fuel cell and related fuels industry, investing an estimated $1 billion a year.

Other countries, including Japan, Korea, and Germany, are aggressively pursuing fuel cell development, deployment, and opening new markets, and they are anxious to lure companies overseas and overtake the US advantage.  To understand America’s success in the fuel cell industry, Fuel Cells 2000 has analyzed each state’s energy plans, tax and grant incentives programs, and fuel cell installations in a new report, State of the States: Fuel Cells in America.  By comparing neighboring states by region, we chose the top five fuel cell states, and what policies other states can adopt to spur their own fuel cell programs, and continue US excellence in the industry.  The top five states were:  California, Connecticut, New York, Ohio and South Carolina. We segmented the country into seven regions, and provided a snapshot of the fuel cell and hydrogen activity in each state.  The best five states were selected from our analysis. 

We started by examining the policies in place that are supportive of fuel cell and hydrogen technologies, including fuel cell and hydrogen roadmaps, renewable energy standards, net metering and interconnection standards, tax incentives, and grant opportunities.  For the roadmaps, we also looked at a state’s willingness to implement these plans and the extent to which the tax and funding incentives were reasonable considering today’s market availability.

The report also accounts for the number of fuel cell vehicles in the state, including fuel cell buses, cars, and materials handling units, as well as the hydrogen stations to support these vehicles.  We looked at small and large stationary installations, as well as past fuel cell demonstration projects.  This allowed us to gauge a state’s interest in fuel cell applications, as well as how successful incentive programs have been.  Where applicable, major fuel cell manufacturers were highlighted.

Highlights by Region

States in the Pacific region are among the nation’s leaders in fuel cell applications with their fuel cell installations and policy.  Due to these positive policy climates, the Pacific is home to some of the largest fuel cell installations, and California is one of the top five fuel cell states in the country.

California is a stellar example of how policy can influence the market, with the Self-Generating Incentive Program (SGIP) helping to fund many recent large-scale stationary installations.  California also leads the country, if not the world, with fuel cell vehicle and bus demonstrations and hydrogen fueling stations, with over 300 customer leases and demonstrations of fuel cell vehicles in the state alone.  California is developing a hydrogen highway to support these vehicles with 22 stations built and 10 more planned. California is also home to small installations, and ReliOn, a fuel cell manufacturer located in Spokane, Washington, has received American Recovery and Reinvestment Act funds to deploy 180 fuel cells at 25 Northern California locations for utilities communications networks.

FuelCell Energy Units at The Sheraton San Diego

 Hawai’i, Oregon and Washington are also actively pursuing fuel cell markets.  Hawai’i has many policies in place to support this technology, and Oregon’s Congressman, David Wu joined with a representative from California to secure tax parity for residential fuel cells.  Oregon and Washington are both home to fuel cell manufacturers, and both states have small fuel cell systems in place.

The Pacific states have a reputation for environmental stewardship and action.  Fuel cells help maintain this green image, because they have no emissions at the source, and can be used with a variety of other clean technologies such as solar, wind, and biogas.  Fuel cells are very quiet, so they can be installed in natural spaces with minimal disruption to visitors or residents. 

New England
New England has become a hotbed of fuel cell activity, with major stationary fuel cell installations, fuel cell buses, and favorable policy and tax environments for those looking to invest in fuel cells.  The region has two fuel cell buses, one in revenue service in Hartford, Connecticut (with more planned), and the other planned for service in Boston, Massachusetts.  Four hydrogen stations are located in this region.
Connecticut and Massachusetts excel compared to the other states in the region, in terms of supportive policies, state activism, and current installations. They both stand out with generous grant programs and comprehensive energy policies, and they are home to several major fuel cell manufacturers.  In the region, only Connecticut has fuel cell and/or hydrogen language in all five policies that we examined.  Massachusetts has many fuel cell policies, and offers more than 10 stationary fuel cell installations, including a Whole Foods Market located in Dedham.  

