"There's a reality check going on, and not just this year but last year as
well," said Steve Szymanski, Manager of Business Development for Proton
Energy Systems, which specializes in hydrogen fuel cell backup systems for
premium power markets like the telecomm industry. "There's a bit of a
shakeout. The interest is here, the enthusiasm is here, but a lot of
people don't have the luxury of a current, commercial product."
Szymanski's comment gets to the heart of one of the major challenges to
the hydrogen energy industry. Its greatest strength and business
opportunities lie predominantly in the longer-term play of a hydrogen
economy, when hydrogen could become the dominant energy carrier --
particularly in the transportation sector.
That situation doesn't bother Jaun Avila, spokesman for Honda Motors, one
bit.
"This is somewhat like the dotcom industry," Avila said. "Those who have a
real product are still in the game and we are by no means done with the
game."
Avila explained that while Honda is clearly a vast and profitable car
company, it's a technology company at heart and will strive to explore and
advance new technologies like this. The company is already on its third
generation fuel cell car and he assures the company will be introducing
some new breakthroughs in the next version.
For now, Honda's focus with respect to clean transportation is with its
hybrid electric cars but Avila says they're looking ahead in stages
including some of the nearer-term offerings such as natural gas powered
vehicles and hybrid natural gas vehicles. These, Avila said, are likely to
reach commercialization sooner than hydrogen fuel cell vehicles.
The very same hype and excitement that bubbled up three years ago
following the President's announcement of his hydrogen energy initiatives
was somewhat of a two-edged sword. It buoyed the industry like it had
never seen but it also raised a lot of expectations for a technology that
still has to battle the reality of being a long-term play.
"I don't think it was healthy to have people so excited," said Giorgio
Zoia, Hydrogen Business Development Manager for BP. "It's not always a
good thing to have everyone so excited or else people think it won't
work."
Some of this hype, that reached its zenith in 2003, has led to heightened
expectations in the general public that just can't be met. The typical
consumer doesn't have the same patience for a hydrogen economy as the
industry folks who still see its vast attainable potential, even if it's a
longer-term situation.
At the event's ride and drive, there were some sleek and rather peppy fuel
cell cars from most of the major automobile manufacturers, but they're all
the products of multi-million dollar research programs and hardly an
available, commercial product a consumer could go out and buy. And if they
could, there would still be precious few places to fill them up with
hydrogen.
Experts at the event acknowledged that the market is deciding right now on
hybrid electric vehicles but they're optimistic that the day of the
mass-marketable hydrogen fuel cell car is down the road, and maybe not
that far.
"Sure, the hype has decreased but now we're focused on making the rubber
meet the road," said Patrick Serfass, Technical & Program Development
Manager for the National Hydrogen Association, the industry group that put
on the conference. "Now you see companies meeting targets towards
commercialization. "There's a lot of progress being made out here. The
reality is starting to meet the level of the hype."
Serfass, and other experts at the show, said the hydrogen industry is
moving forward in three major directions, each with different timetables
for commercialization. Small portable power applications are the first
avenue and Serfass says they're already commercial with numerous products
available and selling. Next will be home or business power units, such as
backup systems. Those are commercial as well, but still cater to the
premium power markets. Transportation will be the last.
"I think a lot of companies are struggling to become profitable," Serfass
said. "For some companies, it's great that they'll have a ready product in
three to five years, but they want to be around in three to five years.
They've got to make sure they're smart about how they develop products in
the right sequence to meet market demand."
It may seem like the auto manufacturers, with all their vast cash and
resources, are best poised to weather the gradual market ramp-up, but
Serfass says it's a real challenge for them to convince their investors to
hang in there as the market slowly develops.
"How do you, as a large public company, convince your shareholders when
the market may not be ready for years down the road," Serfass said. "But
it is worth it, that's where they need to come together. It's worth the
investment now."
Another theme that was evident at the conference was that hydrogen
encompasses a vast, malleable range of technologies, applications and
energy pathways. In two extreme cases, hydrogen can be cracked out of
water through the energy from a solar panel or wind turbine, or harvested
on a massive commercial scale from the waste products of a gasoline
refinery, as BP is planning to do at one of its Los Angeles refineries.
Both examples, of course, highlight two very different pathways to the
production and use of hydrogen. The solar approach is pure and clean, it
could be said, yet the reality is that it's not very efficient or
affordable if you need a lot of hydrogen. The BP process, on the other
hand, is "less clean" by conventional reasoning, but a more cost-effective
approach, and one that uses an existing waste product. This new facility
BP is planning would generate enough hydrogen to run a 500 MW power plant.
Where hydrogen comes from has been perhaps the most contentious and hotly
debated topic among those who follow the industry. Renewable energy
advocates have grumbled, with some legitimacy, over claims of clean,
emissions-free hydrogen, when sourcing that hydrogen is done through a
process that does create emissions and pollution. Almost all hydrogen
today is produced from a process of steam reforming natural gas.
In one of the more contentious examples of hydrogen's variability in terms
of its source, there's considerable debate and planning at the U.S.
Department of Energy about using a new breed of nuclear reactors to create
hydrogen in the future. Whether for hydrogen or not, nuclear technologies
spark great schisms between energy experts, politicians, environmentalists
and others.
This concern was perhaps best exemplified when some good-natured, slightly
devious Honda staff were witnessed photographing a "GO NUCLEAR" bumper
sticker they had placed on fuel cell vehicles from rivals Toyota and
General Motors.
All the car companies' fuel cell teams actually work quite closely,
cooperatively and congenially together through the California Fuel Cell
Partnership (CaFCP), where teams share workspace and work bays within the
same facility.
The CaFCP is a collaboration of 32 member companies that are working
together to promote the commercialization of hydrogen fuel cell vehicles.
All the major automobile manufacturers with current research and
development of fuel cell vehicles are involved in this collaboration,
which is largely responsible for the 22nd hydrogen fueling station opening
up just in time for the conference. Like other advanced energy
technologies such as solar and wind, California, through the CaFCP will be
a major test-bed technology incubator for the hydrogen economy. The
Governor himself has been a very strong proponent. In fact, he meant to be
there as a headlining speaker but instead had to settle for a live
satellite teleconference as he was tied up wrangling with state lawmakers
over his major infrastructure proposals.
One Californian who can take a lot of credit for advancing the hydrogen
industry and fuel cell vehicles in California and beyond is Alan Lloyd,
Secretary of the State's Environmental Protection Agency Secretary, and a
speaker at the event. He had his own unique view of the some of the
current debate over hydrogen, which he steadfastly believes will play a
central role in the country's energy future.
"A lot of people tend to knock hydrogen these days," Lloyd said. "And it's
a clear sign it's progressing. It's typical for people to knock the
alternatives to oil and gas. I look at this as a sign of some success.
It's very important to keep our eyes on where we need to go. There's a
jump right now to the technology of the hour. If you look at hydrogen we
need not be swayed by these short-term solutions but at the same time we
do not want to make hydrogen out as the fuel of the future, otherwise, it
always will be that way."
