Select Committee on Innovation, Universities, Science and Skills Written Evidence

Memorandum 3

Submission from Fuel Cells UK


  Fuel Cells are an exciting emerging energy technology characterised by strong UK capability, wide-ranging and substantive market opportunities and the potential to deliver against a range of policy goals:

    —  Fuel cells have the potential to revolutionise the energy landscape, bringing high efficiency, low carbon solutions for transport, large-commercial scale power, residential, portable and premium power applications.

    —  Over 20,000 fuel cells have been installed worldwide. The pace of installation is accelerating rapidly as the technology approaches commercialisation. Companies active in the sector are predicting timescales in the near term (less than five years) for profitability.

    —  The potential for carbon savings in the UK by 2020 from fuel cells are in the region of 0.87-1.74 million tonnes.

    —  The global market in fuel cells is expected to be worth over $25 billion (£13 billion) by 2011.

    —  Over 100 UK companies contribute to the global fuel cell industry and over 35 research UK organisations are highly active in fuel cell and hydrogen research.

    —  Between 2003 and 2006, 11 fuel cell companies listed on AIM. The market capital of these 11 companies was £600 million. This compares to only one listing on the NASDAQ in the same period, which had a market capital of £20 million, highlighting the attractiveness of the UK financial market.

    —  UK research is credible and well respected and has strong global links, in Europe with Germany and Italy for example, the USA, Canada, Japan and China.

    —  The growing interest in fuel cells in the UK was highlighted in 2005 by the establishment of Fuel Cells UK, the UK's only free-standing trade association for the sector. The willingness of players in the sector to come together is seen as indicative of the industry's "coming of age".


2.1  About Fuel Cells UK

  This document has been prepared by Fuel Cells UK. The Association was established in 2005 at the request of the growing number of fuel cell companies and supply chain related industries in the UK. Fuel Cells UK represents the leading UK fuel cell companies, as well as organisations from the academic community and other stakeholders. A full list of members is available on our website:

  Fuel Cells UK acts on behalf of UK fuel cell stakeholders to accelerate the development and commercialisation of fuel cells in the UK. It provides a respected and authoritative point of contact and a clear, informed and up-to-date view on research, development and demonstration priorities for Government, other funding agencies and opinion formers.

2.2  About fuel cells

  A fuel cell is a device that directly converts the chemical energy of a fuel into electrical energy in a constant temperature process. In some ways analogous to a battery, it possesses the advantage of being constantly recharged with fresh reactant. Unlike batteries, fuel cell reactants are stored outside the cell. They are fed to the cell only when power generation is required. Therefore, a fuel cell does not consume materials that form an integral part of, or are stored within, its own structure.

  There are a number of different types of fuel cells, with the various technologies being suited to different types and scales of applications (see Section 4.1).

  Some of the advantages of fuel cells are:

    —  high efficiency;

    —  high energy density;

    —  low noise levels;

    —  low maintenance; and

    —  low to zero emissions.

  Furthermore, fuel cells are a technology that can:

    —  contribute substantially to a global low carbon economy;

    —  improve urban air quality and the health of urban populations;

    —  form the basis of a 21st Century industrial sector that allows sustainable growth of the world economy;

    —  enhance energy security by allowing a wider choice of fuels;

    —  contribute to the alleviation of fuel poverty through superior efficiency relative to conventional technologies (particularly in CHP mode); and

    —  provide essential intermediate and final components of any future hydrogen economy.


  Over 100 UK companies contribute to the global fuel cell industry and over 35 research UK organisations are highly active in fuel cell and hydrogen research.

  A number of UK companies are already or have the potential in the short term to become world leaders in their areas. Some were spin-outs from UK universities; examples include Ceres Power, Intelligent Energy and ITM Power.

3.1  Industrial capability

  The breadth of the UK fuel cell industry's expertise can be illustrated by the number of companies active across the various parts of the supply chain—see Figure 1. (Detailed companies' capabilities by sector can be made available on request.)

Figure 1


(Note: AFC: Alkaline fuel cells; DMFC:Direct Methanol Fuel Cells; MCFC: Molten Carbonate Fuel Cells; SOFC; Solid Oxide Fuel Cells; PEMFC: Proton Exchange Membrane Fuel Cells.)

3.2  Academic capability

  The UK academic base exhibits a high degree of collaboration, and there are strong links with Germany, the USA, Canada, Japan and China. Academic institutions work closely with industry.

  Issues currently being researched include transient behaviour, longevity and cost, membrane types, systems performance, degradation of electrodes, levels and types of catalyst coatings, microbial fuel cell systems and process modelling of biomass-derived fuels for fuel cell systems. There is also research into fuel cell policy and strategy, including issues such as public acceptance. Longer term research into fuel flexibility and optimization of the technology is also being carried out, albeit to a lesser degree. In 2003, UK academics published over 100 papers directly related to fuel cells and hydrogen. Figure 2 gives an indication of the levels of interest in specific areas.

