Fuel for thought: Will 2017 be the year of the zero-emission fuel-cell vehicle?

Low-carbon energy and sustainable transport are becoming evermore intertwined as new green technologies emerge and become more affordable to the masses. But as the sectors move ahead with innovative battery and electrification plans, they could be missing out on a growing fuel cell market, writes Matt Mace.

Nations across the globe have until 2018 to develop the roadmap and frameworks that will marshal them towards the 2C pathway established under the Paris Agreement. Indeed, the low-carbon transition is seemingly well underway and nations are extending their reach to ensure that renewables and green innovations are at the heart of new policies.

Countries already leading the charge, such as the UK and France, have strived to decarbonise the power sector to the point where renewables are now claiming a majority share in generation. Yet, this decarbonisation process has been continually faltering in the heat and transport sectors – especially in the UK, where we are not even halfway towards reaching a 12% target for heat generated from renewables, while the proportion of renewable energy used in transport has fallen from 4.9% to 4.2% over the past year.

Innovation has encouraged nations with financial influence to rapidly transform to the cusp of a low-carbon revolution. Transport might be a principle culprit in London’s air pollution misdemeanours in the first week of 2017, but corporate giants in this sphere are increasingly realise that low-carbon technologies will reign supreme in the near future.

Nowhere is this more apparent than in the growth of electric vehicles (EVs). Sales of EVs look set to sky-rocket over the next 25 years, with Bloomberg New Energy Finance (BNEF) predicting that, by 2040, they will represent 35% of all new car sales.

In truth, the concept has moved well beyond a low-carbon concept and has actually begun to drive consumer interest. EVs are aided by their flexibility: different battery ranges and the willingness of incumbent corporates and upstarts like Tesla to forge their own EV paths has created variety in the market – a variety which is capturing the intrigue of consumers.

Tesla has of course played a prominent role in this growth, with EVs now acting as a viable option for domestic and commercial battery storage. Meanwhile, innovative vehicle-to-grid trials from the likes of Nissan have the potential to generate up to 180MW of electricity capacity, if all 18,000 Nissan EVs in the UK were connected to the network.

With this in mind, you’d be forgiven for assuming that EVs are forming something of a monopoly in the motor industry - and possibly even energy storage, if Tesla’s SolarCity “masterplan” takes flight. But governments keen to turn to electric batteries to strengthen decarbonisation commitments would do well to look towards fuel-cell technology as another piece of the low-carbon jigsaw.

Fuel-cell vehicles (FCV), particularly hydrogen-based ones, do not emit any greenhouse gases during driving and vehicle operation. Depending on how the hydrogen is made – companies are already experimenting with hydrogen sourced from renewable wind energy – the lifecycle emissions can also be extremely low.

FCVs can run up to five times longer than their all-EV counterparts, but the technogy has so far struggled to leave an impression amongst consumers. High upfront capital costs continue to act as a deterrent for both the energy and transport sectors. But this hasn’t stopped the industry from growing. Late last year, business management consultant E4tech published the Fuel Cell Industry Review report for 2016. The report noted that fuel cell industry shipments grew by two-thirds compared to 2015 levels – with transport-related fuel-cell capacity doubling to 280MW.

Money matters

The technology’s troubles amongst consumers hasn’t been reflected in the business-to-business market. Sales of commercial fuel cell-powered forklifts, such as those produced by Toyota, grew by 60% last year from 6,000 to 10,000. In China, the Government has unveiled new national plans to introduce at least 300 fuel cell electric buses into operation over the course of 2017.

For E4tech’s director David Hart, the fuel cell industry has matured in recent years. Previous research and development methods used to focus on the clean energy aspect of the technology. But with technical performance now established, Hart believes that the industry is finally developing a business case that will generate mass interest.

“Fuel cells have come from this technology push,” Hart tells edie as part of our green innovation month. “But until very recently the sector hasn’t focused on the actual business case and how it can impact someone’s life. But there’s a change and greater focus here. Business models are being studied much more closely and there’s a stealth take-up of fuel cells that are being sold through business-to-business deals. Companies understand that it costs more upfront, but it costs less to run and will last longer. It’s a better deal over time.”

The US Department of Energy (DOE) has long argued that fuel cells would have to drop costs by a third in order to compete with conventional generating and transport sources. The DOE estimates that average fuel cell generation costs reach about $100/kw, and would have to drop prices by $35/kw as a result.

However, since 2006, the DOE has reduced automotive fuel cell costs by more than 50%. Currently, fuel cells can be manufactured in low-volume orders for around $280/kw. Producers are confident that mass-scale production for vehicles could see the prices drop to around $55/kw.

In comparison, li-ion battery system costs currently range between $350 and $700/kWh (around $1,000 and $2,000/kW). This not only highlights the enhanced efficiency that fuel cell technology can bring, but also the stumbling blocks that appear in the supply chain.

On top of the system costs, fuel cell – especially hydrogen – costs are still steep because of their assortment of membranes and catalysts that are often rare and expensive. The temperatures required in the processes are also relatively high. In addition, hydrogen on-board storage costs for vehicles add an extra $15-18/kwh depending on storage pressure.

Hydrogen in the land of the rising sun

E4tech’s Hart is a firm believer that costs will lower as more companies begin to utilise fuel cell technology. Japan is viewed as the current king of the fuel cell: the country has around 200,000 stationary units up and running in people’s apartments. But China seems to be making the biggest strides forward: alongside the rollout of 300 fuel cell buses, the nation is also switching up its subsidy approach for low-emitting vehicles.