The other states in the New England region should emulate Connecticut and Massachusetts for a number of reasons.  First, New Hampshire and Vermont have a national reputation as eco-friendly, green, and independent states.  Fuel cells emit no greenhouse gases at the source, and can be used with a wide variety of clean energy friendly fuels.  Fuel cells can offer businesses, homes, and communities the option to operate independently from the grid, even in conjunction with other renewable energy sources such as solar, wind and hydro-power.  Fuel cell technology can also provide an economic benefit to states.  According to the Connecticut Center for Advanced Technology, Connecticut estimates that 240 jobs are created per megawatt of installed fuel cell capacity.  Additionally, for every dollar invested by fuel cell companies, the State receives $0.84 in tax and other revenue. 

The Mid-Atlantic is working diligently to create markets for fuel cell applications.  Chevy Equinox fuel cells vehicles were deployed in both New York and Washington, DC as part of the General Motors “Project Driveway” program in which everyday drivers helped the company test the vehicle in real-world settings.  There are five fuel cell buses in the region, including two at the University of Delaware.  The region is truly outstanding in materials handling vehicles; there are 61 fuel cell-powered forklifts at a Whole Foods distribution center in Landover, Maryland, a Wegmans warehouse has 59 fuel cell powered material handling vehicles in Pennsylvania, and GENCO has received American Recovery and Reinvestment Act funding for fuel cell powered forklifts for distribution centers across the country.  Washington, DC is also home to the first hydrogen pump at a public Shell station in the US. 

Delaware has paved the way for fuel cell manufacturing to move into the State and is actively pursuing grant opportunities to lure businesses to Delaware.  New York, also, has set up a great financing mechanism through the New York State Energy and Research Development Authority (NYSERDA).   Due to NYSERDA, New York is home to many stationary fuel cells at a variety of locations, including five wastewater treatment plants operating on anaerobic digester gas, a renewable source of energy.  New York is home to at least 22 public safety communications sites whose backup power is provided by a fuel cell system.  Other notable installations include a Coca-Cola facility in Elmsford, New York, several hotels, the New York Aquarium, and even the NASDAQ sign in Times Square!

New Jersey has a long-standing reputation as a leader on environmental issues, and it has a home grown fuel cell movement.  A private resident of the State has converted his home and car to fuel cells, with his own, self-built hydrogen reformer.  Also, BASF, a fuel cell component supplier has shut down its facilities in Germany, and moved to Somerset, New Jersey.  Similarly, another fuel cell manufacturer, Smart Fuel Cells, based in Germany, has recently moved its North American headquarters from Atlanta, Georgia to Rockville, Maryland.

The South’s hotbed of fuel cell activity is found in South Carolina, which is why it was chosen as one of the top five states.  The State, and city of Columbia, want to be fuel cell leaders and are working with the University of South Carolina to facilitate fuel cell research, development and demonstrations.  The South Carolina Hydrogen and Fuel Cell Alliance is also building a fuel cell industry in the State.  The Alliance reports 65% job growth in the State’s hydrogen cluster since 2004 and a ten-to-one return on investment in the industry.  The state is home to two hydrogen stations, linking Columbia and Aiken in a “hydrogen highway”.

Two fuel cell buses are planned in the South, one in Columbia, South Carolina, and one in Chattanooga, Tennessee, and a USPS fuel cell delivery truck operates in Virginia.  Fuel Cell forklifts and other materials handling vehicles are abundant in the region with 40 Department of Defense vehicles in Georgia and Virginia, 40 at a Coca-Cola facility in Charlotte, North Carolina, 22 at a Bridgestone-Firestone facility in Aiken, South Carolina, and 60 at a Nissan North America facility in Tennessee.

Although many of the states in the South have tax incentives, they are not being fully utilized, because of lack of political will to advertise them, or because they are for fuel cell systems not readily available.   Tax incentives could be created that match current federal tax incentives for combined heat and power fuel cell systems, which can be purchased for homes and small business. 

In the Gulf region, Florida and Texas have been the most active supporters of fuel cells, with a number of vehicle deployments.  There have not been many large fuel cell installations; however, where the Gulf thrives is small stationary fuel cell installations.  There were a number of smaller Department of Defense stationary demonstrations in the 1990’s, as well as past and present small stationary demonstration projects, such as telecommunications back-up power, primarily in Florida and Texas.

 Florida has taken a leading role in promoting the fuel cell industry by designating it as a Qualified Target Industry, providing tax refunds for companies that create high wage jobs.  The state has also launched H2 Florida, a statewide program to accelerate the commercialization of hydrogen technologies.  Florida is home 65 fuel cell powered forklifts at a United Natural Foods facility and two hydrogen fuel stations in Orlando.  Florida is also leading the Gulf in small stationary applications, with fuel cells providing key back-up power at telecommunications site across the state. 

