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					CleanTech Roadmap:
Fuel Cells
December 2011




Maricopa Community Colleges SBDC, 2400 N. Central Ave., Suite 104, Phoenix, AZ 85004




©Arizona Small Business Development Center Network
                                          CleanTech Roadmap: Fuel Cells


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                                                            Table of Contents

1.0 Introduction ................................................................................................................. 5
2.0 Technology Overview ................................................................................................. 9
   2.1 Keywords ................................................................................................................................................ 9
   2.2 Description ............................................................................................................................................. 9
   2.3 NAICS Codes ...................................................................................................................................... 13
3.0 Technology Overview ............................................................................................... 15
   3.1 Summary ............................................................................................................................................... 15
   3.2 Hydrogen Resource ........................................................................................................................... 16
   3.3. Installed Hydrogen & Product Capacity ....................................................................................... 17
   3.4 Industry & Market Structure ............................................................................................................ 19
   3.6 Competition ......................................................................................................................................... 25
   3.5 Market Growth ................................................................................................................................... 29
   3.6 Investment ............................................................................................................................................ 34
   3.7 Technology Development................................................................................................................. 35
   3.8 Operating Costs & Capitalization ................................................................................................... 39
   3.9 Fuel Cell Policy .................................................................................................................................... 41
4.0 Information Resources .............................................................................................. 45




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1.0 Introduction

PURPOSE
   The CleanTech Roadmaps are designed to assist the Client in achieving the goals and
   objectives of the Arizona SBDC (AzSBDC) Network Clean Tech Program.
            Develop clean companies that will create capital formation, sales and jobs for
             Arizona
            Advance research & development in renewable energy into viable products and
             services
            Creation of a thriving renewable and clean technology sector
            Support network to provide education, counseling, training and investing to
             entrepreneurs
            Provide innovative research projects that will provide new ideas for entrepreneurs
             to take to market
            Develop innovative strategic alliances between large and small companies
   Based on recommendations from a market study previously performed for the AzSBDC,
   roadmaps have been created for each of the following CleanTech sectors:

        00       Overview                           06     Biomass to Electricity

        01       Solar Electric Power Systems       07     Geothermal

        02       Solar Photovoltaic                 08     Wind Power

        03       Solar Thermal Power                09     Fuel Cell Systems

        04       Micro-Inverters                    10     Hydrogen Fuel Cells

        05       String Inverters                   11     Zero Emission Machines


USING THE ROADMAPS
   Each roadmap is intended to provide counselors and other stakeholders with reputable and
   reliable information about sub-sector-specific:
            Definitions of technology concepts
            Energy installed capacity and consumption
            Market characteristics and trends
            Government policy



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          Investment activities
          Arizona-based experts, organizations, and activities
   The roadmaps provide historical contextual information, as well information about recent,
   current, and projected trends in energy capacity, consumption, and innovation.
   CleanTech is a challenging topic because it is subject to evolving—and sometimes
   unforeseen—technological, sociopolitical, and economic forces. To make it easier for users
   of the roadmaps to stay current with CleanTech and more general business, industry, and
   technology developments, each roadmap contains an Information Resources section. These
   resources should be particularly useful when creating CleanTech-centric business plans, and
   when assessing venture readiness levels.
   Because the roadmaps may be used as a single “atlas” or as individual documents, some
   information and resources are listed multiple times. Other redundancy can be attributed to
   the overlapping nature of the CleanTech energy sectors, as well as of the market, industry,
   and technology resources used to create the roadmaps.
   For example, hydrogen fuel cells constitute a significant subset of the fuel cells sector.
   Accordingly, these roadmaps are necessarily closely related.

USING THE OVERVIEW ROADMAP
   The Overview Roadmap provides a general introduction to the CleanTech sector and
   establishes a context for the sector-specific roadmaps. Its General Information Resources
   section should be used to supplement the Information Resources sections included in this
   Fuel Cells roadmap.

RESOURCES
   The following types of information resources were used to populate each of the roadmaps:
          Industry, business, technical, and trade publications
          Market research reports
          Academic, industry, nonprofit, and government white papers and reports
          Intellectual property, technology transfer, and licensing resources
          Federal and state agencies and programs
          Venture capital and M&A databases
          Business and economic development resources

   In each roadmap, links are provided to information sources consulted, and contact
   information is provided for individuals and organizations.




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ADDITIONAL NOTES
   Listings of information sources, individuals, and organizations are not comprehensive. Both
   free and fee-based resources are included.
   Efforts were made to ensure that information was current and aligned with findings from
   other information sources. Variations in market size, installed capacity, and other figures
   can be attributed to having consulted a variety of information sources. Many of the graphics
   drawn from various sources and presented here—in particular those originating from
   Bloomberg News—are courtesy of the American Council on Renewable Energy (ACORE).
   No endorsement for any individual or organization listed is implied. Individuals based in
   Arizona were included in part because of their active engagement in Arizona technology
   and business development activities and organizations.




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2.0 Technology Overview

2.1 Keywords
       Fuel cell; fuel cell system; hydrogen fuel cell, portable fuel cell; stationary fuel cell;
       proton-exchange membrane (PEM); direct methanol fuel cells (DMFC)


2.2 Description

FUEL CELL
      A fuel cell is a device that converts the chemical energy from a fuel into electricity
      through a chemical reaction with oxygen or another oxidizing agent. Unlike a
      conventional engine, it does this without burning the fuel and can therefore be more
      efficient and cleaner. Hydrogen is the most common fuel, but hydrocarbons such as
      natural gas and alcohols like methanol are sometimes used.
      Fuel cells are different from batteries in that they require a constant source of fuel and
      oxygen to run, but they can produce electricity continually for as long as these inputs are
      supplied.
      A fuel cell essentially consists of an electrolyte sandwiched between two electrodes with
      connectors for collecting the generated current. It consists of an anode (negative side), a
      cathode (positive side) and an electrolyte that allows charges to move between the two
      sides of the fuel cell. Electrons are drawn from the anode to the cathode though an
      external circuit, producing direct current electricity.
      Individual fuel cells produce very small amounts of electricity, about 0.7 volts, so cells are
      "stacked," or placed in series or parallel circuits, to increase the voltage and current
      output to meet an application’s power generation requirements. In addition to electricity,
      fuel cells produce water, heat and, depending on the fuel source, very small amounts of
      nitrogen dioxide and other emissions. The energy efficiency of a fuel cell is generally
      between 40-60 percent, or up to 85 percent efficient if waste heat is captured for use.

ELECTROLYTE
      As the main difference among fuel cell types is the electrolyte, fuel cells are classified by
      the type of electrolyte they use.
          Polymer Electrolyte Membrane Fuel Cells: Also called proton exchange membrane
           fuel cells—PEM fuel cells deliver high-power density and offer the advantages of low
           weight and volume, compared with other fuel cells. PEM fuel cells use a solid
           polymer as an electrolyte and porous carbon electrodes containing a platinum
           catalyst. They need only hydrogen, oxygen from the air, and water to operate and



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           do not require corrosive fluids like some fuel cells. They are typically fueled with
           pure hydrogen supplied from storage tanks or on-board reformers.
          Direct Methanol Fuel Cells: Most fuel cells are powered by hydrogen, which can be
           fed to the fuel cell system directly or can be generated within the fuel cell system by
           reforming hydrogen-rich fuels such as methanol, ethanol, and hydrocarbon fuels.
           DMFCs, however, are powered by pure methanol, which is mixed with steam and
           fed directly to the fuel cell anode.
          Alkaline Fuel Cells: AFCs were one of the first fuel cell technologies developed, and
           they were the first type widely used in the U.S. space program to produce electrical
           energy and water on-board spacecraft. These fuel cells use a solution of potassium
           hydroxide in water as the electrolyte and can use a variety of non-precious metals as
           a catalyst at the anode and cathode. High-temperature AFCs operate at
           temperatures between 100°C and 250°C (212°F and 482°F). However, newer AFC
           designs operate at lower temperatures of roughly 23°C to 70°C (74°F to 158°F).
          Phosphoric Acid Fuel Cells: PAFCs use liquid phosphoric acid as an electrolyte—the
           acid is contained in a Teflon-bonded silicon carbide matrix—and porous carbon
           electrodes containing a platinum catalyst. The chemical reactions that take place in
           the cell are shown in the diagram to the right. The phosphoric acid fuel cell (PAFC) is
           considered the "first generation" of modern fuel cells. It is one of the most mature
           cell types and the first to be used commercially. This type of fuel cell is typically used
           for stationary power generation, but some PAFCs have been used to power large
           vehicles such as city buses.
          Molten Carbonate Fuel Cells: MCFCs are currently being developed for natural gas
           and coal-based power plants for electrical utility, industrial, and military
           applications. MCFCs are high-temperature fuel cells that use an electrolyte
           composed of a molten carbonate salt mixture suspended in a porous, chemically
           inert ceramic lithium aluminum oxide (LiAlO2) matrix. Because they operate at
           extremely high temperatures of 650°C (roughly 1,200°F) and above, non-precious
           metals can be used as catalysts at the anode and cathode, reducing costs.
          Solid Oxide Fuel Cells: SOFCs use a hard, non-porous ceramic compound as the
           electrolyte. Because the electrolyte is a solid, the cells do not have to be constructed
           in the plate-like configuration typical of other fuel cell types. SOFCs are expected to
           be around 50–60 percent efficient at converting fuel to electricity. In applications
           designed to capture and utilize the system's waste heat (co-generation), overall fuel
           use efficiencies could top 80–85 percent.
          Regenerative Fuel Cells: RFCs produce electricity from hydrogen and oxygen and
           generate heat and water as byproducts, just like other fuel cells. However, RFC
           systems can also use electricity from solar power or some other source to divide the
           excess water into oxygen and hydrogen fuel—this process is called "electrolysis."
           This is a comparatively young fuel cell technology being developed by NASA and
           others.