The China Association of Automobile Manufacturers notes that 200 Chinese manufacturers built 379,000 electric and hybrid vehicles in 2015, four times more than 2014. Sales of these vehicles quadrupled in 2015 to 331,000, mainly spurred on by welcoming subsidies to manufacturers and consumers. But a high-profile case of subsidy cheating in relation to misreporting production and sales data will see these subsidies slashed. Subsidies will now be maxed at $43,000 per vehicle, compared to the old figure of $86,000. EV and hybrid passenger cars will also be hit with a 20% subsidy reduction this year.

This relatively unattractive market for EVs may well be the opening that FCVs need to get increase production. Chinese subsidies for fuel cells will remain the same, and Hart believes that China could grow the market to a point where expensive supply chain manufacturing is normalised.

“China has the capabilities to vastly increase the demand and are already working on hundreds of buses going into cities, but it can reduce costs through the supply chain,” Hart says. “They have programmes which are specifically about improving access to technology and enabling China to be a participant in what it thinks will be a significant market.

“This is just one aspect of Chinese policy. Motivated by air quality concerns and its commitments under the Paris Accord, it has significantly upped its efforts to curb greenhouse gas emissions – and the development and deployment of clean technologies is a key pillar of its efforts toward meeting this objective. China has begun developing a grand vision involving the funding and supporting of research, development and large-scale roll-out of fuel cells – a vision that’s enabling it to catch up with traditional leaders in technology like Japan and North America.”

Asia accounted for 246MW of the global 479MW of fuel cell installations in 2016 and shares the majority of the market with the US. Both China and the US are two of the three nations that has tested the viability of hydrogen fuel cell-powered aircrafts – the other being Germany – and Hart believes that fuel cells could open avenues for clean energy to appear in president-elect Donald Trump’s “Make America Great Again” manifesto.

Hart believes that the fuel cell industry, which is already prominent in areas such as California, could allow Trump to source his indigenous and local energy, while also providing jobs to Americans. Ex-President George Bush was a firm believer in the potential of fuel cell technology, not because he was concerned with climate change, but because he wanted to source energy locally to create new markets.

“It will be interesting if someone can sell this to Trump as a clean industry that can create clean energy and jobs, which is what he needs,” Hart says. “If someone can convince him, then it could be reasonably positive.”

Typically British

Germany is the leading candidate for implementing fuel cell technology in Europe, operating 17 fuel-cell buses in major cities. The UK actually tops this number, with 18 FCV buses in operation – including the world’s first hydrogen double-decker, but hasn’t sourced as much capacity.

Hart believes the UK Government has taken a “typically British” approach to fuel cell technology, mainly looking for “quick-wins” over long-term potential. Current infrastructure issues are unlikely to encourage politicians to explore this avenue further until it is more established. Hydrogen stations, for example, can cost about $6m apiece, but that hasn’t stopped UK councils and companies from exploring the market.

Last year, Aberdeen became the first city in Europe to offer hydrogen-powered cars for public use on a pay-as-you-go basis. The City Council also revealed that over the last 12 months the Aberdeen Hydrogen Bus Project attracted £21m of investment into the city.

Meanwhile, a report from June last year proposed that the city of Leeds should convert its gas grid to an all-hydrogen version by 2030 in order to test the viability of using hydrogen to help meet national carbon reduction targets. The Northern Gas Networks (NGN) fronted the H21 Leeds City Gate project, which lays out the blueprints to convert Leeds into a “hydrogen city”. A new feasibility report from the project organisers has established that a switch away from methane would be “economically viable”. NGN has claimed that the city should be considered as it has the optimal size and location for the conversion, which could start in Leeds by 2026 at the cost of £2bn, before being rolled-out nationally.

Hart actually helped to produce E4tech’s roadmap for hydrogen and fuel cells in the UK, which suggested that the adoption of hydrogen and fuel cells would improve air quality and reduce emissions by “tens of millions of tonnes per year”.

"The UK Government doesn’t need to fully explore the benefits of fuel cells in order to gain from it," Hart notes. Companies such Loughborough-based Intelligent Energy – which has admittedly fallen on tough times – and chemicals specialist Johnson Matthey were both integrated into the global fuel cell supply chain. Last year, Horsham-based Ceres Power signed a joint development agreement with Honda for Solid Oxide Fuel Cell stacks to be used for power equipment applications.

For Hart, it is these businesses that can help to grow the fuel-cell market to the point where the UK Government is less reluctant to explore it, although this may require a mindset change from short to long-term thinking.

“UK businesses can benefit even without a huge uptake of fuel cells,” Hart adds. “There is a lot of interest from governments in using hydrogen and fuel cells in some of the more significant decarbonisation scenarios. The way they’re looking at doing that is a typically British way by finding the quick wins, but the UK is in an interesting place because it already has one or two companies very well positioned or strongly embedded in this industry.”

With companies now seemingly more open to changing mindsets and adopting the necessary long-term thinking required to understand the potential of fuel-cell innovations, the business-to-business market could soon integrate FCVs and fuel cells at an increased pace.

Hart believes that the utilisation of fuel cells in innovative ways will be key to bringing fresh blood to the industry. He believes that more entrepreneurs will emerge in the market with the knowledge and business nuance to make fuel cell technology attractive and affordable to consumers. Could 2017 be the year that all of this happens?

edie's innovation month

The month of January sees edie shift the editorial spotlight to green innovation, with a series of exclusive interviews, features and podcasts running throughout the month to celebrate the very best of emerging clean technologies and low-carbon systems.

Change will not happen without genuine innovation and so this month will explore the bleeding edge where change is really happening. From emerging tech to new business models; breakthrough approaches and creative leaders, we’ll shine the spotlight on the real game-changers and sort the facts from the fads.

Read all of edie’s innovation content here.

Matt Mace