The Evolution of the PEM Stationary Fuel Cell in the U.S ... of innovation in the fuel cell industry zKnowledge creation and use of intellectual property in the fuel cell industry

John M. Nail,Ph.D. EconomistEconomic Assessment Office

Advanced Technology ProgramNational Institute of Standards and Technology

Technology AdministrationU.S. Department of Commerce

(301) [email protected]

The Evolution of the PEM Stationary Fuel Cell in the U.S. Innovation System

Presentation for the OECD International Conference on Innovation in Energy Technologies

Washington, DCSept 29-30, 2003

DisclaimerDisclaimer

This report is intended to stimulate discussion andcritical comment at this OECD Conference,

as well as outside this Conference, on issues affectingtechnology policy. The analyses and conclusions are

those of the authors and do not necessarily reflect theviews of NIST, the Technology Administration, or

other parts of the Department of Commerce. Given theongoing status of the analysis reported herein, it is

advisable to check with the author before quoting orreferencing this report

National Institute of Standards and Technology • Technology Administration • U.S. Department of Commerce

CoCo--authorsauthors

Gary Anderson, Ph.D., Economist, ATP Economic Assessment Office

Gerald Ceasar, Ph.D., ATP Program Manager, Electronics and Photonics Technology Office

Christopher J. Hansen, Ph.D. Candidate, Oxford University


Outline of the DiscussionOutline of the Discussion

Introduction to fuel cells

Drivers of innovation in the fuel cell industry

Knowledge creation and use of intellectual property in the fuel cell industry

Commercialization of fuel cells


Introduction to Fuel CellsIntroduction to Fuel Cells

“A sufficiently advanced technology is indistinguishable from magic” – Sir Arthur Clarke

Pass hydrogen and oxygen over two electrodes, thereby generating electricity, water and heat.


Fuel CellFuel Cell

Electrolyte(Membrane)

- +

+ +

+

2H +

2e -

O 212

2H +

2e -

H 2

2e -

2H +

Anode Cathode

heat+

waterH 2O

Hydrogen(from fuel)

Oxygen( from air)


Fuel Cell SystemFuel Cell System

INVERTER HYDROGEN

RICH GAS FUEL INPUT

HEAT RECOVERY

FUEL PROCESSING PREHEATING HEAT FOR COGENERATION

FUEL CELL

STACK

FUEL REFORMER

OXYGEN (AIR)

AC POWER OUTPUT

DC POWER OUTPUT

WATER


Types of Fuel CellsTypes of Fuel Cells

Proton Exchange Membrane (PEM)

Solid Oxide

Direct Methanol


Fuel Cell ApplicationsFuel Cell Applications

Stationary

Automotive

Portable devices


Historical Drivers of Innovation in the 1960s Historical Drivers of Innovation in the 1960s

1960s – Gemini and Apollo space programs– Produced many innovations in computing, materials and solid

state electronics and fuel cells

Great success at generating prototypes (“proving what is possible”); Poor at leading to commercialized productsWhy? Cost was not a consideration in making products– Example: Fuel cells built by GE used relatively large amounts

of expensive platinum and gold– Example: Mainframe computing progressed, but it took

another decade for two guys in a garage to introduce the personal computer


Two major drivers of PEM Fuel Cell Innovation Emerge in the 1980Two major drivers of PEM Fuel Cell Innovation Emerge in the 1980ssThe “True Believers” The “True Believers”

Ballard Power – Geoffrey Ballard started

Ballard Research (eventually Ballard Power Systems) in Vancouver, BC in 1983

– Ballard received Canadian government contract to build PEM fuel cell

– Ballard demonstrated that fuel cell could eventually produce enough energy to power a car

Los Alamos National Laboratory

– Los Alamos research team headed by James Huff demonstrated that amount of platinum could be reduced by a factor of 10

– When Ballard revealed their power improvements to LANL


Lessons from 1980sLessons from 1980s

Once discoveries by one research group reached others, estimates of probable success rose

Lack of resources led to focus on cost reductions in the fuel cell since they were always looking for cheaper parts

National labs continued research on all types of fuel cells, thereby allowing competing technologies to continue to develop until the private sector was interested in commercializing them


1990s 1990s –– Emergence of ATPEmergence of ATP

Advanced Technology Program began in 1990 to

help industry accelerate the development of high

risk, enabling technologies

• Since 1990, 665 projects awarded with 1,359 participants and an equal number of subcontractors

• 198 joint ventures and 467 single companies• $3,921 million of high-risk research funded

– ATP share = $2,009 million– Industry share = $1,912 million


Advanced Power Technologies

Active or completed projects: 50 24

Estimated ATP funding: $ 118 M $ 58 M

Industry cost-share funding: $ 102 M $ 51 M

Total Impact: $ 220 M $ 109 M

ATP Technology Clusters1997-2003

Fuel CellTechnologies


50 Advanced Power Projects50 Advanced Power Projects(As a Percentage of $118M Awarded)(As a Percentage of $118M Awarded)

Flyw heel1%

Microturbine5%

Solar Cells19%

Batteries22%

Fuel Cells49%

Ultracaps4%

Total Project Costs = $220M

Total ATP Costs = $118M


Case Study: Plug PowerCase Study: Plug Power

Mechanical Technical Incorporated (MTI) operated 30 years as a government contractor

First contract was to build a fuel cell came from New York Science and Research and Development Center (NYSERDA)

Energy deregulation spurred Detroit Edison to invest in fuel cell technology

Detroit Edison joined with MTI to create Plug Power in 1997

Plug Power went public and raised $93 million in April 1999


Plug PowerPlug Power(ATP Funded, 5/1999 (ATP Funded, 5/1999 –– 5/2002)5/2002)