Figure 2


3.3  Areas of strength and deployment

  An analysis of the UK's position in the global fuel cell landscape reveals the following opportunities:

Figure 3


  The top right quadrant of Figure 3 shows areas where the UK has established strengths and where there are likely to be substantial global opportunities. The top left quadrant shows areas where the UK has strengths in more targeted markets. These markets could, in themselves, be quite significant in global terms.

  Areas of key strength and substantial opportunity include large SOFC systems (for stationary power), PEMFC components (primarily for automotive applications), reformer systems and components and fuel delivery and storage systems. Areas where niche markets could be successfully exploited include SOFC components and small stationary power systems, early / niche markets for PEMFC systems (eg back-up power) and balance of plant components.

  By playing strategically to these strengths, the UK has the opportunity to develop a stronger, larger, and more credible footprint in fuel cell technology. The key challenge is to ensure that appropriate support mechanisms are maintained to keep options open and allow this nascent industry to flourish and realise its potential for the benefit of the UK economy.

  Fuel cell and hydrogen businesses already support over 800 jobs in the UK. A recent report for the Department of Trade and Industry (DTI) and Carbon Trust(3) estimated the worldwide market potential for fuel cells to be over $25 billion by 2011, with significant growth thereafter as commercialisation progresses.

  The UK Government is starting to recognise the great capabilities and potential of the UK fuel cell sector. At the end of 2006, the DTI opened the first call of its first fuel cell demonstration programme(2) which will run over four years, with a total of £15 million Government funding. The industry has welcomed this as a first step in helping to bridge the "Valley of death" en route to commercialisation. The next five years will be crucial in determining long term outcomes. Other countries are already seeing the benefits of substantial demonstration programmes developed within an appropriate policy framework (see Section 5).


4.1  Feasibility

  The range of applications in which fuel cells can operate and the size of the associated markets are very large. These are often grouped into 3 sectors: portable, mobile and stationary applications.

4.1.1  Mobile (=transport) markets

  These comprise:

    —  Propulsion systems for cars, trucks, buses & bikes;

    —  Marine and aviation power purposes;

    —  Specialist vehicles; and

    —  Auxiliary Power Units (APUs) for "on-board" power to cover idling power and "hotelling" loads for trucks, buses and other transport applications.

  The major auto makers have been investing significantly in fuel cell vehicle development. Fleet vehicle demonstrations have already commenced in North America, Japan & Europe. Commercialisation of fuel cells in transport applications is expected to begin around 2010 and grow rapidly thereafter. UK companies active in this area include Johnson Matthey, a leading supplier of materials and components on a global basis, and Intelligent Energy, which is taking forward development a fuel cell powered motorbike in collaboration with Suzuki, and an APU for an aircraft in collaboration with Boeing.

4.1.2  Stationary markets

  These comprise:

    —  Commercial and residential distributed generation (DG) and combined heat and power (CHP) systems;

    —  Remote power generators for non-grid connected sites; and

    —  Uninterruptible power supply (UPS) and back-up power.

  The UK has a number of players active in stationary markets, which is an area of particular strength from a systems perspective (see Figure 3 above). Examples include Ceres Power, Ceramic Fuel Cells and Baxi, all of whom are targeting the residential and small scale market, Rolls-Royce Fuel Cell Systems, which is developing products for large scale applications, and Fuel Cell Control, which has developed technology to power telephone repeater stations in remote locations.

4.1.3  Portable markets

  These comprise

    —  Battery replacement in portable electronics (eg laptops, mobile phone);

    —  Battery re-charging devices in the field or at base sites; and

    —  Replacement of portable generators.

  By way of example, CMR Fuel Cells is developing fuel cell stacks for use in applications such as battery chargers, auxiliary power units, laptops, power tools, robotic devices, portable generators, and portable military applications.

4.2  Costs and timescales

  A key outstanding barrier to fuel cells is cost. However, the support which the technology is receiving from both the Financial Markets, eg City of London and Governments across the world illustrates the confidence which exists in the potential for costs to fall dramatically.

  A number of generic cost curves have been published for fuel cells. Figures 4 and 5 show examples. It can be seen that both governments and industry expect cost reductions on the scale of orders of magnitude over the next few years.

  Government support will be critical to ensure progress along these pathways and to allow fuel cells to deliver against a range of policy objectives (see section 5).

  Figure 4 also shows the likely trend in commercialisation by application, with fuel cells in stationary and portable devices expected to precede the wide-spread introduction of fuel cell powered vehicles.

Figure 4


Source: Plug Power Inc, presentation at SalomonSmithBarney conference, 2002.

Figure 5


Source: US DOE.

4.3  Carbon footprint

  There is clear consensus that the widespread introduction of fuel cells for distributed generation and transport has huge potential for reducing CO2 emissions and improving quality of life. In effect, fuel cells are much more efficient than conventional energy technologies, therefore using less fuel.

  Fuel cells reduce CO2 emissions to zero at point of use when operated on hydrogen. Since they are by far the most efficient conversion device for transport applications (two to three times better than an internal combustion engine) their use also minimises any CO2 emitted during production of the hydrogen. Using today's technology, a fuel cell car running on compressed hydrogen from natural gas will produce half the Greenhouse gases of a gasoline car on a well-to-wheels analysis (see Figure 6).

