Select Committee on Science and Technology Appendices to the Minutes of Evidence


APPENDIX 49

Memorandum submitted by Dr Nigel Brandon, Chief Executive Officer, Ceres Power Ltd, and Senior Lecturer in Electrochemical Engineering, Imperial College London

  In my opinion there is no relevant published information so I have prepared the following, following consultation with others in the UK fuel cell sector. It is necessary to describe the UK situation in the context of the global developments for each major application. This makes the discussion more complex, but enables a proper perspective. The UK has world class component players, emerging fuel cell developers and a leading science base. The ability of these organisations to take part in this emerging global market will be enhanced should the Government implement and promote a proactive commercialisation strategy. Furthermore, it is vital to note that a successful UK fuel cell sector will require a strong home market for its products.

1.  COMMERCIALISATION WILL REQUIRE PUBLIC-PRIVATE CO-OPERATION

  The fuel cell is probably the only technology able to simultaneously address the problems of environmental degradation and energy security associated with growing energy demand. However, the major benefits of fuel cells (increased energy security, reduced CO2 and pollutant emissions) will accrue to society as a whole as well as the user. In addition, fuel cells are a disruptive technology. Consequently broad mass-market acceptance of fuel cells before the end of the decade is only likely to occur with appropriate public support. The successful introduction of fuel cells will require unprecedented public-private co-operation. Before fuel cells can be successfully introduced a number of conditions must be met. The following are believed to be the most critical, ranked in order of urgency:

    —  Remove barriers to commercial introduction. The current regulatory environment makes it extremely difficult to install and operate a small fuel cell CHP power plant or hydrogen fuelled vehicle for example.

    —  Extensive demonstration and field trials are critical to commercialisation—and these should reflect not only existing first generation technologies (largely to be found outside the UK), but also the emerging second generation fuel cell technologies, where the UK is particularly well placed.

    —  Market entry support to help "push" the technology in early years.

2.  A MULTIPLICITY OF POTENTIAL APPLICATIONS

  A number of potential applications are beginning to emerge for fuel cells and it is this multiplicity of opportunities and the synergies between them that will help ensure the successful commercialisation of this benign technology. Issues (such as cost, timescale and market potential) can only be examined in the context of each application.

2.1  Portable Generators and Battery Replacement

  On 3 December 2002 Coleman Powermate launched the hydrogen fuelled 1kWe AirGenTM generator at a retail price of $5,995 (£3,818) in the US. Earlier this year Smart Fuel Cell GmbH launched a portable fuel cell in Europe. The system has an output of 25W continuous and up to 80W peak. The exchangeable 2.5 litre methanol cartridge yields 2500 Watt-hours of electrical energy. Other companies are also marketing portable fuel cell generators. The current high price of these systems will limit their use to niche applications and annual sales of tens of thousands of units are expected in the early years. Technology development and cost reduction efforts directed primarily at residential and automotive applications will help reduce prices and allow increased market penetration. Global annual sales potential could approach a million units by the end of the decade. These units will not only take market share from conventional ICE generators but also replace batteries in, for example, UPS applications.

  UK industry has the potential to become an important supplier of high value components (including fuel cell stacks) to original equipment manufacturers (OEMs) especially if the component suppliers are able to exploit the opportunity for residential fuel cell CHP units where synergies exist with portable power systems. UK developers anticipate sales of around 50 MWe per annum into this sector by 2010.

2.2  Battery replacement products for hand-held electronic devices

  The tremendous growth of portable electronic devices such as cell phones, notebook computers, camcorders, etc. (®400 million units sold each year) coupled with an increasing burden on battery life as applications become ever more complex has created concern amongst device manufacturers about power requirements.

  The higher energy density and fast refuelling characteristics of fuel cells in comparison to batteries would lead to both longer operational time and serve the power demands of next generation portable electronics. Casio, HP, NEC and Motorola all have ambitious fuel cell programs. The major manufacturers are expected to launch mass market products in 2004-05 and a multi-million unit market is expected by 2010. However, substantial technical challenges still have to be solved.

  UK industry could be seen as a potential supplier of materials and components. However, there is limited activity in device R&D in the UK, which limits opportunities in this area.

2.3  Residential and Commercial Cogeneration

2.3.1  Small (100 to 300kWe) Commercial Cogeneration

  The most mature fuel cell system is the PC25, a 200kWe on-site commercial cogeneration unit produced by UTC Fuel Cells and their joint venture partner Toshiba. Over 250 units have been delivered since 1992 and they have demonstrated reliability and durability that is already significantly better than mature conventional cogeneration equipment. The longest run is 57,738 hours and the longest continuous run is 9,506 hours (13 months). At over £3,000 kWe per ex-factory, they are too expensive for general acceptance but high value applications are showing promise.

  Woking Borough Council in the UK has installed a PC25 and has provided the following analysis.