ATP pioneered funding PEM fuel cells for distributed power generation

Key objective: To develop a fuelcell system with up to 2,000 ppmcarbon monoxide (CO) tolerance

Key approach: High temperaturemembrane, advanced components

Succeeded in producing PEM fuel cells with high-temperature membrane operating at >150 °C (with Celanese Ventures)

Demonstrated 20,000 ppm CO tolerance with more than 5000 hours stable endurance

Significantly simplified PEM fuel-cell system


Knowledge Creation in the Fuel Cell IndustryKnowledge Creation in the Fuel Cell Industry

2003 State of the Union address, President Bush called for a significant increase in research for the hydrogen economy and fuel cells

Total of $1.7 billion over the next five years to develop hydrogen-powered fuel cells, hydrogen infrastructure, and advanced automotive technologies

DOE is largest provider of funds for fuel cell research – 2002: $75 million

– 2003: $89 million

– 2004: $165 million (proposed)

Largest increases for fuel cell stack, technology validation and hydrogen storage and hydrogen infrastructure


Knowledge Creation in the Fuel Cell IndustryKnowledge Creation in the Fuel Cell Industry(cont’d)(cont’d)

Public-private partnerships programs (e.g., ATP) create knowledge in the fuel cell industry

DOD currently funds fuel cell research programs designed to get fuel cells inside the devices carried by soldiers

National Institute of Standards and Technology provides calibration of measurements so that competing standards such as ANSI or ASME that develop can be meaningfully compared

NIST is currently testing a fuel cell in its new Residential Fuel Cell Testing Facility– These measurements will provide valuable information on what

level of performance consumers may expect from their fuel cells under different operating environments. (Think of the yellow sticker on the refrigerator they sell at Sears)


Current Fuel Cell Innovation Arena Current Fuel Cell Innovation Arena

Three types of fuel cell companies: fuel cell makers, fuel cell distributors, fuel cell input suppliers

Plug Power is a fuel cell maker, so is Ballard, United Technologies Fuel Cell as well as Nuvera and MTI Micro Fuel Cells

Fuel cell makers must develop strategic relationships with distributors and suppliers. The structure of those relationships determine innovation strategies

Fuel cell makers are developing “moats” around their core technology through aggressive patenting. Very little economic research in this area.


Leapfrogging to Tomorrow’s Leapfrogging to Tomorrow’s Power TechnologiesPower Technologies

AutomotivePower

($0.05/W)

PortablePower

(>$5/W)• Cellular

telephones• Laptops• Power tools• Medical

RemotePower($3/W)

• Telecommunications• Village power• Water pumping• Refrigeration

Respond to Real Customer NeedsRespond to Real Customer Needs

TechnologyTechnologyLearningLearning

CurveCurve

$/W$/W

UtilityPower

($0.5 - $3/W)• Distributed premium

power• Demand supply mgt.• Residential• Central utility

• EVs


Direction of Global Energy R&DDirection of Global Energy R&D

Decaux (2003) finds that for OECD countries, overall energy R&D is declining and shifting from long-term to near-term projects

Her recommendations for an improved policy environment include: – providing direct incentives for energy R&D,

– targeting long-term projects,

– and clearly mapping the process from technology drawing board tocommercialization


Environmental RegulationsEnvironmental Regulations

Environmental regulations are subject to political whim especially if they threaten jobs

Fuel cells will need to be more price competitive with other technologies, otherwise policymakers will need to sell their environmental benefits in order to justify large subsidies

Two examples: Clear Air Act of 1990 and California’s zero-emissions law of 2003

CAA compliance occurred without significant opposition because advances in gas turbine technology enabled utilities to invest in the cleaner technology


Utility DeregulationUtility Deregulation

Deregulation contributed to Plug Power’s founding

Deregulation has resulted in a significant reduction in long-term R&D by the utility companies as many companies sold their power plants (source: Electric Power Research Institute)


Factors Contributing to Commercial Success Factors Contributing to Commercial Success or Failureor Failure

There appears to be enough platinum (see Borgwardt, 2001)

Natural gas is the current source of hydrogen for most PEM systems

Hydrogen – increased Federal funding and Nanotechnology

Fuel cells face a rather difficult challenge as they enter the marketplace – whereas electricity was a new power source and computers were

novel machines, fuel cells appear at first blush to offer only a novel way of producing a commodity called electricity

Fuel cells also face stiff competition from an efficient technology that continues to receive a tremendous amount of investment

Therefore, fuel cells must navigate a much higher set of marketplace hurdles than either electricity or computers in order to gain commercial acceptance


Lessons for the National Innovation System:Lessons for the National Innovation System:An Economist’s Point of ViewAn Economist’s Point of View

Space and defense programs great at proving feasibility of technology, not as great at commercializationAt birth of industry, entrepreneurial spirit cannot be minimized; however, even Geoffrey Ballard would be hard pressed to start a new company to compete with his current one that has a 20-year head start

Increased emphasis on funding research into fuel cell parts and hydrogen infrastructure seems appropriate


Lessons for the National Innovation System: Lessons for the National Innovation System: An Economist’s Point of View (cont’d)An Economist’s Point of View (cont’d)

Fuel cells will not “solve” the problem of emissions; fuel cells represent one tool in the policymakers toolbox

Understand what effect aggressive patenting has in a newly developing technology

Micro fuel cells and portable applications are already in the marketplace or will be soon. However, the more ambitious applications of stationary and automotive will need considerable government support for years

Documents

The Evolution of the PEM Stationary Fuel Cell in the U.S ... of innovation in the fuel cell industry zKnowledge creation and use of intellectual property in the fuel cell industry