Texas is also breaking ground in the fuel cell industry, using their hydrogen roadmap to increase hydrogen production and increase demand in the transport sector.  There are over 100 fuel cell powered forklifts deployed across Texas at places such as Nestle, Sysco, and H-E-B Grocers.  The University of Texas has a hydrogen station, and there are plans for a fuel cell bus at UT, Austin. 

Fuel cells can provide necessary power in remote areas, which could be incredibly beneficial to communities across the gulf region.  Additionally, fuel cells can provide quality, consistent, and reliable back-up power to hospitals, government buildings, and emergency responders, which could help a region beset by violent weather.  The fuel cell industry also supports a wide range of other businesses in the supply chain, such as parts manufacturers, and precision metal manufacturers.

Two states strongly stand out in the Mid-West region – Ohio, with its plethora of research and manufacturing and proactive business development policies; and Michigan, with its roots in the auto industry.  In Michigan, through the US Department of Energy Hydrogen Learning Demonstration Program, there are four Ford Focus fuel cell vehicles, and five Daimler F-Cell vehicles.  There are over 250 fuel cell forklifts deployed in the Mid-West, with 220 at a Central Grocers facility in Joliet, Illinois.  The region is also home to hydrogen fueling stations in Minot, North Dakota, Chicago and Des Plaines, Illinois, and Crane, Indiana.  Farm-focused states, such as Minnesota, are realizing the potential of using biomass, methane and other farm-produced anaerobic digester gas in fuel cells.  Small fuel cell systems are powering radio and telecommunications systems across the Mid-West.  The Mid-West is also home to large megawatt sized systems, like the system installed at the First National Bank of Omaha.

Even with a strong policy framework in the Mid-West, there are still states with no fuel cell vehicles or stationary installations.  South Dakota, Oklahoma, Arkansas, Kansas, and Iowa lack permanent installations, although some of these states participated in the Department of Defense demonstration program. 

Ohio stands out not only as one of the best states in the Mid-West, but one of the best states in the Country for the development of the fuel cell industry.  The Ohio Department of Development has created the Third Frontier Program, to help boost Ohio as a national leader in technology, and the program has created or retained 48,000 jobs statewide.  Ohio, who has also managed to entice large corporations to the state, such as Rolls Royce, serves as a strong example to the other states in this region.  The Mid-West already has a manufacturing history, and a thriving fuel cell industry could help retain these industries in the region.  Fuel cells also provide outside the box solutions for farms, and industries looking to deal with waste in an environmentally and business friendly way. 

The West, with a few exceptions, is a relatively quiet region with respect to fuel cell installations and demonstrations.  The region has a substantial amount of policy, but little action in terms of actual fuel cell installations.  Many of the fuel cell installations in the West were initiated by the US Department of Defense through their various fuel cell demonstration programs at military bases and facilities and have since been decommissioned. 

The Deaconess Billings Clinic in Billings, Montana is the first fuel cell/microturbine hybrid in the nation.  The fuel cell provides base load power to the hospital.  Small stationary systems power National Guard communications in New Mexico and the Washington Park Fire Station in Denver, Colorado.  In Wyoming, the Bighorn National Forrest and Yellowstone National Park have had small scale demonstrations in the past.

Fuel cells are already being used in warehouses, wastewater treatment plants, corporate headquarters, and vehicles across the country.  States are beginning to recognize the specific benefits of fuel cells: clean, quiet, reliable, adaptable renewable energy.  As the pressures to reduce greenhouse gas emissions increase, fuel cells should become part of a larger portfolio of clean energy sources.  Some states are starting to see how a combination of policies and action can encourage the use of fuel cells.  Not only are these states seeing environmental benefits from fuel cells, but they are also seeing an economic benefit in terms of job growth, and tax revenue.  States looking to increase their involvement in the fuel cell industry can learn from their neighbors and from past fuel cell demonstration projects to help the whole country move to a more sustainable future.

For more information about the policies and installations in each state, or to download the report for free, please visit: http://www.fuelcells.org/statereport.html.

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