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
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: www.fuelcellsuk.org.
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:
Furthermore, fuel cells are a technology that
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
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.
3. CURRENT STATE
UK FUEL CELL
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 chainsee Figure 1. (Detailed
companies' capabilities by sector can be made available on request.)
NUMBER OF UK COMPANIES ACTIVE ACROSS DIFFERENT
PARTS OF THE FUEL CELL SUPPLY CHAIN IN 2005(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
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.
NUMBER OF UK RESEARCH ORGANISATIONS ACTIVE
ACROSS DIFFERENT PARTS OF THE FUEL CELL SUPPLY CHAIN IN 2005(1)
3.3 Areas of strength and deployment
An analysis of the UK's position in the global
fuel cell landscape reveals the following opportunities:
UK FUEL CELL CAPABILITY IN THE GLOBAL FUEL
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
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
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
4.1.1 Mobile (=transport) markets
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
4.1.2 Stationary markets
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
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
FUEL CELLS SYSTEM COST OVER TIME FOR VARIOUS
Source: Plug Power Inc,
presentation at SalomonSmithBarney conference, 2002.
COST REDUCTION OF PEM FUEL CELLS OVER TIME,
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).
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
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 sourcesgas and coal turbine generation,
wind and photovoltaicsto provide overall improved efficiencies,
reliable and secure supplies. They will also support the development
of distributed power generation.
5. THE UK GOVERNMENT'S
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
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.
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
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
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
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
(7) Synnogy. 2003. A Fuel Cell Vision
for the UK (Funded by the DTI).