We've noticed that fuel cells have the unique ability to strip hydrogen atoms of their electrons and venture capitalists of their money. This has prompted the GTM Fuel Cell Profitability Challenge (tm) we've had in effect for a few years.

We are looking for a firm to populate the list of profitable fuel cell companies -- which currently looks like this:


A few firms might be in striking distance -- FuelCell Energy (Nasdaq:FCEL) has had two consecutive quarters with positive gross margins and perhaps some others. Maybe ClearEdge Power has a shot in a year.

But now it looks like Oorja Protonics might be the first entry to populate our perennially empty list.

Oorja, founded by CEO Dr. Sanjiv Malhotra, is based in Fremont, California and builds liquid methanol-powered fuel cells. Oorja has focused on a narrow vertical for the last few years: battery rechargers or range extenders for industrial material handlers and forklifts. It might sound like a small market, but think about the fleets of material handlers and forklifts in big-box stores, distribution warehouses, and everywhere stuff gets moved. These units are in the 1.5-kilowatt size range and there are tens of thousands of them.

And there is a clear pain point for the customer. The current technology, lead-acid batteries, doesn't have the energy or energy density for forklift job requirements. Plus, the traditional technology has to be swapped out every four to six hours and then needs to charge for 12 to 14 hours. The fuel cell solution keeps the forklifts in action without the recharge downtime.

Malhotra has decided to focus the company's efforts on this niche market and provide a complete solution to the customer. The company has been shipping into this market for three years and volumes are steadily increasing. The CEO claims that the firm has a dozen customers and has shipped about 500 units to date. Even more promising is the fact that customers are returning, order sizes are rising, and this current quarter will see the company as "profitable before tax." End-customers for the fuel cells include large food handlers such as Baldor and Golden State Foods. And now that reliability and value have been established, forklift OEMS are looking to design-in this product.

With a firm beachhead established in the forklift market, Oorja is moving to other verticals. The company has embarked on joint development agreements to address the electric vehicle market with an automotive OEM in the 5-kilowatt to 10-kilowatt size range.

Other joint development agreements are addressing the stationary fuel cell market.

Current manufacturing capacity is about 100 units per month, while the firm is building 30 to 40 units per month. Fuel stack assembly and final assembly are done in Fremont.

The CEO expects the current fuel cell to last 7,000 hours to 8,000 hours. He has developed a viable path via which that figure might be doubled.

After 150 years of less-than-successful entrepreneurial fuel cell efforts, Oorja has a real chance of demonstrating "fuel cells done right" -- and the potential to be the lone entry on our profitability list.