Fuel cell membrane/MEA market dynamics

The core technology in PEM fuel cells remains the MEA and membrane. Stack technology is becoming a commodity. But the solution to a low cost long term durable high performance membrane is elusive. The major player Dupont still owns this market with their nafion category of products. Several challengers have risen to try their hand, but really have ben unable to make a major dent in Dupont’s nafion, or the industry need. By my guess the challengers still have only in the very low double digit millions in revenue.

As an example, rapid growing Hoku Scientific, the latest craze for investors, is on a run rate of c. $5 mm in revenue. It is even making a bit of money. However with a market cap of $150 mm, a bit aggressive.

Take note: That market cap is close to the total volumes of commercial PEM fuel cell sales for Hoku’s entire target customer base.

Polyfuel, another membrane producer, took the AIM route, and is of a similar size.

The problem for the membrane and MEA producers is 3 fold:

With the advent of the challengers, their is not a big enough near term market for any of them to grow profitably (the whole PEM fuel cell market in terms of cost for total pilot and commercial units shipped is well less than $200 mm/year)

  • PEM fuel cells are being supplanted in R&D spending by SOFC and DMFC or microPEMs (which either do not need membranes like these, or need far less square footage of membrane).
  • The prices and performance are still not where the fuel cell industry needs them to be to commercialize, even if it can get the rest of its act together.
Not an easy challenge.

Publicly traded MEA Companies:
Polyfuel (LSE:PYF.L)
Hoku Scientific (NASDAQNM:HOKU)

Privately held or divisions:

Getting Serious About Efficiency

You know there’s a real opportunity to cost-effectively reduce energy consumption when the CEO of a supermajor oil company (David O’Reilly of Chevron) argues in national advertisements that improvements in efficiency must become an increasingly significant factor in meeting future energy needs.

As additional evidence, consider the following recent letter to President Bush from Robert Lowe (Chairman of the Real Estate Roundtable, an industry association for real estate interests), arguing for greater federal push for additional energy efficiency measures.

Letter to President Bush from Real Estate Roundtable

It’s easy for all of us in the cleantech community to be seduced by improvements and breakthroughs in clean energy supplies — solar, wind, fuel cells, etc. However, it serves us well to remind ourselves occasionally that the greenest unit of energy is the unit of energy not consumed. While not letting up on developing renewable energy supplies, we should pay at least as much attention (and frankly probably more) to the demand-side of the equation.

Oil prices continue slide – Impact on Cleantech?

Oil prices continue a downward spiral. Oil has dropped to $58 from a high of $70. We have been saying on Cleantechblog for sometime that the oil market was overheated.

Big questions of the day – how does this impact cleantech? A couple of quick thoughts.

– Can a prolonged slide in oil prices and gasoline (I’m now back down to $2.25/gal in California) take the edge off of the hot California hybrid car market?

– Part of the slide is due to warmer weather in key markets. If natural gas prices (still holding up well) follow suit in the US, will that impact solar system demand?

A Must-Read

Even though I daily read many items of professional interest, very rarely do I come across a piece so important and cogently written that I forward it to a long list of friends and family in an effort to educate and shape opinions among a broader public.

This week, I encountered a superb synopsis of the pervasive economic and geopolitical crises that we face as a result of our dependence on oil. It is written by two people who are hardly known for their expertise in energy/environmental issues, but whose voices should nevertheless be heeded: James Woolsey (ex-Director of CIA) and George Schulz (ex-Secretary of State).

Woolsey/Schulz on Oil and Security

The paper makes it abundantly clear that every gallon of oil we consume not only harms our environment, but reduces our national security. It also suggests that the environmental community can and should form a coalition with the security community to capitalize on their deep influence in setting the nation’s priorities, and thereby bring the environmental community closer to (or even inside) the circles of strongest power in DC.

I urge you readers, who are committed to the cleantech community, to spread this Woolsey/Schulz paper to a wider audience.

Rising Solar Prices Threaten the Industry

One of the most disturbing things about the solar industry, the rising star of cleantech, has been its recent rising prices. According to the SolarBuzz.com survey, module prices are up close to 7% in the US this last year, after years of falling.

The main culprits according to most solar watchers are a combination of:

  • High demand driven in large part by the US state and German subsidy programs
  • Tight supply on module capacity
  • Tight supply on silicon capacity

The first issue here is that rising solar module prices threaten the viability of the industry, at a time when it is gaining momentum and trying to reach critical mass. Worse, almost every manufacturer of solar modules is increasing capacity trying to take advantage of the industry growth. As a result, we think the industry may be in for a rude awakening if that capacity increase begins to outstrip demand, or if key subsidy programs underpinning growth falter for political reasons.

The businesses most at risk are the young technology developers, who are spending significant equity dollars on technology development and building to a critical manufacturing and sales base. These are the businesses that the VC community is funding at a tremendous rate. These aren’t businesses that are throwing off tremendous amounts of cashflow to weather a storm.
One concern, if the market does turn down, the major Japanese, European, and oil company solar manufacturers are likely to lower prices to keep their factories full, and really hurt the smaller businesses. Keep in mind, if you launched a solar business 5-10 years ago, reaching a 20 MW plant would put you in the top 20 manufacturers. With that same launch today, looking ahead five years to when your technology is commercialized, you will have to hit perhaps 50-100 MW of capacity to be an elite player. That’s a big difference that I don’t think the investment community has understood yet.

Dawnbreaker Conference Recap

I just returned from the Dawnbreaker technology commercialization conference. The conference is supported by the DOE, and is one of the oldest cleantech technology forums around.
Dawnbreaker had over 50 companies and 100+ strategics in attendance, and a number of very interesting technologies.
Among the more interesting in energy technology:
Alzeta Corporation was there showing a very interesting high efficiency burner. www.alzeta.com

A little company called InvenTek was showing off a unique battery structure, it was a ribbon Li-ion battery with a pancake coil design that exhibits very high power density. www.inventekcorp.com

CeraMem was showing off a restart of a very interesting technology in ceramic membranes for water purification. www.ceramem.com

Renewable Energy and Big Business

A new report from a group with a horrifically unwieldy name — the Renewable Energy Policy Network for the 21st Century (REN21) — indicates a record level of investment in renewable energy worldwide.

REN21 Report “Renewables 2005: A Global Status Report”

The lead author of the report Eric Montinot claims that “Renewable energy has become big business.” What am I missing here? Why do I find it difficult to agree with this assessment?

True, there are a lot of big corporations with a non-trivial involvement in renewables: BP, Shell, GE, FPL, ADM, and so on. And, there is no doubt that the renewable sector is growing rapidly and has grown tremendously from its earliest days. But, it strikes me that claiming renewables as “big business” is hype, premature at best. For the above firms, renewables represent a significant growth opportunity and an excellent PR position, but don’t represent a very large portion of their core business. Furthermore, there’s still an awful lot of “mom-and-pop” in the renewables sector, and an awful lot of green idealism or green policy rather than green money driving activity in renewables.

In any event, what does it really mean anyway for renewables to be “big business”? If it means being like Dell or Wal-Mart — improving the economics and delivery of products/services so that more customers purchase them because they represent truly valuable offers — then that (in my opinion) would be a good thing for the advancement of renewables. If “big business” means being like the average U.S. oil company, utility or auto manufacturer, those are the last role models I would like to see for the renewable energy sector.

A Rant on ExxonMobil

ExxonMobil was the subject of a none-too-flattering profile recently in USA Today, which documented the company’s long-standing opposition to investing in renewable energy technology development:

USA Today Article

Subsequent to running the article, letters to the USA Today editors indicated at least some citizen outrage at ExxonMobil for their shortsighted view. No doubt as a response to this, ExxonMobil late last week was running full-page color ads in local newspapers, touting statistics on how much the company invests annually in new (albeit conventional) energy resource and technology development.

For those who dislike ExxonMobil’s anti-renewables stance as much as I do, I suggest an alternative tactic to writing angry letters to editors: stop buying gasoline from ExxonMobil stations. Whenever possible, I buy gasoline from either BP or Shell stations, because of these corporations’ more progressive position and demonstrated commitment to building businesses in renewables. As a fallback position, I buy from Chevron or ConocoPhillips stations, as the parent companies are at least investing in new alternative energy R&D. ExxonMobil stations, for me, are a last resort.

Maybe if millions of people stopped buying ExxonMobil branded gasoline, the corporate honchos in Texas might take notice. It will be interesting to see if ExxonMobil’s philosophy against renewables changes after the year-end retirement of Chairman/CEO Lee Raymond. Mr. Raymond has long had what seems to be an almost personal animosity against renewables. As a leading candidate for being the poster child for the anti-renewable camp, his is a face (below) that I will not regret seeing move off of the energy stage.