  With the installation of the Woking Park Fuel Cell CHP project a direct comparison has been able to be made with photovoltaics (Woking has the largest concentration of photovoltaics in the UK), as follows:


Photovoltaics
Fuel Cell CHP

Electricity Generation
200 kWp
200 kWe
Heat Generation
264 kWth
Electricity Production pa
150,000 kWh
1,629,360 kWh
Heat Production pa
2,150,755 kWh
Total Energy production pa
150,000 kWh
3,780,115 kWh
Cost per kWElec
£6,0001
£5,2352
Cost per kWElec + Heat
£6,0001
£2,2552
Reduction in CO2 Emissions
150 tonnes pa3
1,740 tonnes pa4


  1.  DTI Major Demonstration Photovoltaic Demonstration Programme 2002—Guidance Notes: Section 4.

  2.  Woking Park—Fuel Cell CHP Turnkey (supply and installation) Contract Price.

  3.  Energy Efficiency Good Practice Guide 116.

  4.  US Department of Energy (Fuel Cells 200 Europe Conference 17-19 October 2000).

  This demonstrates that fuel cell CHP is more economically viable than photovoltaics (but still needs economic support—at least when based on (exisiting) PAFC technology) and will have a far greater impact in reducing carbon dioxide CO2 emissions than photovoltaics, even when the fuel cell CHP is fuelled by natural gas.

  While the UK has no PAFC technology, it does have second generation fuel cell technology relevant to this application, and sales of around 100 MWe per annum by 2010 are anticipated into this sector.

2.3.2  Micro (1 to 30kWe) Residential and Commercial CHP

  Many industrial players in Europe, Japan and the US believe that micro (1 to 30kWe) residential and commercial CHP will provide the first major market for fuel cells. In Japan for example, the Government has set a target of installing 1.2 million residential CHP units of ®1kWe and 230,000 small commercial units of ®4kWe by 2010.

  In this context it should be noted that, both General Motors and Toyota intend to enter this market to gain production and operating experience to facilitate their development of fuel cells for vehicles as well as seeing this as an economic opportunity in its own right.

  In the UK, Baxi and Vaillant Hepworth are both expected to launch micro fuel cell CHP systems in 2004-05, subject to a successful demonstration programme. They will be targeting the annual ®1.3 million unit market for gas boilers in the UK. The UK has several fuel cell developers with highly promising second generation technology, and this sector represents one of the strengths of the UK fuel cell industry. A UK fuel cell market of ®100MW per annum is anticipated by the end of the decade. UK industry is also positioned to become also an important supplier of high value components to original equipment manufacturers (OEMs) both in the UK and elsewhere. But they require involvement in UK demonstrations.

  Costs and market potential for this sector are summarised in the following:

    —  By the end of 2004 hundreds of fuel cell CHP systems will have completed major demonstration programmes in Japan, the US and Europe.

    —  The first commercial products will be launched in 2004-05, but costs will still be too high for mass market application and continued public support will be required.

    —  Build-up of manufacturing experience and continued technical development is expected to reduce costs to between £500 and £1,000 per kWe by around 2010. At this level, users of fuel cell CHP plant should see meaningful savings relative to conventional separate electrical and thermal energy supply.

    —  Once costs are competitive, rapid growth is anticipated with annual sales of 1GW after 2010 for new fuel cell CHP equipment, growing to ®20GW per annum by 2020. It would not be unrealistic to assume a 5% share of the global market for the UK. However this would depend on effective public support, including major demonstration programmes.

    —  UK fuel cell developers anticipate large scale production of units for this sector by 2006

2.4  Distributed (1MW) and Central Generation

  High temperature fuel cells, including turbine hybrids, are being developed in the UK, where a strong capability exists to engineer these devices. Such systems are expected to be able to demonstrate electrical efficiency between 40 and 60% (fuel cell/turbine hybrids—60 to 70%), delivering electricity at a cost of £0.05/kWe, with a production rate of 150 MWe per annum by 2010. Early commercial units of 1 MWe rating will be available from 2007.

2.5  Automotive Applications

  On December 2 Toyota delivered the first few pre-commercial fuel cell vehicles (FCVs) to the government of Japan and universities in the US on a 30 month lease at 1.2 million Yen (£6,300) per month. Honda and DaimlerChrysler will follow with fleet trials of their own within the next few months. These automakers plus GM, Ford and Nissan have all announced that they will start mass series production (®50,000 FCVs/year) from 2010. These will include passenger cars, buses and other utility vehicles. Japan alone plans to have 50,000 FCVs on the road by 2010 and five million by 2020.

  The UK's major strength in this sector is in the area of auxiliary power units for vehicles, where innovative technology exists in some early stage companies, and in the supply of components (including stacks) to overseas developers.

  A number of automakers have indicated that they will make their decisions on plant location and launch market based on where public support and its impact on the market are most conducive to the successful introduction of FCVs. Given the current lack of a clear commercialisation strategy, the UK is unlikely to be the beneficiary of these early investment and market launch decisions.

January 2003



 
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