In 2010, the Bloom Energy fuel cell, powered by natural gas, $400 million in cash from Kleiner Perkins Caufield & Byers and a 60 Minutes piece sucked most of the air out of the fuel cell market space, column-inch wise. 

Natural gas fuels the Bloom Box with low-carbon emissions and efficiencies in the range of a natural gas genset. After incentives, Bloom claims its server generates power for 9 cents to 11 cents a kilowatt hour, a calculation that includes fuel, maintenance and hardware expenses.

Bloom's 100-kilowatt solid oxide fuel cell (SOFC) sells for about $700,000 before incentives and the company will have shipped in the neighborhood of 100 pieces by the end of 2010 to marquee customers such as Walmart, Google and FedEx.  That's a significant amount of revenue for a young company, possibly on the scale to get to an IPO in 2011.  An SEC filing for a proposed IPO would reveal how much the Bloom Box costs to build versus its selling price.

But there are many other unprofitable fuel cell companies besides Bloom overlooked by 60 Minutes that we have covered at Greentech Media.

First, here's an updated list of the top three profitable publicly-held fuel cell firms:


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The not-profitable list is a bit longer and includes:

FuelCell Energy (Nasdaq:FCEL) reported revenue of $69.8 million in 2010 compared to $88.0 million for the comparable prior year. Net loss for the year was $58.9 million. FuelCell Energy builds molten carbonate stationary fuel cell power plants located at wastewater treatment facilities, universities, pump stations and other sites that need low-emission baseload distributed generation.    

Australian firm, Ceramic Fuel Cells builds SOFC-based small-scale on-site micro combined heat and power (CHP) and distributed generation units.  The AIM and ASX-listed firm lost about $19 million in the year ending June 2010 on sales of $2 million.  The company has some sales activity in Europe. 

Canadian-based Ballard Power Systems produced its one-millionth membrane-electrode assembly (MEA) this year, certainly a milestone in the commercialization of hydrogen fuel cell technology.  The MEA is the core component of its proton-exchange membrane (PEM) fuel cell and Ballard has seen a 30 percent annual reduction in the cost of its fuel cell products over the past two years.

Ballard lost $3.3 million on 2009 sales of $46.7 million at a 5.9 percent gross margin. Ballard has a range of fuel cell products including systems and components for residential cogen, distributed generation and backup power. The pioneering firm has been developing proton exchange membrane-based fuel cells and losing money since 1983. 

Plug Power (NASDAQ:PLUG), facing a Nasdaq delisting, lost $19.5 million in the second quarter of this year and $9.3 million on revenue of $5.8 million in the third quarter.  The company is now focusing its PEM fuel cells on the materials handling market (in other words: forklifts).  Oorja Protonics is also targeting this market.

Every fuel cell startup from MTI  (recently de-listed from Nasdaq) to Protonex (recently delisted from the AIM) all the way to multi-nationals like Toshiba have promised commercial fuel cell product for decades, but few have managed to reach commercialization, let alone profitability.  

Fuel cells were first demonstrated in the 1830s though it took another 50 years until the physics of the flow of electrical current in the fuel cell was understood.  It might take another hundred years or so until the art of making them a volume-scale and profitable commercial business can be fully understood.  

But VCs and entrepreneurs, God bless 'em, are not going to let a century of business failure halt their ambition.  Nor is Uncle Sam or other governments, which continue to pour millions into fuel cell technology development.  Major firms such as GM, Hyundai, Honda, Johnson Matthey, Panasonic, Siemens, Samsung, Sharp, Toshiba, Toyota, and UTC also invest in the fuel cell industry directly or as limited partners in venture capital firms.

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There are a variety of fuel cell technologies, fuels and applications.

Technologies use an assortment of membranes, catalysts and temperatures, but in almost all cases the membranes are difficult and expensive to fabricate, the catalysts are rare and expensive (typically platinum or palladium), and the temperatures are relatively high.  Fuels range from natural gas to methanol to methane to hydrogen and to other feedstocks.  Many fuels require a reformer step to provide hydrogen.  Applications include portable, small stationary, large stationary, transportation, auxiliary power units (APUs) and military.

According to Price WaterhouseCoopers, shipments of fuel cell systems in 2009 were approximately 24,000 units, an increase of 41 per cent compared to 2008.

Here's a partial list of firms in the fuel cell ecosystem:

 

Fuel Cells for Portable Power

EZelleron is a German-based mobile fuel cell company focused on devices in the 1-watt to 400-watt range.

Wilmington, Mass.-based Lilliputian Systems recently received an investment from Intel Capital for the startup's butane cartridge-powered fuel cell charger for consumer devices. The firm was spun out of MIT in 2002 and has raised more than $90 million from VCs including Kleiner Perkins, Atlas Venture, Fairhaven Capital, Rockport Capital, Stata Venture Partners and Altira Group. Lilliputian looks to combine silicon economics and fuel cells.

Neah Power, originally venture-funded by Intel, Novellus, et al., became a public firm traded on the OTCBB via a reverse merger in 2006. Neah is developing power solutions for military, industrial and consumer applications using a silicon-based Direct Methanol Fuel Cell (DMFC) design that potentially offers higher power densities, lower cost and compact size.  The company will be "going after specialized markets," adding that fuel cells "are never going to compete with the grid." Neah has managed to capture a number of customers in the portable power market, including Hobie Cat, the marine craft company, and Indian scooter manufacturer Eko Vehicles. CEO Chris D'Couto believes that fuel cell pricing must be in the $1.00 to $1.50 per watt range for widespread consumer adoption.   

