The Fuel Cell Industry Review 2015 offers data and analysis by region, application and fuel cell type and includes objective commentary on key events in the industry over the past year.
Contributed by | E4tech
More fuel cell units, more installed power. That’s the simple headline for activity in the fuel cell industry in 2015. Behind that lies a struggle for commercial competitiveness, recognition, and even survival. One highlight of the year was of course the Toyota Mirai’s roll-out and the joyful advertising campaign that accompanied it, followed by Honda’s more restrained announcement of the 2016 Model Clarity Fuel Cell. On the stationary side, Doosan accelerated from modest shipments of its PAFC units to multiple MW of announcements and Bloom and FuelCell Energy continued their solid sales. Japan’s Ene-Farm programme hit around 140,000 residential CHP units.
The industry lost some more well-known names, notably Ceramic Fuel Cells Ltd, whose European SOFC microCHP operation was picked up by the newly-formed SOLIDpower (SOFCpower as was), and BIC (Angstrom technology) who decided to call it a day in the consumer electronics segment and sold their IP to Intelligent Energy. But Electro Power Systems successfully entered the French stock market, and companies including Bloom, eZelleron, Ballard and Swiss Hydrogen raised money. Plug Power acquired the rest of HyPulsion in France, Ballard bought Protonex, and some heavyweight competition entered the fuel cell forklift space as NACCO (Hyster-Yale) acquired Nuvera’s technology for its own vehicles.
At just over 70,000, units shipped in 2015 were only up slightly on 2014. However, we estimate that around 350 MW of fuel cells will have been deployed, not far from double 2014’s figure. The apparent discrepancy is easily explained; fewer tiny fuel cell chargers and more large units were shipped. Roughly twice as many cars entered the market, and more than double again should go out of the door in 2016. Even so, waiting lists for the Mirai are said to be around 3 years, and demand in general is far from being met by supply.
Frenzied hydrogen infrastructure building is underway too; some 46 public stations are near completion in California, perhaps a couple of dozen in Europe, and 74 should be ready in Japan by early 2016. The complexity of matching car roll-out and that of infrastructure is not easily solved, and it will be many years before fuelling is a sustainable business. Because of that it is strongly government backed, although Toyota and Honda have also funded station-builders, and the German H2Mobility consortium is now a private joint venture company, able to take that farsighted view and invest now for future returns.
In stationary applications, unit numbers are dominated by Japan: the Ene-Farm programme continues to expand and increasing (though still small) numbers of residential SOFC CHP units are being sold in addition to PEM. The market for large-scale units still belongs to FuelCell Energy (MCFC), to Bloom Energy (SOFC) and somewhat to Doosan (PAFC), though AFC Energy provided a welcome – if small – return for their alkaline chemistry. Most of the large units are in Korea, where the support programme remains generous and in the US, which also has state and federal programmes. Aside from that, telecoms backup remains a solid and strongly competitive market and so, increasingly, are entirely autonomous systems with their own hydrogen generation and storage.
Europe remains a slight anomaly. With many strong firms and some solid support, especially in Germany, and with development and demonstration financing available from the European FCH JU, European deployment is nevertheless much lower than the regions mentioned above: only around 10% of shipments in both unit numbers and installed capacity. This reflects the low or absent commercial subsidy regimes in comparison with these other regions, but also uncertainty in European energy markets, turmoil in the energy utilities, and the impacts of austerity regimes more generally. The only exception is buses; more fuel cell buses are operating in Europe than anywhere else, though this may change within a year or two if sales in China are realised.
It looks like 2016 will be a mixed year. Encouragingly, a number of large and credible orders and intentions have been announced – both stationary and transport. Ballard is working on sizable orders for trams, trains and buses in China, Hydrogenics has a solid order book which includes commuter trains supplied to Alstom, while Doosan and FCE also have many units to build. Aspirations are equally large – South Africa has installed one PAFC from Fuji but hopes to have many MW more. A few hundred MW of stationary power is easy to forecast, though some still depends on subsidy agreements.
Intelligent Energy now has nearly 40,000 telecom towers to manage, into which it would like to install fuel cells. Being your own customer requires knowledge of the actual operating business, but since the telecoms market is being targeted by many companies this may be a safer way to ensure participation than simply competing hard with everybody else.
We expect 2016 to bring even bigger fuel cell passenger car shipment numbers. 2,000 units of Toyota’s Mirai alone are slated to be handed over to customers, while Hyundai – which has cut its prices – will continue steady sales and Honda will start to lease the first few Claritys to favoured customers. Buses, trucks, vans and smaller vehicles will also continue to be released into controlled markets. We remain cautious about the very small end of the market, though design award-winning chargers will be released into the world by MyFC and eZelleron, and the rest of the portable power segment is likely to continue expansion.
At the same time, several important subsidy programmes may come to an end. Japan’s Ene-Farm subsidy is expected – but not guaranteed – to be renegotiated. The US investment tax credit is scheduled to run its course and while a major proposal for fuel cell support is in discussion enactment is far from certain.
Overall we remain cautiously positive. We think shipments will be significantly higher in 2016. We also fear a few more companies may start but not finish the year. What we can’t say is how many – if any – companies might make a profit from selling fuel cells.
The outlook for 2016… and a little beyond
2015 was an important year for fuel cells, with significantly increased sales in most markets. However, the industry’s steady progress overall since 2010 is still a fragile thing. In nearly every significant market, sales are supported by financial and non-financial incentives, several of which are scheduled to expire by the end of 2016. Of course, this is true even in established industries; the International Monetary Fund estimates post-tax energy subsidies globally at 6.5% of global GDP in 2015 (US$5.3 trn)1.