Figure 6

  Fuel cells produce between 0 and 85g of CO2/km (approximately), compared to a gasoline internal combustion engine, which produces approximately 170g of CO2/km.(4) (Projected figures for 2010).

  * Lowest fuel cell CO2 emissions are for hydrogen produced from renewable sources, highest fuel cell CO2 emissions are for hydrogen produced from fossil fuels.

  Fuel Cells in stationary applications also deliver significant CO2 savings due to their extremely high efficiencies. Larger scale power only generation SOFC hybrid fuel cells are being developed targeting efficiencies of over 50%, with some developers predicting efficiencies of up to 70% in later generations. As micro-CHP devices, fuel cells can use existing gas supplies and replace conventional boilers to provide heat and power as needed, with an overall energy efficiency of 80-90%.

  In addition, fuel cells offer an excellent contribution to the reliability of energy supplies, as they can be run on a wide and growing range of fuels, including bio-fuels, and in conjunction with other energy sources—gas and coal turbine generation, wind and photovoltaics—to provide overall improved efficiencies, reliable and secure supplies. They will also support the development of distributed power generation.


  At this critical stage, Government support for fuel cells can make a material difference with a relatively modest outlay. Against the background of the City's current enthusiasm and support, Government intervention will play an important role in retaining and growing this nascent industry and its supply chain.

  The UK is lagging behind other countries (see Figure 7) when it comes to public support. More funding is required to help accelerate this important industry, bring forward policy benefits, and enable the UK to compete globally.

Figure 7

  The public support for fuel cells in the UK is considerably less than in other countries (1 and 5).

  By taking a leading position on fuel cell development and deployment, the UK will encourage investment in its indigenous nascent industry and stimulate the early flow of inward investment. Longer-term commitment and support for fuel cells will enhance the attractions of investment by companies in the UK.

  To meet the UK's economic and environmental goals, the development of fuel cells needs focused, ongoing support and forward commitment:

5.1  Focused support for development

  We believe that there is a need for focused support (eg in the form of grants) for development of near-commercial fuel cells (including materials and components). This could play an important role in helping to bridge the gap between research and demonstration, and facilitate longer-term cost reduction through product and process optimisation.

5.2  Ongoing support for demonstration activity

  We would like to see the Fuel cell and Hydrogen Demonstration Programme(2) extended beyond its current four year life time, with resources to enable demonstration in a wide range of applications and locations (eg schools, public buildings, social housing).

5.3  Forward Commitment to Buy

  Forward commitments to purchase products that are not currently commercially available, against a defined performance specification, provide the market with the certainty necessary to justify intensive product development effort and "underwrite" significant financial risk. By focusing on technologies which deliver CO2 benefits and improve energy security, such mechanisms can align with and help to deliver wider Government objectives.

  We strongly recommend the introduction of forward commitments to buy fuel cells.

5.4  Capital Grants

  We recommend that the Government commits to the extension of capital grants to this technology. The level of grant available for a particular technology, whether it be fuel cells or various types of renewables, should reflect the potential contribution of that technology to CO2 reduction to meet policy goals. This will help to ensure that technologies which offer considerable energy and carbon saving potential, but are currently at a higher cost than other technologies, receive the support that they deserve.

5.5  Export Reward for fuel cells

  It is currently very difficult for domestic customers to obtain reward for exported power. We believe that two options exist to address this:

    —  for energy suppliers to offer and publish terms for purchasing exported power from domestic consumers,

    —  for microgeneration output to be "deemed" at a fixed annual level of kWh according to type approved product and installation standards for each technology, and for this to be subtracted from a customer's actual gross consumption.

  In addition, we would like to see utilities encouraged to buy back surplus electrical power at a fair price, with Government agreeing to "top-up" this amount to provide an added economic incentive for users to purchase fuel cell appliances. This approach has proved successful in Germany, which has had a CHP funding regulation in placed since 2000.

5.6  Mandating the use of fuel cells through regulation

  We encourage the Government, over time, to introduce legislative requirements to purchase fuel cells, as a means of delivering energy policy objectives. A precedent has already been set for this with the requirement for all domestic boiler replacements to be condensing boilers. An alternative to this approach could take the form of a specification that a certain level of fuel cell capability should be installed in new buildings.


  (1)  Synnogy, 2005. UK Fuel Cell Development and Deployment Road Map (Funded by the DTI).

  (2)  DTI Hydrogen Fuel Cells and Carbon Abatement Technologies Demonstration Programme:

  (3)  E4Tech, 2003. Review of Fuel Cell Commercial Potential for DTI and The Carbon Trust.

  (4)  Well-to-Wheels analysis of future automotive fuels and powertrains in the European context Well-to-Wheels Report, version 2b, May 2006.

  (5)  Synnogy's own study.

  (6)  Fuel Cell Technology and Market Potential 2006:

  (7)  Synnogy. 2003. A Fuel Cell Vision for the UK (Funded by the DTI).

July 2007

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