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FUEL CELL SYSTEM
       Key types of fuel cell systems include:
           Stationary fuel cells are units which provide electricity (and sometimes heat) but are
            not designed to be moved. These include combined heat and power (CHP),
            uninterruptible power systems (UPS) and primary power units.
           Combined Heat and Power (CHP) units are sized between 0.5 kWe and 10 kWe, use
            either PEM or SOFC technology and take advantage of the fact fuel cells generate
            heat alongside electricity. By making use of this heat, for example to make hot
            water, the overall efficiency of the system increases. Fuel cells are also more
            efficient at generating electricity which gives CHP units overall efficiencies of 80-95
            percent. Residential CHP units have been deployed extensively in Japan with more
            than 10,000 cumulative units by the end of 2010 providing home power and heating.
            South Korea has also deployed CHP units for residential use but, as in Japan, their
            purchase still relies upon government subsidies.
           Portable fuel cells are built into, or charge up, products that are designed to be
            moved.
           Micro fuel cells, including Auxiliary Power Units, small personal electronics, and
            educational kits and toys, have a power output of less than 5 W.
           UPS systems provide a guaranteed supply of power in the event of grid interruption;
            this market can be divided into five sub-sectors:
                o Off-line short run-time systems for telecommunication base stations
                o Off-line extended run-time systems for critical communication base stations
                  such as Terrestrial Trunked Radio (Tetra) networks
                o Off-line extended run-time rack mountable systems for data centers
                o On-line rack mountable systems for data centers
                o Off-line systems for residential use

FUEL TYPES
       Most types of fuel cells require hydrogen as a fuel source. Hydrogen can be derived
        from natural gas, coal, methanol, ethanol, biomass, and even from renewable power
        sources such as solar and wind energy through electrolysis. Not only hydrogen available
        but it is very environmentally friendly, even when produced from natural gas.
       When using natural gas to make hydrogen and then using the hydrogen in a fuel cell
        vehicle reduces greenhouse gas (GHG) emissions at least 50 percent compared to a
        gasoline vehicle. When using hydrogen derived from biomass, FCVs have 60 percent less
        GHG emissions than a PHEV running on cellulosic ethanol.




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      Fuel choice varies by region with natural gas and liquefied petroleum gas (LPG)
       dominating in Asia, hydrogen prevalent in the U.S., and in Europe some adopters are
       conducting trials with methanol.

HYDROGEN PRODUCTION PROCESSES
      Electrolysis. Hydrogen can be produced by the electrolysis of water: splitting of water
       into its component elements. This process takes place in an electrolyser, which can be
       described as a 'reverse' fuel cell: instead of combining hydrogen and oxygen
       electrochemically to produce electricity and water as a fuel cell does, an electrolyser
       uses an electrical current and water to produce hydrogen and oxygen.
      Fuel Reforming. Hydrogen can be generated by reforming of hydrocarbon fuels such as
       natural gas, methanol, gasoline or ethanol. These are not necessarily fossil fuels;
       reforming of bio-ethanol, for instance, is equally possible and this would then also be a
       source of renewable hydrogen.

       See the Hydrogen Fuel Cells roadmap for more information about these processes.

REFORMING TECHNOLOGIES
      Steam Reforming is the process whereby fuel is mixed with steam in the presence of a
       base metal catalyst to produce hydrogen and carbon monoxide. This method is the most
       well-developed and cost-effective for generating hydrogen and is also the most
       efficient, giving conversion rates of 70–80 percent on a large scale.
      Partial Oxidation Reforming can be used for converting methane and higher
       hydrocarbons but is rarely used for alcohols. This method involves the reaction of the
       hydrocarbon with oxygen to liberate hydrogen, and produces less hydrogen for the
       same amount of fuel than steam reforming. The reaction is, however, exothermic and
       therefore generates heat. This means that the reaction can be initiated by a simple
       combustion process leading to quick start-up. Once the system is running it then
       requires little external heating to keep going. The technology is preferred where there is
       little access to natural gas or an abundance of oil.
      Autothermal Reforming combines the endothermic steam reforming process with the
       exothermic partial oxidation reaction, therefore balancing heat flow into and out of the
       reactor. These systems can be very productive, fast-starting and compact, and have
       been demonstrated with methanol, gasoline and natural gas. A number of auto and oil
       companies are also working on proprietary versions of this technology.
      Hydrogen Storage is the lightest chemical element and offers the best energy to weight
       ratio of any fuel. The major drawback to using hydrogen is that it has the lowest storage
       density of all fuels. However, it is possible to store large quantities of hydrogen in its
       pure form by compressing it to very high pressure and storing it in containers which are
       designed and certified to withstand the pressures involved. In this way it can either be
       stored as a gas, or cooled to below its critical point and stored as a liquid.




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        Hydrogen can also be stored in solid form in chemical combination with other elements
        (there are a number of metals which can 'absorb' many times their own weight in
        hydrogen). The hydrogen is released from these compounds by heating or the addition
        of water.
        Other storage mediums are being investigated (e.g., carbon nanotubes and glass
        microspheres).

OTHER FUEL PRODUCTION
       For high temperature systems such as molten carbonate and solid oxide cells, it is
        possible to supply a hydrocarbon (e.g. natural gas or methanol) directly to the fuel cell
        without prior reforming. The high temperature allows the reforming stage to take place
        within the fuel cell structure. In practice, some preliminary reforming or purifying of the
        fuel is often carried out.
       The exception to this is direct methanol fuel cells, in which a catalyst on the anode
        draws the hydrogen from liquid methanol, eliminating the need for a fuel reformer.
        Therefore, as the name suggests, pure methanol can be used as fuel.

INFRASTRUCTURE
       Infrastructure refers to the equipment and systems needed to produce, distribute,
        store, monitor and dispense fuel, specifically hydrogen, for fuel cells.
       Balance of plant (BOP) refers to the remaining systems, components, and structures
        that comprise a complete power plant or energy system that are not included in the
        prime mover and waste heat recovery (ex. gas turbine, steam turbine, HRSG, waste heat
        boiler, etc.) systems.


2.3 NAICS Codes
       The North American Industry Classification System (NAICS) is the standard used by
       Federal statistical agencies in classifying business establishments for the purpose of
       collecting, analyzing, and publishing statistical data related to the U.S. business economy.
        334413 Fuel cells, solid-state, manufacturing
        335999 Electrochemical generators (i.e., fuel cells) manufacturing
        335999 Fuel cells, electrochemical generators, manufacturing




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3.0 Technology Overview

3.1 Summary
      Electricity from fuel cells can be used at all times and in every location. The power
       generation is quiet, produces fewer emissions than conventional fossil fuels, and can
       operate independent of weather conditions.
      Global fuel cell spending -- including research and development funding and investment
       in fuel cell enterprises, as well as commercial sales -- is forecast to climb 10.9 percent
       annually to $10.2 billion in 2015 and then nearly double to $19.0 billion in 2020.
      Although fuel cells used in motor vehicle applications will account for less than one-half
       of one percent of the total number of systems sold in 2020, they will make up the
       largest single share of demand in dollar terms.
      Market gains will be driven by continuing technological advances, helping bring costs
       down to competitive levels in a growing number of applications, and bolstered by
       improved economies of scale as fuel cell manufacturers increase production.
      Hydrogen fuel cell technology is complex and some problems still have to be solved,
       such as the technical and economic ones related to the automotive applications.
       Nevertheless, a basic infrastructure has to be implemented for the generation,
       distribution, and storage of the hydrogen fuel, and then the commercial success of this
       new technology can take place.




