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Exclusive: The 2019 Fuel Cell Industry Review, Reviewed (Part 1)

By January 20, 2020 5   min read  (728 words)

January 20, 2020 |

The 2019 edition of E4Tech’s industry bible, The Fuel Cell Industry Review, is now out — drawing from interviews and data from 100 companies in the fuel cell ecosystem. Fuel Cells Works strongly encourages all readers to download it at www.fuelcellindustryreview.com.

Having pioneered the comparison of historical fuel cell, solar and wind production two years ago I scrolled immediately to page 47 to E4Tech’s estimated calendar-2019 fuel cell production figure: roughly 1130 MW.

Keying it into my spreadsheet gave the Figure above.

Conclusion? The fuel cell sector continues to closely track the historical growth rates of both solar and wind energy in decades past.

I’ll cheekily dub this “Klippenstein’s Law” this one time, just so no one beats me to the punch: fuel cells will continue to scale like solar and wind before them.

Even if Toyota and Hyundai both experience significant delays in their planned production ramps, the trend should hold for several years at least. If they both meet their aggressive, stated targets, fuel cells will pull ahead of the solar/wind trend.

Consequence? Steadily-rising shipments mean steadily-declining production costs. Suppliers are able to spread overhead costs across more units, and everyone in the value chain can invest more in development, leading to experience curve effects. And as price points edge down, new markets open up. It’s standard demand curve stuff.

Drawing from the Japanese Ene-Farm program, a recent peer-reviewed article in the journal Energy & Environmental Science estimated that the installed cost of PEM micro-CHP fuel cells dropped about 16% each time the number of cumulative installations doubled. In standard terminology, the learning rate for PEMFCs was 16%.

(Readers may wonder why learning rates for SOFCs and MCFCs are less impressive. Not to worry, those will follow trend as expected as shipments increase. Achieving even 10 MW of PEM micro-CHP would’ve involved the production of more than 10,000 PEM fuel cell stacks — but only 50x SOFC stacks or 40x MCFC stacks. And it’s far, far easier to cost-reduce systems when you sell 10,000’s than when you’re building dozens. As SOFC and MCFC deployments climb towards the 1,000’s similar learning rates will assert themselves.)

The 16% learning rate for PEMFCs is better than onshore wind (for which Bloomberg New Energy Finance estimates an 11% learning rate) and roughly on par with lithium-ion batteries (BNEF’s estimate is 18%).

But that’s an underestimate.

Remember, the researchers above were looking at installed costs — PEMFC stack, reformer, balance of plant, hot water tank, shipping and installation labor. Over the years stack and reformer costs will have plummeted since these were never manufactured in large volumes in the first place. But hot water tank, shipping, and installation labor aren’t insignificant and will have probably stayed pretty steady. Basically, the “sticky” costs of these three masks the cost reductions the PEMFC stack (and reformer) have achieved. The 16% learning rate is almost certainly an underestimate.

In support of this hypothesis, worldwide PEMFC shipments rose 6x from 2014 to 2017 (from 75 MW to 467 MW) primarily due to the Toyota Mirai. When their volumes increase, suppliers can drop prices — and the Ene-Farm data suggests costs began to decrease more quickly around this timeframe.

Piggybacking off PEMFC

We’ll continue our review of the Fuel Cell Industry Review soon, but it bears mention that for now, the bulk of growth in the fuel cell sector is coming from PEMFCs, whose “market share” of FC shipments has risen from about 50% to 80% (of a much-bigger “pie”) in the past five years.

And that’s okay. There’s a very-big, very-bright future ahead for fuel cell technologies, and progress made on the PEM side will clear paths for other technologies as their scale-ups continue.

For now, I’ll finish with a chart showing that PEMFCs on their own are themselves tracking historical solar and wind growth. While it’ll probably be several years in the making, it’ll be my delight and privilege to chart the probably-similar growth trends for its technology siblings!

Matthew Klippenstein (@ElectronComm) for FuelCellsWorks.com.

Matthew Klippenstein is a professional engineer who has tracked the Canadian electric mobility transition for the past seven years. A veteran of Canada’s fuel cell, renewable energy, and electric vehicle infrastructure sectors, he regularly provides sector commentary for television and radio. He does not have business relationships with or hold direct investments in, any companies mentioned in his articles.

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