Bootstrapping a Sustainable North American PEM Fuel Cell Industry: Could a Federal Acquisition Program Make a Difference?
- ORNL
- Energy and Environmental Analysis, Inc., an ICF Company
The North American Proton Exchange Membrane (PEM) fuel cell industry may be at a critical juncture. A large-scale market for automotive fuel cells appears to be several years away and in any case will require a long-term, coordinated commitment by government and industry to insure the co-evolution of hydrogen infrastructure and fuel cell vehicles (Greene et al., 2008). The market for non-automotive PEM fuel cells, on the other hand, may be much closer to commercial viability (Stone, 2006). Cost targets are less demanding and manufacturers appear to be close, perhaps within a factor of two, of meeting them. Hydrogen supply is a significant obstacle to market acceptance but may not be as great a barrier as it is for hydrogen-powered vehicles due to the smaller quantities of hydrogen required. PEM fuel cells appear to be potentially competitive in two markets: (1) Backup power (BuP) supply, and (2) electrically-powered MHE (Mahadevan et al., 2007a, 2007b). There are several Original Equipment Manufacturers (OEMs) of PEM fuel cell systems for these applications but production levels have been quite low (on the order of 100-200 per year) and cumulative production experience is also limited (on the order of 1,000 units to date). As a consequence, costs remain above target levels and PEM fuel cell OEMs are not yet competitive in these markets. If cost targets can be reached and acceptable solutions to hydrogen supply found, a sustainable North American PEM fuel cell industry could be established. If not, the industry and its North American supply chain could disappear within a year or two. The Hydrogen Fuel Cell and Infrastructure Technologies (HFCIT) program of the U.S. Department of Energy (DOE) requested a rapid assessment of the potential for a government acquisition program to bootstrap the market for non-automotive PEM fuel cells by driving down costs via economies of scale and learning-by-doing. The six week study included in-depth interviews of three manufacturers, visits to two production facilities, review of the literature on potential markets in North America and potential federal government procurements, development of a cost model reflecting economies of scale and learning-by-doing, and estimation of the impact of federal PEM fuel cell procurements on fuel cell system costs and the evolution of private market demand. This report presents the findings of that study. Section 2 outlines the status of the industry and describes potential markets based on interviews of manufacturers and the existing literature. Section 3 describes the modeling methodology including key premises and assumptions, and presents estimates of market evolution under four scenarios: (1) Base Case with no federal government procurement program, (2) Scenario 1, an aggressive program beginning with less than 200 units procured in 2008 ramping up to more than 2,000 units in 2012, (3) