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Fuel Cells and the Hydrogen Economy
Euro Japan is developing expertise in this area and is keen to talk with companies that have a direct or indirect interest. Chris Taylor, who has been following the hydrogen sector for almost 10 years, has written the following overview of the sector.


The Hydrogen Era Is About To Start !

Hydrogen could meet the World’s total current primary energy requirement. The capital investment required to achieve the complete switch over would be less than $9 trillion. This could be “financed” within a decade by the annual $1 trillion switched from expenditure on oil.

Such an investment is cheaper than the $10 trillion needed to only incrementally expand and replace parts of the World’s power sector over the next 30 years (International Energy Agency).

The economic argument for doing so is overwhelming. The figures mentioned above do not take into account either the further advances in fuel cells’ materials technology or the massive environmental benefits of the switch. Both these would reinforce the economic argument.

The economic argument for hydrogen.


Timetable To 2010 – The First Year Of Mass Production

2010 is a realistic date for the mass production of fuel cell related products to be underway. On the basis of the table below this fits in with companies’ current field testing of products and the “normal” pattern of manufactured product research, design, build and mass production.

Fuel cell assembly is more akin to light manufacturing/assembly so that a plant would take 2 years to construct rather than the 3 to 4 years required for a traditional engine or component facility.

“Slippage” in the timetable is most likely to occur at this point or at the field test stage, when the product may have to be redesigned/retested because of component failures.

Probable schedule to mass production of fuel cell based products
Time taken 2 Years 2 Years 2 Years 1 Year 1 Year
Years 2003 to 2004 2005 to 2006 2007 to 2008 2009 2010
Tasks • field test prototypes
• fine tune for mass output
• lock in final design
• raise funds
• order factory equipment
• build and equip factory
• train staff
• put in place suppliers
• production line fine tuned
• logistics in place/tested
• low volume trial output
• ramp up plant to full capacity
• full mass manufacture

Implications

The impending hydrogen economy, powered by fuel cells, will have far-reaching implications for all aspects of life as we know it.

At the industry level, hydrogen will not only force a restructuring of the oil, utility and transportation sectors but will also affect others such as consumer electronics, IT and telecommunication.

Geopolitically, the wide-spread but localised production of hydrogen will break the current global dependence upon oil and the Middle East’s pivotal role.

The environment will benefit significantly, not only from the lower emission of green-house gases but also from the use of renewable energy sources to produce the hydrogen. The resultant hydrogen economy will see individual consumers become self sufficient and independent of both centralised electricity generation and national power distribution networks.


Imminent Commercialisation Of The Hydrogen Sector

The use of hydrogen to generate electricity is not new, it has been known for over 120 years. However, recent developments in materials technology have dramatically reduced the cost of fuel cells whilst sharply improving their power density. This in turn has triggered a dramatic expansion in research and development funding by both the government and industry that will help accelerate the commercial adoption of the hydrogen fuel cell.

Already the world’s current production of hydrogen is sufficient to power 14% of the global vehicle fleet. Several multinational firms have significant product field tests underway including fleets of hydrogen powered vehicles. Indeed, Daimler-Chrysler will have 30 such buses and 60 cars in operation by the end of 2004.

Daimler-Chrysler Citaro bus operating in London as part of the EC wide CUBE program.


Massive Annual Savings

$1 Trillion & 5.1 Million Barrels Of Oil

Based upon the World’s primary energy consumption during 2002, global energy requirements would halve. 5,108 million tonnes of oil equivalent would be saved due to fuel cells’ greater efficiency.

$1 trillion annually that would normally have been spent upon other primary energy sources. At a price of $40 per barrel the amount saved would surpass $1,500 billion per annum, funding the entire switchover to hydrogen within 6 years.

Given the 30 year forecast 60% increase in the World’s total primary energy requirement the entire cost, not just the incremental expense, of the switch to hydrogen would be $14,500 billion. By then the annual “saving” at $28 per barrel would increase to a minimum of $1,600 billion each year. The corresponding figure for oil at $40 a barrel would be $1,900 billion.


Scale Of The Challenge

Worldwide : $9 Trillion Over The Next 25 Years

Assuming the world’s economy is completely converted to Hydrogen use based on 2002 energy consumption figures, including nuclear and hydro power, and that roughly 3 months worth of primary energy is stored then the total cost would be almost US$ 20,000 billion. The US would account for around 1/3 the required capital investment.

Once the figures are adjusted for fuel cells’ more efficient use of the energy liberated (2 to 3 times better than hydrocarbon based rival technologies) then the implied total cost of the hydrogen infrastructure drops to just over $9,000 billion. The US share would be $3,000 billion, or $125 billion a year if spread over the next 25 years.

By way of comparison US GDP is currently worth around US $12,000 billion annually whilst the Afghanistan War and the second Gulf War have each already cost US $200 billion (and still rising). In addition around $50bn to $100bn has to be spent on “mending” the US power distribution grid to prevent a recurrence of the recent blackouts in the North East and in California.


New Markets Created

$1 Trillion Annual Sales And 100% + 25 Year Growth Rates

The initial market opportunities will be in the hydrogen infrastructure markets, worth $9 trillion in total, and this would equate to a 25 year growth rate of around 140%. The renewal of the infrastructure based on a 25 year life cycle, would be worth an eventual $375 billion. a year by 2030. By the same date, the total fuel cell based product markets plus the retail value of all the electricity generated globally would be worth around U$ 161 billion annually, amounting to a 25 year growth rate of almost 110%. (If the final value of the products that incorporate fuel cells is included then the annual sales figure becomes almost US$ 1 trillion.) Again the US would comprise roughly 1/3rd of the global total, or roughly $55 billion and $300 billion of fuel cells and fuel cell based products sold respectively, and another $125 billion on infrastructure replacement.


Improved Energy Economics

Fuel Cells Twice As Efficient (Up To 5x At $2 Per Gallon)

As an energy source hydrogen is initially more expensive than petrol. But, the hydrogen fuel cell greater efficiency is key to that combination being far more economic than the petrol driven internal combustion engine. This means that a fuel cell will only use about half the amount of energy to achieve the same task. At $1.25 per gallon the relative frugality of the fuel cell lifts its overall energy efficiency to two to three times that of the petrol powered alternative. At the $2 per gallon its relative overall efficiency is nearer five times.

COMPARATIVE POWER GENERATION COSTS

H2

MJ/$

Efficiency

net MJ/$

Comments

$10/GJ

100

75%

75

Efficiency 70–80% with cogeneration

55%

55

(50-60% without, such as in a vehicle)

PETROL

MJ/$

Efficiency

net MJ/$

Comments

$1.25/132MJ

105.6

25%

26

Net MJ/$ falls to 16.5 at current $2 per gallon

15%

16

Net MJ/$ falls to 10.0 at current $2 per gallon


Key = Materials Technology

Efficiency Doubles Every 2 Years – Like Semicondutors

Proton Exchange Membrane, or PEM, based fuel cells that primarily use platinum are set to follow the same path of technological improvement that semiconductors have done. Their efficiency will roughly double every 2 to 3 years or the size of the installation will halve in volume and weight.

Current PEM systems are already more energy dense than a similar power output internal combustion engine installation.

The key is the parallel advances being made in the materials that form the membranes and the catalysts used. These advances will depend upon knowledge of interactions at the molecular level, so will be one of the first widespread applications of nanotechnology.

TYPE of FUEL CELL

OPERATING TEMP

ELECTROLYTE

FUEL

CHARACTERISTICS

EFFICIENCY %

USES

Proton exchange membrane (PEM)

below 100°C

Thin polymer membrane permeable

Hydrogen; reformed methane, methanol, petrol

Light, small, scalable 1W to 250kW; each cell = 0.7 Volt

40–60%

Portable power — homes, business, electrical devices; road, rail, air & marine transport

Solid oxide fuel cells (SOFC)

800–1000°C

Solid ceramic Zirconium stabilised with Yttrium Oxide

Heavy, need steady load, 200kW to 400MW; hi tolerance to impurities

50–65%

Power stations, stationary power, auxiliary power in vehicles

Molten carbonate fuel cells (MCFC)

