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Fuel cell shipments double, but it's still a tiny market

Posting in Energy

Fuel cells are gaining traction for use in the power grid and electric transportation, but they're still waiting for their chance in the limelight. Here's a look at the state of the industry.

Fuel cells are beginning to get traction in the global marketplace as a key component in electrical applications such as the power grid and electric transportation, but they're still waiting for their chance in the limelight.

A new report from Pike Research explains how the fuel cell industry is shifting from a research and development-based industry to one that's fully commercial, with applications that include residential power, off-grid mobile communications sites in developing nations, low-carbon transportation and electrical grid reliability.

As such, global fuel cell shipments have doubled between 2008 and 2010, from about 7,500 units to more than 15,000 units each year during that time period.

But you won't see a fuel cell under the hood of the family car anytime soon. Most of this traction has been in small markets such as the stationary power sector -- 60 percent of total shipments in 2010 -- which supplies entities such as hospitals, universities and hotels with cogeneration plants, to help them achieve sustainability goals.

To illustrate how small this market remains, consider the following: a temporary spike in portable fuel cell shipments occurred after the sale of 3,000 Toshiba Dynario external battery rechargers in 2009. Without a similar deal in 2010, total sales experienced a sharp decline in 2010.

But there remains considerable potential for the technology in the transportation sector. Pike says the industry can move "significant volumes" of fuel cells for use in cars and buses once automakers launch vehicles with necessary powertrains in 2015.

The fuel cell industry is already seeing signs of maturation as leaders emerge. In 2010, fewer than a dozen companies accounted for the vast majority of global shipments. The next Darwinian step that sorts out the winners and the losers will occur over the next few years.

For now, the barrier for entry remains low -- Pike expects it to remain this way for another five years, especially with direct support from governments such as the United States, Germany, Japan and South Korea. But a home run with a major automaker might just elevate fuel cells to prime time.

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Andrew Nusca

Editor Emeritus

Andrew Nusca is editor of SmartPlanet and an associate editor for ZDNet. Previously, he worked at Money, Men's Vogue and Popular Mechanics magazines. He holds degrees from the Columbia University Graduate School of Journalism and New York University. He is based in New York but resides in Philadelphia. Follow him on Twitter. Disclosure