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.
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 commercialisationand 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
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
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
2.3 Residential and Commercial Cogeneration
2.3.1 Small (100 to 300kWe) Commercial
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
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:
||Fuel Cell CHP
|Electricity Generation||200 kWp
|Electricity Production pa||150,000 kWh
|Heat Production pa||2,150,755 kWh
|Total Energy production pa||150,000 kWh
|Cost per kWElec||£6,0001
|Cost per kWElec + Heat||£6,0001
|Reduction in CO2 Emissions||150 tonnes pa3
||1,740 tonnes pa4
1. DTI Major Demonstration Photovoltaic Demonstration
Programme 2002Guidance Notes: Section 4.
2. Woking ParkFuel 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 supportat
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
hybrids60 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
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.