Competing technologies are entrenched in major growth markets, including combined heat and power and telecom backup power. In some related markets, such as energy storage, hydrogen technology is unfamiliar to customers, and lacks a developed business case and commercial terms. Round-trip hydrogen-fuel cell systems are regarded as uneconomic.
Competition is also not standing still. Widespread use of battery technology, for example, already limits or is believed to limit fuel cell access to light duty vehicle and other mobile markets, energy storage markets, and backup power systems. Battery advocates argue that technology improvements soon will make fuel cells redundant – though in many applications fuel cells augment batteries and a hybridised system is an overall optimum, suggesting that co-operation is rather more valuable than confrontation.
Despite this difficult backdrop, our view is more optimistic. Fuel cell technology is not standing still, either. Bloom Energy’s incredible shrinking power module now delivers 500 kW in the space that a 100 kW system required just a few years ago. Honda’s new 2016 model year Clarity includes a module small enough to fit comfortably into the same volume as its four-cylinder combustion engine, and system efficiency is yielding a vehicle range of well over 300 miles. Another way to look at it is to be clear that in most cases, fuel cell products are in their first or at most second generation, while batteries, combustion engines and gensets have a commercial development history of well over 100 years. As the actor Tommy Lee Jones said in Men in Black, “Imagine what we will know tomorrow.”
Stepping back, what strikes us is just how many credible forward looking announcements about fuel cells have been made in 2015, suggesting a healthy if probably not revolutionary increase in commercial deliveries in 2016. Shipments in the light duty vehicle market, for example, approximately 1200 vehicles in 2015, likely will double in 2016. Total installed fuel cell generation in the United States, reliably estimated at less than 180 MW today by a private source, could also step up if the proposed MW FCE facility in Connecticut receives timely approval. Similar year-on-year increases in capacity are possible in Korea as well, with POSCO Energy being joined by several other power park developers. Fuel cell bus orders, if delivered as promised, would more than double the bus fleet.
Looking a little farther ahead, Tokyo City, the Government of Japan and a list of major corporations are on board a collective effort to make the 2020 Tokyo Olympics a showcase for hydrogen systems, products and energy service. This is accelerating other local plans and developments.
By 2020 the industry ought to be seeing significant production of cars from General Motors, Daimler and perhaps Nissan, BMW and VW, plus range-extender and niche vehicles from other manufacturers. Would-be mobility provider (not car seller) Riversimple promises a new vehicle unveiling in early 2016, designed by the former design head of the Fiat 500. Production is targeted for 2018. Meanwhile California’s Air Resources Board projects more than 18,000 fuel cell vehicles in the state by 2020, with 6,500 by 2017. Even assuming half of all FCEVs will be sold in California, which is probably too high given Japan’s position and Europe’s desire, this implies a 2020 worldwide fleet of 35,000 vehicles carrying perhaps 4 GW of fuel cell power. Toyota’s aspiration to sell 30,000 FCEVs per year, on its own, by 2020 suggests even greater things.
We urge readers, however, to continue to approach these projections with caution, as markets remain thin, government policies will be under review, and it is not uncommon for contract sales to fall short of announced projections. Additionally for vehicles, it is essential that the many hydrogen refuelling stations under development are actually finished, and operate reliably. Alienating the first customers would be a poor start to a promising roll-out period.
Critical policies will be under review in 2016. In Japan, the government’s financial support for residential fuel cell installations is scheduled to decline to zero. Discussions on a follow-on program are under way. In the US, the 30% investment tax credit for purchases of fuel cell units expires at the end of 2016; a comprehensive proposal to extend and expand fuel cell support has been introduced but its future is highly uncertain. This incentive has been crucial to the success of both power generation and forklift sales. In the US States, support for fuel cell power generation and for hydrogen fuelling stations are typically reviewed annually and future funding at current levels is not guaranteed.
Few direct support programmes for fuel cells exist in Europe, though Germany’s NIP is large and valuable. Also, many FCH JU projects of significant size are under way, and are important to the development and increased profile of the sector. The FCH JU runs to 2020; projects will run for several years more, and while the current NIP finishes in 2016, funding is being continued. Other support mechanisms that can be exploited include the typical range of local feed-in tariffs, tax breaks for clean vehicles or subsidies for highly efficient equipment, but all are subject to local moods and whims.
Some confusion remains in the energy markets, however. Oil prices are lower than had been thought possible, squeezing margins for the big energy companies. Large utilities in Europe remain under pressure, as variable renewable energy capacity increases on the grid. In the UK, shutting down older power stations continues and the safety margin between likely demand and capacity is razor-thin. Quite what impact this will have on fuel cells is unclear, though distributed generation – and storage – have long been talked about as possible solutions.
The Paris climate change COP may have some impact. The world is already half way to achieving a 2°C rise over pre-industrial temperatures, and CO2 in the atmosphere has hit 400ppm. Air quality is increasingly poor and increasingly important politically, and the fallout from the admissions of cheating at VW is also unclear. While there does not seem to have been a public rush away from diesel, at the very least governments are realising that the emissions reductions they thought they were getting are far from real. Stricter testing regimes and yet-to-emerge responses could push car companies faster into new vehicles. Whether those will be fuel cells remains to be seen.
1How Large Are Global Energy Subsidies? Coady, Parry, Sears, Shang, International Monetary Fund (May 2015)
The Fuel Cell Industry Review 2015 offers data and analysis by region, application and fuel cell type and includes objective commentary on key events in the industry over the past year. The full report can be downloaded for free from www.FuelCellIndustryReview.com
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