Fuel Cells: Fascinating But More Talk than Power In Most Cases

I am neither a scientist nor a historian of science, but I have been told that the fuel cell was “invented” about 170 years ago — before there was any such thing as a battery.  That said, fuel cells have been the unicorns of energy, much talked about and never quite there. 

First of all, what is a fuel cell?  It is a device that contains a chemical reaction that directly generates electricity.  Did I hear someone in the back of the room say “methane”?  Yes, fuel cells are commonly associated with methane, or CH4, which is the largest component of natural gas (a fossil fuel), and can also be made artificially in a variety of relatively expensive ways and from a variety of carbon-based or organic substances.  Not ALL fuel cells are methane-based, however heretical it is to say that.  But back to that in a minute.

The unicornlike aspect of fuel cells is that no one has actually manufactured them in quantity in that 170 years, unlike the gazillions of batteries that are turned out all the time.  Well, one company has made some of them, and you’ve most likely never heard of them: Medis Technologies, based in New York City with labs and scientists in Israel (Nasdaq: MDTL, http://www.medistechnologies.com).  Medis has had a checkered record of fits and starts, but as far as we can find out, they are and remain the only company that has ever designed and manufactured a portable fuel cell in commercial quantities. Their stock is trading for $0.50, down from $10.49, for a market cap of about $22 million, which reflects an expectation of very poor financial performance for 2008, mos t likely.

The prairies are littered with the bleached bones of investors in companies that staked everything on fuel cells.  Probably the best known of those is Ballard Power Systems, based in Burnaby, BC (TSX: BLD & Nasdaq: BLDP, http://www.ballard.com).  The dizzying heights of Ballard back in 2000 was when their stock was at US$129.00, and the stomach-churning parachute drop since then has left their shares trading at 1/100th of that price, or $1.30.  When I say bleached bones, that is the sort of thing I am talking about.   They have been developing fuel cells for two decades and their website says they are a leader in that development effort.  According to their March 3 news release on their 2008 YE results, they shipped 802 fuel cells in the fourth quarter.  That’s not missing any zeros: 802.  These are big stationary units, not pocket-sized portable units.

Clearly there are sexy aspects to fuel cells.  Unlike batteries, they create energy on the spot (when they work).  If they are methane-based, they create carbon dioxide.  If they are sodium borohydride-based, they have no carbon footprint at all.  And they are so cool, so self-contained that they inspire people to lofty dreams.  Look at this Mercedes Benz F-Cell Roadster:

Mercedes Benz F-Cell Roadster

Mercedes Benz F-Cell Roadster

It took 150 students and interns to design and build it.  Probably not something you are going to see on the Autobahn, but there is a certain unicorn-ity about it (http://www.porhomme.com/2009/03/the-f-cell-roadster-concept-built-by-mercedes-benz-trainees/).

Or check out this improbable announcement from Toshiba: http://www.treehugger.com/files/2009/03/toshiba-starting-mass-production-of-fuel-cells.php. Mass production of fuel cells to start right away, possibly available next year.  Oh, by the way, they will cost between $100 and $500 EACH.  You may want to wait to turn in your old-fashioned plug-in phone charger until a bit later in the pricing curve.  It is that sort of announcement that makes people snicker when fuel cells are mentioned.  For comparison purposes, the Medis 24/7 Power Pack cellphone or PDA-charger is available at Amazon for about $30. 

Nonetheless, DOE is tossing some coins into the pot: http://www.azonano.com/news.asp?newsID=10575 and this is not the only federal stimulus money that is available for fuel-cell development.  Renssalaer Polytechnic is no slouch, and one assumes that the materials they are developing will be important to the future of fuel cells.

Las Vegas-based SymPowerCo Corp (OTC: SYMW, http://sympowercocorp.com/) said that it is entering into negotiations with unnamed third parties to bring its methanol-based fuel cell to commercialization, possibly for automotive uses.  The same small company said that its first EV would be a golf-cart-type vehicle, possibly to use to replace pedicabs in the Far East, but no ETA was given.  SYMW trades at an impossibly low $0.0003 per share, for a full-company market cap of $65,000 or so. 

For a more uptown view, look at Mississauga, ONT-based Hydrogenics (Nasdaq:HYGS, http://www.hydrogenics.com/).  HYGS is trading for $0.41, down from a high of $2.45, for a market cap of $38 million, just a hair over its recently announced 2008 revenues of $36.9 million, with a loss of $14 million. 

Two prominent alternative energy companies seem to have de-emphasized their fuel-cell operations.  One is Energy Conversion Devices (Nasdaq: ENER, http://www.ovonic.com) , which started as a battery company and was responsible for inventing the NiMH battery,  then went into the H2 fuel-cell business, but is now largely seen as a solar energy company; its shares are selling for $13.35, down from $83.33 for a market cap of about $611 million.  The other is Ener1 Inc (Nasdaq: HEV, http://www.ener1.com), which cast its lot with its li-ion operations in Indiana and Asia, and seems to be one of the charge-leaders in its niche.  HEV is selling for $5.98, down from a high of $9.24, for a market cap of about $679 million.  Not bad in a market like this one.

There are lots of companies fiddling with fuel cells, just as there are lots of companies fiddling with li-ion batteries.  There is an implied assumption that both fuel cells and li-ion batteries will win some portion of the potentially huge automotive markets currently served by by NiMH batteries in HEVs.  But there are very few production models running on li-ion, and there  are very few portable electronics being powered by fuel cells.  At least at the moment.  Still, it may be worth a follow, or even a bet, if you believe that we need these clean alternative energy sources for our grandchildren’s world.

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