As some of you may know, last week we published our 2012 Industry Review and I was quoted as saying “2011 was a very exciting year for fuel cells, the technology is proven commercially in many applications and in some cases fuel cells are now selling without subsidies”. We expect 2012 to show even better growth and I also made the comment that we “could expect the first fuel cell companies to become profitable in the coming year”. So why was 2011 so exciting, what makes us think 2012 will be any better and what led me to talk about profitability of fuel cell companies?
Fuel Cell Today has reported on developments in the fuel cell industry for eleven years now, witnessing many companies come and go, with hopes for commercialising fuel cells seemingly dashed along the way. Only in recent years, since around 2007, have we seen significant progress for the technology. Recognition from governments has coincided with improvements in durability and reductions in cost – resulting, in 2011, in certain fuel cells no longer requiring subsidies to compete with incumbent technologies such as batteries and generator sets.
To make the success of these fuel cells more visible this year we chose to remove toys and educational kits from our data; the graphs and figures in the Industry Review now reflect growth in end-use industrial fuel cells operating globally to provide useable electricity and heat. In 2011 annual shipments were 24,600 – growing by 39% compared to 2010, led by increases in the stationary power sector. For the first time these fuel cells contributed to a total annual megawatts (MW) shipped figure of more than 100 MW.
In 2012 we forecast annual shipments will triple compared to 2011, reaching a total of over 78,000 for the full year. The most dramatic growth in fuel cell system shipments will be in the portable sector with the widespread commercial release of fuel cell chargers for consumer electronics. Annual megawatts shipped are expected to grow by over 60%, to around 176 MW, with large stationary power deployments in South Korea and North America expected to boost this figure.
In this year’s Review we have included three special features. The first looks at the success enjoyed in the USA as a result of the Recovery Act funding. This programme was launched in 2009 and by 2012 had exceeded its initial targets in terms of fuel cell systems deployed. It has also been a driving force behind the success of fuel cells in America in recent years, paving the way for almost 5,000 fuel cell systems which have been ordered without financial support.
Special feature two looks at a specific application where fuel cells are able to provide unique benefits – data centres. Major names in the USA, such as eBay, Apple, AT&T and NTT, have identified fuel cells as the necessary technology to meet the power hungry needs of their data centres. More are likely to follow.
The final special feature looks back to the infamous interview of US Energy Secretary Steven Chu talking about the ‘four miracles’ needed to enable fuel cells in transportation. Dr Chu has altered his view in recent times, now voicing his support for the technology – a positive move for fuel cells. This special feature looks at what appears to have changed his mind during the past three years.
So finally, what about profitability? Ballard, at its 2011 annual results presentation, announced its outlook for 2012 with expectations to “approximately break-even” in terms of adjusted EBITDA. This was quickly revised two weeks later due to delays in contract negotiations in Brazilian and European bus markets, but progress is clearly being made and I believe Ballard’s focus on fuel cell buses and the stationary telecommunications sectors will be vital to a positive balance sheet in the future. One of its customers, Plug Power, is also making progress; still loss-making, but improving year-on-year and with its targeted entry to the European materials handling market (more than double the size of the US market) success could happen soon. Deloitte included Plug Power at number 473 in its 2011 Fast 500 (an annual list of the 500 fastest-growing technology companies in the United States and Canada). Higher on that list was ReliOn, listed at number 148 and its success in the telecommunications space is clear to see.
FuelCell Energy was listed at number 434 in the 2010 Fast 500, but does not appear this year. I wouldn’t say this means it is doing worse, in fact quite the opposite. While it has recently had a bad quarter, this was in part due to lower margins on the kits it is shipping to POSCO Energy in South Korea versus the full fuel cell systems it produces for domestic use. Its Korean agreement is set to grow, with POSCO Energy manufacturing full systems from 2014, and FuelCell Energy is perfectly placed to take advantage of the support for fuel cells offered by the country.
The Fuel Cell Industry Review 2012 is available as a free download from www.fuelcelltoday.com and we welcome any feedback you have on the report; free printed copies are available upon request.
Dan Carter Manager