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3.2 Hydrogen Resource
    Hydrogen Potential from Renewable Resources (Total kg of Hydrogen per County
                             Normalized by County Area)




See the Hydrogen Fuel Cells roadmap for maps depicting hydrogen potential from specific
resources and industrial processes.

ARIZONA RESOURCES
Arizona has hydrogen potential from coal, natural gas, nuclear, and hydro power as follows
(expressed in tonnes/year):

           Hydro power            34,268          Natural gas            416
           Nuclear power         122,511          Coal               432,209




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3.3. Installed Hydrogen & Product Capacity
       According to the U.S. Department of Energy,
              There are more than 50 commercially available hydrogen and fuel cell products
               on the market today.
              Approximately 15,000 fuel cells were shipped globally in 2010—more than 40
               percent growth since 2008.
              More than 85 megawatts of fuel cells were shipped globally in 2010—more than
               50 percent growth since 2008.
              There are more than 9 million tons of hydrogen produced in the U.S. today, and
               more than 1,200 miles of hydrogen pipelines.
              In the transportation sector, demonstrations in the United States include:
                  o More than 200 fuel cell electric vehicles (FCEVs)
                  o 15 fuel cell buses, with at least 20 more planned
                  o About 60 hydrogen fueling stations
       In April 2010, Fuel Cells 2000 released State of the States: Fuel Cells in America, a report
       cataloguing the span of fuel cell and hydrogen activity and policies of all 50 states. In
       just over a year, the states have greatly expanded the playing field for the fuel cell
       industry, in some cases by adopting fuel cell friendly policies, but in most cases
       providing a marketplace for fuel cells and fuel cell powered systems.
       Key finds of the report include:
              There were more sales of primary fuel cell power and combined heat and power
               (CHP) systems to grocery and retail markets, corporate sites and production
               facilities, local governments, municipalities, schools and universities in the U.S.
              More than 50 MW of stationary power either installed or recently purchased.
              A dozen current or soon to be opened fuel cell installations in the megawatt
               (MW) range - between 1.2 and 2.8 MW in size each - in California alone.
              Installations have been completed in new states such as Arizona, New Mexico
               and Wisconsin.
              The U.S. is the world leader in fuel cell forklift deployments. More than 1,500
               forklifts were deployed or ordered, in more than a dozen states. Repeat
               customers include Coca-Cola (CA, NC), Walmart (OH, MO and Alberta, Canada),
               and Sysco (PA, TX, VA). New customers include BMW (SC), EARP Distribution (KS)
               and WinCo Foods, LLC (CA).
              More fuel cell buses and light duty vehicles were placed on American roadways.
               30 fuel cell buses were either put on the road or plans were announced for
               deployment in numerous states, including AL, CA, CT, DE, IL, MA, MI, OH, SC, TN
               and TX.



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              Honda and Daimler began leasing programs in California, and Toyota announced
               it will place more than 100 of its FCHV-advanced fuel cell vehicles with
               universities, private companies and government agencies in both California and
               New York over the next three years. Two Toyota FCHV-advanced vehicles have
               been delivered to New York, and 10 have also been delivered to Connecticut.
              More fuel cells are now backing up telecommunication and radio towers and
               utility substations.
              More hydrogen fueling stations were opened, serving light duty vehicles, buses
               and fuel cell forklifts.
                  o By the end of 2011, California plans to have at least 20 public stations
                    operating or under construction, with California Energy Commission (CEC)
                    support for more stations down the pike.
                  o New hydrogen stations were opened in Delaware, New York, and South
                    Carolina to fuel cars and buses.
                  o New private hydrogen fueling stations were opened at warehouses
                    around the country to serve fuel cell-powered forklifts.
                  o Air Products reports 347,000 hydrogen fuelings per year at its fueling
                    stations and hydrogen dispensers.




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3.4 Industry & Market Structure
                        Hydrogen Conversion Technologies & Applications




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       Source: http://www1.eere.energy.gov/hydrogenandfuelcells/pdfs/budget_webinar_fy12.pdf

   Fuel cells are used for primary and backup power for commercial, industrial and residential
   buildings and in remote or inaccessible areas. They are used to power fuel cell vehicles,
   including automobiles, buses, forklifts, airplanes, boats, motorcycles and submarines.




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TRANSPORT
      The major OEMs working in this sector have targeted 2014 and 2015 to introduce their
       first commercial FCVs. In order to meet this target, the OEMs must continue to test and
       refine their fuel cell systems as well as the vehicle integration and optimization. They
       will also be focused on driving down vehicle costs. Since hydrogen fueling must be
       readily available before FCVs are offered for sale, some automakers are working with
       infrastructure companies and governments to support infrastructure rollout.
      Sales are forecast to ramp up from what are currently extremely modest levels,
       consisting predominantly of revenues generated from the sale of products and services
       associated with prototyping, demonstration and test marketing. With a number of
       products already on the market, electric power generation applications accounted for
       well over half of all commercial fuel cell demand in 2010.
      The fuel cell bus sector is showing year-on-year growth, with more prototypes being
       unveiled. Successful deployments have taken place in Europe, Japan, Canada and the
       U.S. but the high capital cost is still a barrier to widespread adoption.
      Niche transport consists of a number of sub-applications with differing levels of
       commercial success to date. Materials handling vehicles account for over 90 percent of
       niche transport shipments, with PEM technology dominating.
      Unmanned aerial vehicles (UAVs), e-bikes, trains, and other niche transport applications
       are still under development with limited deployments to date.

STATIONARY
      Large stationary refers to multi-megawatt units providing primary power. These units
       are being developed to replace the grid, for areas where there is little or no grid
       infrastructure, and can also be used to provide grid expansion nodes.
      Four technology types serve the large stationary market:
           o Solid Oxide Fuel Cell (SOFC)
           o Molten Carbonate Fuel Cells (MCFC)
           o Proton Exchange Membrane Fuel Cells (PEMFC)
           o Phosphoric Acid Fuel Cells (PAFC)

      The manufacturing of these units is predominately located in the U.S. and Japan.
      For decades, experts have agreed that SOFCs hold the greatest potential of any fuel cell
       technology. With low cost ceramic materials, and extremely high electrical efficiencies,
       SOFCs can deliver attractive economics without relying on CHP. But until now, there
       were significant technical challenges inhibiting the commercialization of this new
       technology. SOFCs operate at extremely high temperature (typically above 800°C). This
       high temperature gives them extremely high electrical efficiencies, and fuel flexibility,



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       both of which contribute to better economics, but it also creates engineering
       challenges.

PORTABLE
      Portable fuel cells are being developed in a wide range of sizes ranging from less than 5
       W up to 500 kW. Portable fuel cells typically replace or augment battery technology and
       exploit either PEM or DMFC technology. PEM fuel cells use direct hydrogen, with no
       point-of-use emissions, whereas DMFCs emit small quantities of CO2.
      Leading applications for portable fuel cells include:
           o Military applications such as portable soldier power, skid mounted fuel cell
             generators, etc.
           o Auxiliary Power Units (APUs) for the leisure, trucking, and other industries
           o Portable products such as lighting, vine trimmers, etc.)
           o Small personal electronics such as mp3 players, cameras, etc.
           o Large personal electronics such as laptops, printers, radios, etc.
           o Educational kits and toys
      Key perceived benefits for fuel cells in portable applications include:
           o Off-grid operation
           o Longer run-times compared with batteries
           o Rapid recharging
           o Significant weight reduction potential (for soldier-borne military power)
           o Convenience, reliability, and lower operating costs also apply

COMBINED HEAT AND POWER
      Residential combined heat and power (CHP) units have been deployed extensively in
       Japan with more than 10,000 cumulative units by the end of 2010 providing home
       power and heating. South Korea has also deployed CHP units for residential use but, as
       in Japan, their purchase still relies upon government subsidies.

