PORTLAND, Ore. — The hydrogen economy is getting a shot in the arm from a start-up that says its nanoparticle coatings could make hydrogen easy to produce at home from distilled water, and ultimately bring the cost of hydrogen fuel cells in line with that of fossil fuels.

QuantumSphere Inc. says it has perfected the manufacture of highly reactive catalytic nanoparticle coatings that could up the efficiency of electrolysis, the technique that generates hydrogen from water. Moreover, the coatings could also eliminate the need for expensive metals like platinum in hydrogen fuel cells.

Boasting 1,000 times the surface area of traditional materials, the coatings can be used to retrofit existing electrolysers to increase their efficiency to 85 percent--exceeding the Department of Energy's goal for 2010 by 10 percent. The scheme holds the promise of 96 percent efficiency by the time cars powered by hydrogen fuel cells hit automobile showrooms, according to the Santa Ana, Calif., company.

"Instead of switching 170,000 gas stations over to hydrogen, using our electrodes could enable consumers to make their own hydrogen, either in the garage or right on the vehicle," said Kevin Maloney, president, chief executive officer and co-founder of QuantumSphere. "Our nanoparticle-coated electrodes make electrolysers efficient enough to provide hydrogen on demand from a tank of distilled water in your car."

The first commercial product inspired by QuantumSphere's technology will debut later this year: a battery using a cathode coated with the startup's nanoparticles, thereby increasing its energy density 5x over alkaline cells and boosting power by 320 percent. The first commercial nonrechargeable batteries with this increased capacity will be announced by an as-yet-unnamed major U.S. battery maker in the second half of 2008.

QuantumSphere also claims to be able to improve rechargeable nickel-metal-hydride batteries to the point where they perform better than the less environmentally friendly lithium-ion batteries popular today.

QuantumSphere's plan is first to retrofit existing electrolysis equipment with its nanoparticle electrodes to boost efficiency. Next, it intends to partner with original equipment manufacturers to design at-home and on-vehicle electrolysers for making hydrogen from water for fuel cells. Finally, the company wants to work with fuel cell makers to replace their expensive platinum electrodes with inexpensive stainless-steel electrodes coated with nickel-iron nanoparticles.

QuantumSphere's nanoparticles are available in four formulations: nickel cobalt, iron cobalt, nickel iron and silver copper. According to the Freedonia Group Inc. (Cleveland), the nanoparticles can be sold directly into the catalyst metals market, which it predicts will edge up to $4.7 billion this year.

QuantumSphere is also expected to have an impact on the battery market, which Freedonia estimates will grow to more than $5 billion by 2009. Portable fuel cells and direct hydrogen generation are markets that are growing even faster, with fuel cells estimated to top $11 billion by 2013, according to Wintergreen Research Inc. (Lexington, Mass.), and hydrogen generation to exceed $15 billion by 2016, according to Clean Edge Inc. (Portland, Ore.).

QuantumSphere was founded in 2002 with just $100,000 of private funding and still has not taken in any venture capital, although it did have a public funding round last year. The company's founding goal was to create a thimble full of the nanoparticles it invented. But now, just over five years later, it claims to have surpassed its original goal with a manufacturing plant capable of producing tons of nanoparticles per year.

QuantumSphere claims its current manufacturing capacity is enough for both the battery and electrolysis markets. With an eye on future growth, however, the company has partnered with the OM Group Inc. (Cleveland) for mass-producing nanoparticles when QuantumSphere can no longer meet demand.

After perfecting the original invention, for which QuantumSphere was awarded a patent last year, the company hired an engineering team to adapt the nanoparticles for particular applications. Leading that team was director of fuel cell research Kimberly McGrath, a protg of George Olah, the 1994 Nobel Prize winner in chemistry. Olah, inventor of the direct liquid-methanol fuel cell, serves as a scientific adviser to QuantumSphere.

"We have formulated a nanoparticle coating that has a very high surface area, enabling inexpensive coated stainless-steel electrodes to exceed the performance of the expensive platinum electrodes used today," said McGrath. "We start with raw material that covers about the size of a sheet of paper, but after converting into nanoparticles, it covers a soccer field."

The nanoparticles are perfect spheres, consisting of a couple hundred atoms measuring from 16 to 25 nanometers in diameter. They are formed by means of a vacuum-deposition process that uses vapor condensation to produce highly reactive catalytic nanoparticles, for which the engineering team has formulated several end-use applications.

"Our biggest engineering challenge was finding a way to get the nanoparticles to stick to metal electrodes," McGrath said. The company has solved that problem, she said, "enabling existing electrolysis equipment to realize a 30 percent increase in hydrogen output just by retrofitting our coated electrodes."

QuantumSphere projects that the efficiency of electrolysis using its nanoparticle-coated electrodes, now at 85 percent, can be increased to 96 percent by the time hydrogen fuel cell automobiles are in wide use. Adjusting for rising gasoline prices, QuantumSphere projects that performing electrolysis at home to power hydrogen fuel cells will then be less expensive than burning fossil fuels.

The company has also made progress in its quest to eliminate the need for expensive platinum electrodes inside the fuel cell itself, claiming that today it can replace half a fuel cell's platinum with nanoparticle-coated stainless steel. QuantumSphere hopes to demonstrate fuel cells with no platinum at all in the coming years.

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