650°C

Molten Lithium - Potassium/Sodium carbonate

Multiple gaseous reformed by MCFC's hi op temp

Heavy, need steady load, 2MW to 400MW

45–60%

Stationary power

Phosphoric acid fuel cells (PAFC)

150–200°C

Liquid Phosphoric Acid

Tolerant to 1–2% CO & S at several ppm

Heavy, simple, need steady load, 50kW to 400MW; stable electrolyte

35–40%

Power stations, stationary power, commercially advanced

Alkaline fuel cells (AFC)

60–90°C; 100°C

Aqueous solution or stabilised potassium hydroxide

Hydrogen

Simple, small, upto 20Kw; 50–100kW

45–60%

Small stationary power, space vehicles - Shuttle, Submarines

Direct methanol fuel cells (DMFC)

60–130°C; 120°C

Polymer membrane

Methanol water mix– 5:100 ratio

Small, <10kW; 1–50kW

40%

Hand held devices phones, laptops

Regenerative fuel cells (RFC)

100–120°C

Closed system, Water split into Hydrogen fuel & Oxygen

Closed system, Water split into Hydrogen & Oxygen

Complex, need cheap reliable renewable power

Stationary power Still being developed


Hydrogen Production Costs

Close To Petrol’s – Local Hydrogen Production Viable

At $1.25 a gallon the cost per Giga Joule (GJ) of energy available from petrol is about the same as that of centrally produced Hydrogen. At $2 per gallon Hydrogen is 50% cheaper. When the cost of centrally produced hydrogen and its delivery are compared, there is relatively little difference, both coming in at between $15 to $25 per GJ but when adjusted for the fuel cells efficiency it drops to between $8 and $13.

Central

($/GJ)

Central vs Local Hydrogen generation/use

Production

10

1 gallon petrol $9.5/GJ ($2 gallon = $15/GJ)

Storage

5

 

Distribution

Distance

km

Form

Truck

2

short/medium

16 to 400

Liquid H2

Rail

2

medium/long

900 to 1900

Liquid H2

Pipeline

4

medium/long

160 to 1600

Liquid H2

Net to Refuel Station via

Form

Truck

17

Liquid H2

   

Rail

17

Liquid H2

   

Pipeline

19

Liquid H2

   

Local

On-Site Reforming

Adjust for efficiency

Conventional

15

15

Fuel cell 3x Petrol Engine

 

Fuel cell

25

8.5

 

Electrolysis

35

12

 

Vehicles

Adjust for efficiency

Fuel Cell

17

6

Fuel cell 3x Petrol Engine

 

Conventional

9.5

9.5

 

Domestic

Adjust for efficiency

Electrolysis

45

22

Fuel cell 2 Gas Turbine/Grid

 

SMR

22

11

 

Product Updates

Growing Range : Auto, Portable Power, Laptop/Phone, Marine/Rail

  • BMW launches 6th generation of fuel cell based hybrid vehicle

  • US West Coast consortia building fast ferry and offshore naval patrol vessel

  • NEC & Toshiba set to launch micro fuel cells running on methanol for mobile phones in 2004 and laptops in 2005

  • US military/GE testing out rail locomotives

  • Ballard & Voller already selling their portable/back up power units, 2nd generation products imminent

  • New fuel cell vehicles : buses Germany/China, cars China


Christopher J. Taylor (UK citizen and resident)

Mr Taylor has 23 years' experience of actively managing global investment portfolios. He spent 16 years with various parts of the Fuji Bank group in London, including 6 years as Deputy Managing Director and 2 as Managing Director. Prior to that Mr Taylor had fulfilled similar roles at County Bank International Investment Limited in London and Swiss American Asset Management Limited in New York, which are respectively subsidiaries of the National Westminster Bank and Credit Suisse. Mr Taylor has a BA (Hons) from Oxford University and an MBA (Finance) from the City University Business School in London.

He is currently the founder, lead portfolio manager and Chief Executive Officer of Lupus Solus Limited. Lupus Solus Limited is manager of The Hydrogen Economy Fund, an umbrella unit trust scheme focussed on the hydrogen sector that invests in both quoted and privately held companies within the relevant industries.

For further information or to submit business plans/financing needs, please contact Chris Taylor.

 


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