UPS SYSTEMS
      Of the leading UPS systems sectors, the following are the most advanced and comprise
       the majority of shipments to date:
           o Off-line short run-time systems for telecommunication base stations
           o Off-line extended run-time systems for critical communication base stations such
             as Terrestrial Trunked Radio (Tetra) networks
           o Off-line extended run-time rack mountable systems for data centers


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GOVERNMENT APPLICATIONS
      Aberdeen Proving Ground, MD, has installed the first fuel cells as part of a partnership
       between the Department of Energy and the Department of Defense. APG's fuel cells are
       electro-chemical devices that use hydrogen as a fuel to produce backup electricity
       without having to combust the fuel. Twenty-four buildings across nine federal
       government sites will receive fuel cells within six months.
       According to a DOE spokesperson, "Together with our partners, DOE has co-funded
       about 600 fuel-cell lift trucks. Based on the results of these demonstrations, industry has
       placed orders for about five times that amount with no DOE funding."
      The Defense Logistics Agency (DLA) has a program focusing on introducing hydrogen
       fuel cells as a replacement for batteries and propane to power forklifts in warehouse
       operations.
       Working with the Department of Energy; the Naval Surface Warfare Center in Crane, IN.;
       and the Logistics Management Institute, DLA has implemented some innovative
       research and demonstration projects, employing hydrogen generated from renewable
       sources and using it in fuel cell-powered material-handling equipment, such as forklifts.
       DLA's first pilot project took place in February 2009 at Defense Distribution Depot
       Susquehanna, PA. The project started with four fuel cell units and an outdoor mobile
       refueler and now has 40 fuel cell units and an indoor hydrogen dispensing system.
       Since then, projects have been initiated at Defense Distribution Depot Warner Robins,
       GA.; Defense Distribution Depot San Joaquin, CA; and Joint Base Lewis-McChord, near
       Tacoma, WA. Officials expect to have about 130 fuel cell-powered forklifts and several
       other demonstration vehicles operating at the four locations within a year.

FUEL CELL PRICING
      Depending on size and application, stationary fuel cell systems are estimated to cost
       from $3,000/kW to $7,000/ kW today, and can range as high as $10,000/ kW in some
       cases.
      Improvements in the technology have already provided significant cost reductions. In
       particular, the Program has reduced the cost of automotive fuel cells by more than 80
       percent since 2002—lowering the projected high-volume manufacturing cost to about
       $49/kW in 2011. Further advances are needed to achieve a competitive high-volume
       manufacturing cost.




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EMPLOYMENT
      The potential for long-term employment growth from the widespread use of fuel cells in
       the U.S. is substantial. A study commissioned by the U.S. Department of Energy found
       that successful widespread market penetration by fuel cells could help to revitalize the
       manufacturing sector and could add more than 180,000 net new jobs to the U.S.
       economy by 2020, and more than 675,000 net new jobs by 2035.
      A separate study, conducted by the American Solar Energy Society to quantify the
       economic benefits of renewable energy and energy efficiency technologies, found that
       gross revenues in the U.S. fuel cell and hydrogen industries could reach up to $81
       billion/year by 2030, with total employment (direct and indirect) reaching over
       900,000— this is based on the most aggressive scenario, which represents what is
       “technologically and economically feasible.” The base-case or “business as usual” case
       of this study shows these industries achieving about $9 billion/year in gross revenues by
       2030, with more than 110,000 new jobs created.
      Fuel Cells 2000’s current estimate of direct fuel cell industry jobs in the U.S. totals more
       than 3,600, based on company reports and expert opinion. Supply chain employment is
       estimated at more than 7,000.




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3.6 Competition

HYDROGEN FUELS
Key players in this sector include:
       Air Liquide                                       HyRadix, Inc
       Air Products and Chemicals, Inc                   Intelligent Energy
       Avalence LLC                                      Linde Group
       Ballard                                           Millennium Cell
       Bing Energy, Inc                                  Nuvera
       BlackLight Power                                  Pdc Machines
       DTI Energy, Inc.                                  Plug Power
       Genesis Fueltech Inc                              Praxair, Inc
       HGenerators                                       Proton OnSite
       HydroGen LLC                                      Sud-Chemie, Inc
       Hydrogen Link                                     Teledyne Energy Systems, Inc.
       Hydrogenics                                       United Technologies
       Hy9 Corporation                                   Ztek Corporation

PORTABLE FUEL CELLS
Key players in this sector include:
       Adaptive Materials, Inc.                          MTI Microfuel Cells Inc.
       Akermin                                           myFC
       Aquafairy Co.                                     NanoDynamics
       Ballard Power Systems Inc.                        Neah Power Systems, Inc.
       Direct Methanol Fuel Cell Corp.                   Nedstack
       (DMFCC)                                           Oorja Protonics
       Horizon Fuel Cell Technologies                    Protonex Technology Corp.
       (HFCT)
                                                         Sandpiper Technologies
       Hydrogenics Corp.
                                                         SFC Energy
       IdaTech PLC
                                                         Trulite, Inc.
       Jadoo Power
                                                         UltraCell Corp.
       Lilliputian Systems




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                                                                   CleanTech Roadmap: Fuel Cells


STATIONARY FUEL CELLS, UPS & BACKUP POWER
   According to Pike Research, the top 10 vendors in this sector are:
         1.   Dantherm Power                                 6.   Electro Power
         2.   Altergy                                        7.   Diverse Energy
         3.   Hydrogenics                                    8.   P21
         4.   IdaTech                                        9.   IRD
         5.   ReliOn                                         10. FutureE

   Pike represents the dynamics of this sector as follows:




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                                                                   CleanTech Roadmap: Fuel Cells


STATIONARY FUEL CELLS (PRIME POWER)
   According to Pike Research, the top 17 vendors in this sector are:
         1.   FuelCell Energy                                10. Eneos Celltech
         2.   UTC Power                                      11. Topsoe Fuel Cell
         3.   Hydrogenics                                    12. Bloom Energy
         4.   POSCO Power                                    13. Intelligent Energy
         5.   ClearEdge Power                                14. Baxi Innotech
         6.   Ceramic Fuel Cells                             15. Ceres Power
         7.   Fuji Electric                                  16. Hexis
         8.   Panasonic                                      17. GS Fuel Cells
         9.   Toshiba Fuel Cell Power

   Pike represents the dynamics of this sector as follows:




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LIGHT DUTY FUEL CELL VEHICLES
   According to Pike Research, the top 10 vendors in this sector are:
       1.   Daimler                                          6.   SAIC Motor Corp.
       2.   Honda                                            7.   Nissan/Renault
       3.   Toyota                                           8.   Ford
       4.   Hyundai-Kia                                      9.   BMW
       5.   General Motors (GM)                              10. Riversimple

   Pike represents the dynamics of this sector as follows:




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3.5 Market Growth

GENERAL TRENDS
      Between 2008 and 2010, the fuel cell industry experienced a compound annual growth
       rate (CAGR) of 27 percent. Although this is lower than some industry commentators
       would have liked to see, this increase belies the fact that within this a number of
       companies have shifted into profit per unit status. Company-level profitability is still
       elusive, but the necessary first step of making a profit on each unit sold has now been
       taken by a handful of industry players.
      The stationary fuel cell market was the only one of the three meta sectors that posted
       an increase, with both the portable and transport sectors experiencing decreases in
       units shipped between 2009 and 2010. This decline was due to a number of factors,
       including a false dawn in the consumer electronics sector, fuel cells for light duty
       vehicles and buses still being released in batches in the market, and the slow recovery of
       some applications from the global recession.
      In terms of breakout applications in 2010, the market for remote monitoring units came
       out of the shadows and started to log adoption.
      According to some researchers, the market for fuel cells and other related products is
       projected to reach about $29 billion by 2011, considering the global basis, since it is
       applicable to some transportation systems, portable power, and power generation.
      Analyses of the near- to mid-term market for fuel cells also indicate substantial potential
       growth (the latest estimate of current fuel cell industry employment by Fuel Cells 2000
       indicates more than 13,000 total direct fuel cell industry jobs worldwide, with more
       than 25,000 associated supply-chain jobs).
      Fuel Cell Today’s 2010 Industry Review predicts that by 2020 the global fuel cell industry
       could create over 700,000 new jobs in manufacturing, and as many as 300,000
       additional jobs in installation, service, and maintenance.
      A study conducted by the Connecticut Center for Advanced Technology estimates that
       the global fuel cell/hydrogen market could reach maturity over the next 10 to 20 years;
       the report estimated that within this timeframe global revenues for the hydrogen and
       fuel cell markets would reach between $43 and $139 billion annually, including the
       following key market sectors:
           o $14 – $31 billion/year for stationary power
           o $11 billion/year for portable power
           o $18 – $97 billion/year for transportation
      Commercial fuel cell demands in the U.S. is forecast to total $715 million in 2015 after
       growing 25.5 percent per year from 2010. Demand is then expected to rise 26.5 percent
       annual through 2020 to $2.3 billion. Gains will be spurred by continuing technological
       advances that bring costs down to competitive levels.