Point Source Power, a startup spun out of research conducted at Lawrence Berkeley National Labs and funded by Khosla Ventures, has devised a fuel cell for emerging markets.  Potentially, consumers will be able to insert biomass into a small case, close it up and put it into a cooking pit or fire.  As it heats, the biomass generates gas, which is converted into electrical power via a ceramic membrane inside the device.  The company hopes to test prototypes later this year in Kenya.

Enymotion of Germany, funded by High-Tech Gruenderfonds and Zukunftsfonds Heilbronn, builds fuel cells for APUs fueled by a mixture of propane and butane.

SFC Energy is a German-based firm building portable fuel cells for consumer, small commercial and military usage.  Methanol is the fuel for these Direct Methanol Fuel Cells (DMFCs).  SFC lost $5 million on $11.5 million in revenue in the first nine months of 2010.

MyFC, based in Stockholm, Sweden is a PEM fuel cell startup focused on consumer device charging.

Trulite builds fuel cell powered portable generators ranging from 100 watts to 400 watts for consumer, commercial and military applications.

 

Fuel Cells for Stationary Power

ACAL Energy, based in the U.K., builds platinum-free or low platinum-content PEMs for stationary, residential and automotive applications requiring more than 1 kilowatt of power.  The firm raised $4.8 million in 2008 from CT Investment Partners, Rising Stars Growth Fund, NorthStar Equity Investors, Porton Capital and Synergis Technologies along with more funding in May of 2010.

ClearEdge Power builds a fuel cell that converts natural gas into heat and electricity for small businesses and residences.  The start-up has raised more than $50 million from investors including Applied Ventures, Big Basin Ventures and Kohlberg Ventures and is starting to ship a 5-kilowatt fuel cell that costs about $10 per watt. The firm targets architects and high-end homes and small businesses.

CellEra, based in Israel, is developing a stationary PEM fuel cell with a design that eliminates the costly platinum catalyst.  The firm targets units in the one-kilowatt to 20-kilowatt range and has received funding from Israel Cleantech Ventures and BrainsToVentures.

AIM-listed Ceres Power of England is releasing a one-kilowatt household SOFC fuel cell that can, in part, be built from diesel engine components.  The fuel cell will provide methane-based combined heat and power (CHP) and will take advantage of the U.K.'s micro-CHP feed-in tariff.  The firm lost $18 million on sales of $1.2 million for the year ending June 30, 2010.

Electro Power Systems of Italy builds fuel cell-based cell tower back-up systems ranging from 1.5 kilowatts to 12 kilowatts.  The firm raised $6.8 million from 360 Capital Partners and others in 2009.   

IdaTech is a publicly traded PEM fuel cell firm that's shipping product in the remote power market with a focus on telecom cell tower back-up.  IdaTech is publicly traded and floated on London's AIM in 2007.  The firm shipped 445 systems in 2009 and doubled its 2008 revenue from product sales to $4.5 million, while managing to post an operating loss of $33.5 million in the time-honored, money-oxidizing tradition of fuel cell companies.  In CEO Hal Koyama's view, the fuel cell industry was "seeding the market in 2006 and 2007" and has "just about hit critical mass." In October of this year, IdaTech acquired the assets of Plug Power’s liquid  petroleum gas off-grid and backup power stationary fuel cell product lines.

Intelligent Energy of London builds PEM fuel cells for automotive and stationary applications.  In 2008 the firm embarked on a combined heat and power (CHP) joint venture with U.K. utility Scottish and Southern Energy. The firm has raised more than $100 million from investors including Meditor European Master Fund.  For the year ending Sept. 30, 2009, Intelligent Energy lost $11.9 million on $6.9 million in sales.

Oorja Protonics, which specializes in methanol fuel cells, is developing a 5-kilowatt fuel cell for powering homes and small businesses or to provide backup power to cell towers.  The firm has received funding from Sequoia Capital.

P21 is headquartered in Brunnthal (near Munich), and was spun out of Vodaphone a decade ago to develop PEM-based fuel cell systems to supply backup power for the mobile communications industry. The firm raised $13 million from Goldman Sachs, Target Partners and Conduit Ventures.  Conduit Ventures is a VC firm that specializes in fuel cell investments, although the firm has enlarged its scope in recent years.

Sweden's PowerCell is building carbon monoxide-tolerant PEM fuel cells for truck and marine auxiliary power units (APUs).

Pragma Industries of France has raised funding from Finaqui and Oséo Capita to develop PEM fuel cells ranging from 100 watts to 10 kilowatts.

 

Other Fuel Cell Firms

Emefcy is an Israel-based microbial fuel cell (MFC) startup funded by Israel Cleantech Ventures, Plan-B Ventures and Pond Ventures.  The MFC produces electricity while remediating waste water in the process.  Other microbial fuel cell startups include Hy-SyEnce, IntAct Labs, Trophos Energy and Pilus Energy

Franklin Advanced Materials builds materials for SOFCs.


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Declining prices, government incentives, demand for cleaner power and improving technology have begun to revive the fuel cell industry. In the U.S., fuel cell incentives include a federal tax credit for 30 percent of the cost of a fuel cell.  California kicks in another $2.50 per watt.  The U.K. has a feed-in tariff for micro CHP which readily applies to fuel cells

Without a doubt, there are some applications for which fuel cells make perfect sense, such as premium power for the military, remote sites, construction industry, travel, etc.  But fuel cell firms have learned the hard way that they must focus on the requirements of specifically addressed niche markets.

IdaTech President and CEO Harol (Hal) Koyama, offers this optimistic outlook for the fuel cell industry: "With fuel cell products reaching competitive levels with incumbent technologies and significant adoption advances, 2011 could potentially bring a step change in commercial growth in our industry.  Watch for the leading indicators that fuel cell technology is becoming a mainstream product in critical power, material handling and possibly other major applications."

Maybe we'll see some profitable fuel cell companies in 2011.

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