This May Be The Turning Point For The PEM-Fuel Cell Manufactures
Summary:
The proton exchange membrane (PEM) fuel cell makers may have found their first mass transportation product in the material handling section. Their demonstration projects all show potential advantages over the existing lead-acid based solution. undefined undefined This bodes well for companies like Ballard, Hydrogenics, Nuvera, and Plug Power, if they can manage the growth with the market..
Analysis:
The introduction of PEM fuel cells into the material handling / forklift sector provide companies like Ballard [NASDAQ:BLDP], Hydrogenics, Nuvera, and Plug Power [NASDAQ:PLUG] with a very real market in a very controlled environment. Up to now the market for PEM fuel cells have been rather elusive. Ballard’s and Hydorgenics’ focus on the automotive markets and the others focus on the stationary market.
The material handling market is attractive as the forklift fleet in the large warehouses typically is required to work at least two and often three shifts. Because of emissions, gasoline or propane powered units are not practical in the enclosed spaces, which traditionally has limited the energy choice to flooded lead acid batteries. However, flooded lead acid batteries have the following deficiencies:
- Last only 4 to 6 hours before they have to be recharged
- Experience loss of power at end of discharge due to reduced battery voltage
- Typically need two people with lifting equipment to be changed out for recharging
The implications of those deficiencies are that the forklifts show reduced performance before the batteries are changed out, and the warehouse may need three sets of batteries (plus spares) for each forklift to operate them continuously, a significant space allocated to charging batteries and extra personal to help change out the batteries.
The fuel cell pilots have shown that the forklift can operate up to two shifts on one charge, and the forklift operator can do the refueling in minutes. Furthermore, the fuel cell does not experience the power loss towards the end, so the forklift can operate at full capacity up to the refueling just like a propane powered forklift can.
For the pilots the fuel cell manufactures have provided not only the fuel cell systems for the forklifts but also the refueling infrastructure.
Going to market, each manufacturer has their strength and weaknesses. Nuvera seems to be the best positioned right now. They have a well-defined product for the market that can replace lead acid batteries in the existing fleet. Furthermore, Nuvera has a strategic relationship with East Penn, a major supplier of lead acid batteries to the material handling sector, and they have solid investor backing in Hess Oil [NYSE:HES].
Plug Power is entering the market aggressively with the purchase of Cellex Power Products back in 2007, and, like Nuvera, they have a well-defined product for the market that can replace lead acid batteries in the existing fleet. However, unlike Nuvera and Hydrogenics, they do not have their own hydrogen generation fuel station.
Hydrogenics seems to have a very attractive and flexible product in its modular fuel cell, but it does not appear to be a direct battery replacement and would require collaboration with a forklift manufacturer to be incorporated. However, they have a long tradition for hydrogen generators, and they could easily position them self as a provider of hydrogen fuel stations for the sector, and their modular systems would make a lot of sense to tailor the size of the station to the local needs.
Even though Ballard started out focusing on the car market, it would appear that they are better positioned for the larger scale stationary power system based on their sale of a 1-MW unit to First Energy [NYSE:FE], and despite their pilots at Wall-Mart and Nissan(NASDAQ:NSANY), it is not obvious how well they are positioned for the material handling market.
In any case this is a very exciting development for PEM fuel cells as it is the first “mass market” application. It will require the participants to scale-up up their production lines, which eventually also should increase reliability and reduce cost, opening the way for other applications.