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FUEL CELLS
      Fuel cells are one of the fastest-growing clean-energy sectors, with 10.3 percent average
       annual employment growth from 2003 to 2010.
      Global sales of fuel cells are expected to grow from $598 million in 2010 to $1.22 billion
       by 2014.

      The global market for fuel cells grew to approximately $500 million in 2009.
      PEM Fuel Cells are by far the most widely used, and they will strengthen their dominant
       market position over the next decade. More organizations are working to develop and
       market PEM systems than any other single fuel cell chemistry, which will help boost
       demand as additional PEM products are introduced. Demand for commercial PEM fuel
       cells is expected to rise 36.2 percent annually through 2015 to $446 million, and then
       grow 31.3 percent per year through 2020 to $1.7 billion, remaining the leading fuel cell
       chemistry. Gains will be driven by an array of potential applications such as motor
       vehicles and portable electronics.
      Demand for DMFCs will expand at a faster rate than that of PEM fuel cells through 2020.
       Demand is projected to grow 36.9 percent per year between 2015 and 2020 to $125
       million, the fastest pace of any fuel cell chemistry (albeit from a small 2015 base).
       Advances will be stimulated by rapid development in portable electronics applications
       as new products are commercialized.
       DMFCs can extract hydrogen from methanol without the need for a reformer, making
       them highly suitable for powering small electronic devices where a reformer would add
       unwanted bulk.
      Sales of high-temperature SOFCs are also projected to climb rapidly because of their
       ability to use multiple fuels and their high energy efficiency, which can exceed 80
       percent if excess heat generated is recaptured for cogeneration purposes.

TRANSPORT
      Fuel cell demand in motor vehicle applications is expected to expand 32.3 percent per
       year through 2015 to $215 million, and then increase 36.8 percent annually through
       2001 to $1.0 billion, the fastest pace of any fuel cell application. Growth will benefit as a
       number of major automakers are expected to begin commercial sales of fuel cell
       vehicles by 2015.
      Fuel cells that use direct hydrogen are opening up a new business opportunity for
       hydrogen suppliers – one with potentially high demand if some key markets take off.
       The key direct hydrogen fuel cell applications that are currently seeing traction are light
       duty vehicles, forklifts, buses, stationary power, and scooters.
      Although fuel cells used in motor vehicle applications will account for less than one-half
       of one percent of the total number of systems sold in 2020, they will make up the
       largest single share of demand in dollar terms.


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      Forklifts are predicted to be the largest driver of hydrogen fuel demand by 2020,
       representing 36 percent of the total market by that time.
      The other large application categories include light duty vehicles, which will consume 33
       percent of total hydrogen, and uninterruptible power supplies (UPS) for stationary
       power, which will represent 27 percent of the total. Fuel cell buses and scooters will
       each be a relatively small percentage of total hydrogen demand.

INFRASTRUCTURE
      Pike Research predicts that more than 5,200 hydrogen fueling stations will be
       operational by 2020, up from just 200 stations in 2010. By the end of that period, annual
       investment in hydrogen stations will reach $1.6 billion, with a cumulative 10-year
       investment totaling $8.4 billion. The increased utilization of hydrogen as a fuel will drive
       annual demand from approximately 775,000 kilograms (kg) in 2010 to 418 million kg by
       2020.
      There is no one clear business model for the hydrogen infrastructure market at present.
       Currently, the major players in hydrogen fueling are large multinationals: the industrial
       gas companies, and the energy and gas companies, both those that operate retail gas
       stations and those that provide fuels for the grid. These companies tend to favor large-
       scale hydrogen infrastructure options.
      Some smaller independent hydrogen suppliers are developing and marketing smaller
       onsite hydrogen generator technologies could offer a more modular path to hydrogen
       infrastructure buildout. Yet another pathway is presented by vehicles using very small
       quantities of hydrogen, such as scooters. These vehicles can be fueled by small solid
       state hydrogen cartridges, which are readily distributed in retail outlets.

PORTABLE FUEL CELL SYSTEMS
      Portable fuel cell systems are projected to reach annual revenue of $2.8 billion by 2017,
       and are expected to account for 97 percent of all unit demand in 2020.
      The market for portable electronics fuel cells, most of which are currently utilized in
       niche applications like defense and educational toys, will be spurred by user frustration
       over the shortcomings of batteries as a power source, and declining costs will help make
       fuel cells an affordable alternative source of portable power.
      The consumer electronics market remains one of enormous potential for portable fuel
       cells. High-end and miniaturized products such as smartphones and media tablets
       represent potentially outstanding high-end applications for portable fuel cells. The high
       energy density afforded by fuel cells suggests that these technologies will become
       integral to future incarnations of these products.
      New niche markets, such as environmental remote monitoring, have also been
       recognized as markets of significant potential. Fuel cells offer substantial benefits over
       conventional diesel generators, including lower maintenance costs and longer


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       endurance. The depth and breadth of this rapidly expanding market suggest that it will
       be essential to the growth of the portable fuel cell sector in the near future.
      Markets for portable fuel cell generators continue to develop at a very slow rate across
       the portable generator markets in general. However, portable fuel cell generators are
       establishing a specialized role in niche markets, particularly as power supplies for
       outdoor music and arts festivals.
      Military man-portable applications such as remote monitoring/sensing and mobile
       soldier power remain a strong area of focus for fuel cell developers. A regular stream of
       military demonstrations and testing is taking place.
      In pursuing these applications and markets, fuel cell technologies have demonstrated
       real-world advantages over conventional solutions such as batteries, diesel generators,
       and solar-powered systems. For example:
           o Batteries are known for their high power density, which means that they have no
             problem covering brief current peaks. Yet, due to their low energy density, they
             are not appropriate for supplying power over long periods because they have to
             be regularly replaced or laboriously recharged.
           o Generators combine power density with energy density, but they also produce
             harmful exhaust emissions and noise. In addition, it is difficult to adapt their
             output for low to medium power levels.
           o A solar-powered system, in contrast, generates electricity without ancillary costs
             when there is enough available sunlight. But it is practically useless in bad
             weather or without intensive direct sunlight, as its output depends strongly on
             the time of day, season, and/or local conditions. Solar cells are also clearly visible
             where they are installed, which is undesirable in many cases (e.g., due to
             vandalism).
      Fuel cells have the ability to overcome the weaknesses of these competing solutions.
       Ideally, a hybrid operation – combining fuel cells with batteries and/or solar modules –
       can be both a backup power solution and a solution to overcome long runtime
       requirements.
      Despite these advantages, though, large barriers remain with respect to the capacity of
       the fuel cell supply chain and associated manufacturing costs. Adopting universal
       industry standards for components and systems will help alleviate these costs in the
       coming years.
      The role of the large Japanese and Korean electronics corporations in boosting
       manufacturing capacity and integrating fuel cell technologies into their products is
       recognized as critical for the industry going forward.




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STATIONARY FUEL CELLS (PRIME POWER)
      The stationary fuel cell prime power market is experiencing rapid growth. With an
       increasing number of companies offering commercial products to the non-residential
       market, commercial adopters are demonstrating increased interest. The residential
       market is only a matter of months behind. In fact, a few forward looking companies
       already have fully certified products in the market in limited regions.
      Within this fluid, vibrant phase of market growth we are starting to see some new
       market trends appearing. These include the electrons or hardware business model
       where adopters lease or buy the stationary fuel cell prime power unit. The benefits of
       both vary depending on the adopter and, interestingly, the country in which the
       company is operating. In terms of geography, we have seen some companies developing
       a single country specific product, for example in the Japanese residential market. So
       although a company may be leading today, in terms of deployment, looking forward it
       could face significant barriers to entry for its product in other regions.

STATIONARY FUEL CELLS, UPS & BACKUP POWER
      The stationary fuel cell UPS and backup power market is experiencing double digit
       annual growth, admittedly from a low base. An increasing number of companies
       operating in the UPS and backup power markets have introduced fully certified products
       in geographies including Europe, America, China, Indonesia, and India. This certification
       is enabling these companies to move quickly through the low volume, quasi-automated,
       production phase of market development.
      Many key industry players are now understanding that their most importance
       competency is their ability to produce the fuel cell systems, which can then be
       integrated into the product line of a current UPS or telecom market industry supplier.
       This approach allows the fuel cell company to leverage not only the existing customer
       base of the current industry supplier, but also its reputation and presence.

ELECTRIC POWER GENERATION
      Electric power generation-related fuel cell sales will continue to grow at a brisk pace
       through 2020, benefitting from the relatively low hurdles that this equipment has to
       overcome to achieve cost competitiveness and its much greater fuel efficiency
       compared to conventional power generation methods. These products accounted for
       well over half of all commercial fuel cell demand in 2010.




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3.6 Investment
      Fuel cell/hydrogen R&D is considered by many as long-term, high-risk, high-payoff R&D
       that is appropriate for governments to support.
      The U.S. Government investment of approximately $1.5 billion for fuel cell technology
       RD&D activities over six years, from fiscal years 2004 to 2009, is on par with investments
       for similar activities by Japan, the European Commission, and Germany, of
       approximately $383 million in 2009, $625 million over the next five years, and $744
       million over the next eight years, respectively.
      Private industry is also making investments to pursue what could ultimately be a major
       global market for stationary, portable, and automotive fuel cells. A survey of the fuel cell
       industry conducted by PricewaterhouseCoopers put global R&D spending in the private
       sector at nearly $830 million and employment at close to 9,000 in 2006—with just over
       60 percent of “key industry organizations” reporting.
      The U.S. Department of Energy states that its funding has already helped to reduce the
       cost of fuel cells by more than 80percent since 2002 and by 30 percent since 2008.
      In 2003, former President George W. Bush announced the Hydrogen Fuel Initiative, a
       $1.2 billion commitment over five years to accelerate hydrogen-related research to
       overcome obstacles in taking hydrogen fuel cell vehicles from the laboratory to the
       showroom.
      To achieve such growth and enable U.S. competitiveness, sustained funding is required
       for R&D to build and strengthen core competencies in areas such as catalysis, advanced
       materials, and manufacturing technologies. Investments will also be needed at the
       university level, to develop human capital, and in industry, to stimulate early markets in
       order to further develop manufacturing capabilities and help achieve economies of
       scale.
       See the Fuel Cell Policy section below for additional discussion of Federal and state
       incentives and policy.
       See also CleanTech Overview section 3.5 for additional discussion of mergers &
       acquisitions and equity investment activity in the CleanTech sector.




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3.7 Technology Development
      Key technical challenges include:
          Durability: The durability of certain types of fuel cells is approaching levels that will
           enable viability in some markets, particularly the markets for stationary power.
           However, to achieve large-scale market penetration, durability will have to be at
           least 40,000 hours—and in some cases as high as 80,000 hours— for primary-power
           applications.
           While some types of stationary fuel cells may be close to meeting these
           requirements, the highest demonstrated durability of PEM fuel cells, for example, is
           approximately 20,000 hours. Furthermore, for fuel cell electric vehicles, durability
           would have to be at least 5,000 hours (or roughly 150,000 miles of driving).
           Although substantial progress has been made in automotive fuel cells, and a
           durability of 2,500 hours (~75,000 miles), with less than 10 percent degradation, has
           been validated on the road, challenges still remain to achieve the full lifespan of
           5,000 hours.
          Some of the other issues relating to fuel cell systems that will have to be addressed
           concurrently with improvements in durability are:
            o The ability for fuel cells to operate reliably in ambient temperatures of -40°C to
              +50°C and in conditions of very high or very low relative humidity
            o Higher operating temperatures (for improved co-generation capacity) and
              improved efficiency for stationary fuel cells
            o Reduced size and weight for auxiliary power fuel cells
            o Higher power density for stationary fuel cells
            o Higher energy density for portable fuel cells
            o To maximize environmental benefits, fuel cell efficiencies should be high and
              materials and components should be designed to maximize total life-cycle
              sustainability
      Two noteworthy recent technical developments include:
          Los Alamos National Laboratory researchers Gang Wu, Christina Johnston, and Piotr
           Zelenay, joined by researcher Karren More of Oak Ridge National Laboratory,
           describe the use of a platinum-free catalyst in the cathode of a hydrogen fuel cell.
           Eliminating platinum -- a precious metal more expensive than gold -- would solve a
           significant economic challenge that has thwarted widespread use of large-scale
           hydrogen fuel cell systems. Because of the successful performance of the new
           catalyst, the Los Alamos researchers have filed a patent for it.
          Bing Energy, Inc. a manufacturer of state-of-the-art components for PEMFCs, has
           entered into a commercialization agreement with Florida State University that gives
           the company exclusive use of revolutionary nanotechnology that will create a new



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           generation of hydrogen fuel cells that are less expensive, smaller, lighter and more
           durable.
           The technology, developed by Dr. Jim P. Zheng, will reduce the need for expensive
           platinum components in hydrogen fuel cells. Working with a material known as
           buckypaper - a form of carbon that is extraordinarily light and that easily conducts
           heat or electricity - Dr. Zheng has designed a thin material, or membrane, that will
           reduce the amount of platinum required in fuel cells. Since the membrane is thinner
           and lighter than current components, the fuel cell can be smaller and yet still
           provide the same amount of power.

U.S. DEPARTMENT OF ENERGY R&D INITIATIVES
      To enable domestic competitiveness, DOE’s Office of Energy Efficiency and Renewable
       Energy (EERE) will continue to support R&D of hydrogen and multiple types of fuel cells
       for diverse applications (in stationary power, portable power, and transportation,
       including fuel cell vehicles).
      DOE’s Recovery Act funding ($43 million) will deploy up to 1,000 fuel cells for early
       market applications and will provide data and lessons-learned from early market
       deployments
      Funding has been reduced for aspects of the program with less impact on R&D progress,
       such as Market Transformation. Further Market Transformation and Education activities
       will be deferred until results from Recovery Act funding are available.
      Key R&D areas (core technologies) for 2012 include:
           o Catalysts Focus on approaches that will increase activity and utilization of
             current PGM and PGM-alloy catalysts, as well as non-PGM catalyst approaches
             for long-term applications.
           o Develop high-temperature membranes that will reduce the negative effects of
             impurities and decrease the size of the cooling system.
           o Improve PEM-MEAs (for stationary and transportation applications) through
             integration of MEA components.
           o Develop transport models and in-situ and ex-situ experiments to provide data for
             model validation.
           o Identify degradation mechanisms and develop approaches to mitigate their
             effects.
           o Investigate and quantify effects of impurities on fuel cell performance.
           o Durability & accelerated stress-testing—determine their correlation with real-
             world degradation.
           o BOP (balance of plant) component development such as sensors, air
             compression, and humidifiers



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      Examples of systems R&D in FY 2012 include:
           o Portable Power: focus on materials improvements for direct-methanol fuel cells.
           o Reduce anode and cathode catalyst loading, while improving catalytic activity
             and durability.
           o Improve membranes, to reduce crossover and increase proton conductivity.
           o Stationary distributed power generation includes integrated FC systems for
             distributed power generation and CHP applications.
           o Develop FC systems for μ-CHP (1-10 kW) for residential and light commercial
             applications.
           o Improve stack components for high-temperature fuel cells including PEM-PBI-
             type and SOFC.
           o Develop BOP components, such as sensors and blowers.
           o For fuel processors, concentrate on component integration, fuel flexibility, and
             clean-up of deleterious fuel components.
      Production R&D key focus areas for FY 2012 include:
           o Achieve a 25 percent reduction in electrolyzer capital cost reducing the
             projected hydrogen cost from $6/gge in 2009 to less than $5/gge.
           o Develop materials with photoelectrochemical conversion efficiency of 10 percent
             compared to a 4 percent baseline, reducing the projected hydrogen cost from
             $6/ggein 2009 to less than $5/gge.
           o Improve the durability of high-efficiency PEC materials to 1,000 hours.
           o Production R&D, ongoing work: Existing projects in longer-term centralized
             production will continue (including solar thermochemical, and biological).
      Delivery R&D key focus areas for FY 2012 include:
           o Work towards increasing the pressure capability of electrochemical hydrogen
             compression from 6,000 to 12,000 psi for potential use in hydrogen stations in
             the long term.
           o Develop fiberglass-based storage vessels that exhibit high pressure capacities to
             enable 7000 psi and a~ 50 percent reduction in cost relative to carbon-fiber
             wrapped tanks in the long term.
      Storage R&D key focus areas for FY 2012 include:
           o The Engineering Center of Excellence will continue advancing complete system
             engineering design of materials-based technologies.
           o Material and system development will continue for early market applications as
             well as for automotive applications. This will include efforts to lower cost for
             high strength carbon fiber for compressed gas storage vessels.



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FUEL CELL-RELATED INTELLECTUAL PROPERTY ACTIVITY
      The U.S. filed more fuel cell patents than any other country, according to the Clean
       Energy Patent Growth Index by the Cleantech Group of Heslin Rothenberg Farley &
       Mesiti P.C.
      The number of fuel cell patents has been the largest in the clean energy field for the
       past eight years - in 2010, the U.S. fuel cell industry had three times the number of
       patents (996) than the second place holder, solar, with just 363 patents.

      The U.S. holds 47 percent of fuel cell patents registered between 2002 and 2010.
      Fuel cell patents originated from 30 states, with Michigan as the leader with 136
       patents, followed by California with 59, New York with 24 and Connecticut with 22.
      Other states registering patents include Oregon (16), Ohio (12), Florida (11),
       Massachusetts (11) and Illinois (11) and Pennsylvania (9), plus 20 other states with at
       least one patent.




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3.8 Operating Costs & Capitalization
   Projected Transportation Fuel Cell Systems Cost, projected to high-volume (500,000
                                       units/year)




                        Projected High-Volume Cost of Hydrogeni—Status




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                                                            CleanTech Roadmap: Fuel Cells


             Comparison of 2008 ORNL Study & 2010 Fuel Cell Cost Estimates




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3.9 Fuel Cell Policy

FEDERAL INCENTIVES
      Ohio, one of Fuel Cells 2000’s Top 5 Fuel Cell States, has implemented a Qualified
       Energy Project Tax Exemption for which fuel cell installations are eligible.
      California, also a Top 5 Fuel Cell State, created the CAEATFA (California Alternative
       Energy and Advanced Transportation Financing Authority) program to finance
       alternatively-powered facilities and facilities used to develop and commercialize
       advanced transportation technologies. Fuel cell technology is eligible for funding.

      Louisiana initiated a renewable energy pilot program for which fuel cells are eligible.
      Oklahoma instituted alternative fuel vehicle and infrastructure tax credits, and a
       renewable energy goal, that includes fuel cells and hydrogen.

      Maryland made fuel cell technology eligible for the state’s net metering policies.
      Hawaii’s state government, in partnership with 10 companies, agencies and universities,
       as well as General Motors, the U.S. Department of Energy and Department of Defense,
       initiated the Hawaii Hydrogen Initiative (H2I) to make hydrogen-powered vehicles and a
       fueling infrastructure a reality in Hawaii by 2015.
      Federal American Recovery and Reinvestment (ARRA) funding supported hundreds of
       installations around the country by Sprint Nextel and fuel cell manufacturer ReliOn (for
       AT&T and PG&E), respectively.
      Renewable portfolio standards (RPSs) are another important incentive. These standards
       require utilities present in states that have passed RPSs to generate renewable energy
       as a certain percentage of the energy they transmit to customers. Twenty-nine states
       and Washington, DC, have passed RPSs and in doing so, they have made renewable
       energy growth a priority. For example, California requires 33.0 percent of its generation
       be renewable by 2020. The penalties vary from state to state in regard to violation of
       the requirement, but most are in the form of compliance payments. This regulatory
       trend has pushed renewable energy growth in states with RPS laws.

      Arizona’s RPS includes hydrogen as an eligible renewable energy source.




©Arizona SBDC Network                     December 2011                                          p. 41
                                                                     CleanTech Roadmap: Fuel Cells


ARIZONA RENEWABLE ENERGY STANDARD
      Several states provide incentives for renewable energy technologies. For example, the
       California Public Utilities Commission and the Wisconsin Public Service Commission have
       consistently developed state energy plans that favor the use of renewables.
      In November 2006, the Arizona Corporation Commission (ACC) adopted final rules to
       expand the state's Renewable Energy Standard (RES) to 15 percent by 2025, with 30
       percent of the renewable energy to be derived from distributed energy technologies
       (~2,000 megawatts). In June 2007, the state attorney general certified the rule as
       constitutional, allowing the new rules to go forward, and they took effect 60 days later.
       Investor-owned utilities and electric power cooperatives serving retail customers in
       Arizona, with the exception of distribution companies with more than half of their
       customers outside Arizona, are subject to the standard.
       Utilities subject to the RES must obtain renewable energy credits (RECs) from eligible
       renewable resources to meet 15 percent of their retail electric load by 2025 and
       thereafter. Of this percentage, 30 percent (i.e. 4.5 percent of total retail sales in 2025)
       must come from distributed renewable (DR) resources by 2012 and thereafter. One-half
       of the distributed renewable energy requirement must come from residential
       applications and the remaining one-half from nonresidential, non-utility applications.
       The compliance schedule is:

               2006: 1.25%                   2016: 6.00% (30% DR)
               2007: 1.50% (5% DR)           2017: 7.00% (30% DR)
               2008: 1.75% (10% DR)          2018: 8.00% (30% DR)
               2009: 2.00% (15% DR)          2019: 9.00% (30% DR)
               2010: 2.50% (20% DR)          2020: 10.00% (30% DR)
               2011: 3.00% (25% DR)          2021: 11.00% (30% DR)
               2012: 3.50% (30% DR)          2022: 12.00% (30% DR)
               2013: 4.00% (30% DR)          2023: 13.00% (30% DR)
               2014: 4.50% (30% DR)          2024: 14.00% (30% DR)
               2015: 5.00% (30% DR)          2025: 15.00% (30% DR)

         A utility may use bundled RECs acquired in any year to meet its annual requirement.
         With the exception of incremental generation from hydropower facilities or
         hydropower output used to firm intermittent renewables, renewable energy from
         facilities installed before January 1, 1997, are not eligible. Energy produced by eligible
         renewable-energy systems must be deliverable to the state.
         Extra credit multipliers may be earned for early installation of certain technologies, in-
         state solar installation, and in-state manufactured content. The multipliers are
         additive, but cannot exceed 2.0. RECs derived from renewables installed after
         December 31, 2005, are not eligible for multipliers. If a utility makes an investment in
         a solar electric manufacturing plant located in state or provides incentives for a plant
         to locate in the state, the utility can acquire RECs for the main RPS tier equal to the
         capacity of the panels produced multiplied by 2,190 hours, which approximates a 25



©Arizona SBDC Network                     December 2011                                        p. 42
                                                                       CleanTech Roadmap: Fuel Cells


         percent capacity factor. These RECs cannot account for more than 20 percent of the
         annual requirement.
         Utilities subject to the RES must submit compliance and implementation plans
         annually to the ACC. Utilities recover RES costs through a monthly surcharge. Each
         affected utility may adopt their own surcharge but it must be substantially similar to
         the sample tariff provided in the rules, and it must receive approval from the ACC.
         Affected utilities also have the option to file a rate case with the ACC in lieu of a tariff.

         Background
      Prior to the 2006 rules, Arizona's original Environmental Portfolio Standard (EPS) required
      regulated utilities to generate 0.4 percent of their power from renewables in 2002,
      increasing to 1.1 percent in 2007-2012. Solar electric power was to make up 50 percent of
      total renewables in 2001, increasing to 60 percent in 2004-2012. The EPS was an update
      of repealed 1996 ACC rules for a solar portfolio standard, which set a goal of 0.2 percent
      from solar energy by 1999 and 1 percent by 2003.
      *For renewable energy systems that produce electricity, one REC equals one kilowatt-
      hour (kWh). For renewable energy systems that produce heat (solar water heating, solar
      industrial process heating and cooling, solar space cooling, biomass thermal systems,
      biogas thermal systems, and solar space heating systems), 3,415 British Thermal Units
      (BTUs) equals one REC. In Arizona, a REC is a bundled package of three elements: the
      kWh, the renewable attributes, and any environmental attributes. All three must be
      delivered to Arizona customers and utilities in order to meet the REST requirements.
      Unbundled "paper RECs" will NOT meet REST requirements.

         Contact:
               Ray Williamson
               Arizona Corporation Commission
               1200 W. Washington Street, Phoenix, AZ 85007
               Tel: 602-542-0828; Fax: 602 542-2129; E-Mail: RWilliamson@azcc.gov
               Website: http://www.cc.state.az.us/




©Arizona SBDC Network                      December 2011                                          p. 43
                                                                        CleanTech Roadmap: Fuel Cells


FULL LIST OF ARIZONA FUEL CELL FINANCIAL INCENTIVES, RULES, REGULATIONS &
POLICIES
(Source: DSIRE database; see the Information Resources section below)

Corporate Depreciation
   Modified Accelerated Cost-Recovery System (MACRS) + Bonus Depreciation (2008-
   2012) Federal
Corporate Tax Credit
   Business Energy Investment Tax Credit (ITC) Federal
Federal Grant Program
   U.S. Department of Treasury - Renewable Energy Grants Federal
   USDA - Rural Energy for America Program (REAP) Grants Federal
Federal Loan Program
   U.S. Department of Energy - Loan Guarantee Program Federal
   USDA - Rural Energy for America Program (REAP) Loan Guarantees Federal
Green Building Incentive
   City of Scottsdale - Green Building Incentives
   Town of Buckeye - Green Building Incentive
Industry Recruitment/Support
   Renewable Energy Business Tax Incentives
Personal Tax Credit
   Residential Renewable Energy Tax Credit Federal
Energy Standards for Public Buildings
   City of Chandler - Green Building Requirement for City Buildings
Interconnection

   Interconnection Guidelines
Net Metering
   Arizona - Net Metering
Renewables Portfolio Standard
   Renewable Energy Standard




©Arizona SBDC Network                             December 2011                                 p. 44
                                                                    CleanTech Roadmap: Fuel Cells



4.0 Information Resources
See also the CleanTech Overview Roadmap, General Information Sources, for additional
relevant resources.

DEFINITIONS
   FAQ, Fuelcelltoday.com

   Fuel and Infrastructure. Fuelcelltoday.com.

   Fuel Cell, Wikipedia entry accessed 9/29/11

   Fuel cell, U.S. Energy Information Administration Glossary

   Fuel Cells in Transportation. Fuelcelltoday.com.

   Portable Fuel Cells. Fuelcelltoday.com.

   Stationary Fuel Cells. Fuelcelltoday.com.

U.S. GOVERNMENT SOURCES
   Database of State Incentives for Renewables & Efficiency
           DSIRE is a comprehensive source of information on state, local, utility and federal
           incentives and policies that promote renewable energy and energy efficiency.
           Established in 1995 and funded by the U.S. Department of Energy, DSIRE is an
           ongoing project of the N.C. Solar Center and the Interstate Renewable Energy
           Council.

   Hydrogen and Fuel Cells Interagency Working Group

   NAICS
           The North American Industry Classification System (NAICS) is the standard used by
           Federal statistical agencies in classifying business establishments for the purpose of
           collecting, analyzing, and publishing statistical data related to the U.S. business
           economy.
   U.S. Department of Energy E-Center
           DOE's e-center contains information on doing business with the agency. The e-
           center allows searching by keyword to view renewable energy funding
           opportunities, register to submit proposals, and obtain information and guidance on
           the acquisition and financial assistance award process. This database provides
           information on all solicitations offered by the Department of Energy, including those
           offered by the EERE Solar Energy Technologies Program, Office of Science, and
           others.


©Arizona SBDC Network                     December 2011                                       p. 45
                                                                     CleanTech Roadmap: Fuel Cells


       U.S. Department of Energy Fuel Cell Technologies Program

       U.S. Department of Energy Hydrogen & Fuel Cells Program
           The DOE Hydrogen and Fuel Cells Program conducts comprehensive efforts to
           overcome the technological, economic, and institutional barriers to the widespread
           commercialization of hydrogen and fuel cells.
           Publisher of National Hydrogen Energy Roadmap (Production, Delivery, Storage,
           Conversion, Applications, Public Education & Outreach (November 2002) and the
           Department of Energy Hydrogen & Fuel Cell Cells Program Plan (September 2011).
   U.S. Department of Energy Office of Energy Efficiency and Renewable Energy (EERE)
           The Fuel Cells Program is working closely with DOE national laboratories,
           universities, and industry partners to overcome critical technical barriers to fuel cell
           commercialization. Current R&D focuses on the development of reliable, low-cost,
           high-performance fuel cell system components for transportation and buildings
           applications.

   U.S. Department of Energy Office of Fossil Energy

   U.S. Department of Energy Office of Nuclear Energy

   U.S. Department of Energy Office of Science

   U.S. Department of Energy Solid State Energy Conversion Alliance

   U.S. Energy Information Administration
           The Renewable & Alternative Fuels page provides statistics on renewable energy
           consumption by source type, electric capacity and electricity generation from
           renewable sources, biomass and alternative fuels. Also provides monthly and annual
           reports on fuel consumption (actual and projected), sector-specific manufacturing
           activities, and other topics.

COMMERCIAL MARKET & INDUSTRY RESEARCH REPORTS
   Freedonia Group
       Publisher of Freedonia Focus on World Fuel Cells (June 2011).
   Global Data
       Publisher of Hydrogen Fuels: Global Market Size, Technology Road-map, Regulations,
       Competitive Landscape and Pricing Analysis to 2020 (January 2011).
   IBISWorld
       Publisher of Rectifier & Fuel Cell Manufacturing in the US - 33599 (October 2011).




©Arizona SBDC Network                     December 2011                                         p. 46
                                                                   CleanTech Roadmap: Fuel Cells


   Pike Research
       Publisher of Fuel Cells for Portable Power Applications (2Q 2011), Hydrogen
       Infrastructure (July 2011), and others.
   SBI Energy
       Provides customized and off-the-shelf market research. Relevant reports include Fuel
       Cell Technologies Worldwide (September 2010), Advanced Storage Battery Market:
       from Hybrid/Electric Vehicles to Cell Phones (March 2009) and others.
   Taiyou Research
       Publisher of Global Fuel Cells Market (June 2011).

FUEL CELL SECTOR BUSINESS & INDUSTRY INFORMATION
   Business Case for Fuel Cells
       This 2010 report was written and compiled by Sandra Curtin and Jennifer Gangi of Fuel
       Cells 2000, an activity of Breakthrough Technologies Institute in Washington, DC, with
       assistance from Elizabeth Delmont. Support was provided by the U.S. Department of
       Energy‘s Fuel Cell Technologies Program.

   CBTR (Clean Technology Business Review): Energy Storage

   Fuel Cell & Hydrogen Energy Association (FCHEA)
       The trade association for the fuel cell and hydrogen industry. Provides Fact Sheets on a
       variety of technologies.

   Fuel Cells 2000: the Online Fuel Cell Information Resource
   Fuel Cell Today
   International Energy Association
       The IEA’s Renewable Energy Secretariat focuses on policy and market analysis, system
       integration issues, as well as gathering and elaboration of statistical data related to
       renewable energy topics.
   National Fuel Cell Research Center
       The National Fuel Cell Research Center (NFCRC) was established at the University of
       California, Irvine, in February 1998. The oldest and perhaps most well-known dedicated
       fuel cell research center, the NFCRC conducts research in fuel cell systems and
       components, as well as analysis and market research, including important beta testing
       of commercial products.
   .Union   of Concerned Scientists
       Provides a comprehensive toolkit for U.S. state renewable electricity standards, as well
       as news and information about other clean energy topics.


©Arizona SBDC Network                    December 2011                                      p. 47
                                                                    CleanTech Roadmap: Fuel Cells



ARIZONA RESOURCES
   Arizona Commerce Commission
       In November 2011, new incentives in the form of tax credits and grants for Arizona
       companies were announced. This source should be reviewed regularly for new
       incentives.
   Arizona Energy Consortium
   Michelle De Blasi, Chair
   Tel: 602-229-5448; michelle.deblasi@quarles.com
       A committee of the Arizona Technology Council, the AEC holds monthly stakeholder
       meetings to stimulate member discussions concerning the current challenges faced
       within the energy industry. Through its development, the AEC will serve as a supportive
       venue for current and new members locating or expanding their business within the
       state, as well as a repository for reliable information related to the energy industry. The
       AEC will advise on the development of long-term strategic plans for industry growth to
       strongly promote both economic development initiatives and continued technological
       innovation across the state. The AEC is currently comprised of approximately 250
       members and is chaired by Michelle De Blasi, a partner with the law firm of Quarles &
       Brady LLP and chair of its Solar Energy Law Team.




©Arizona SBDC Network                     December 2011                                       p. 48

				
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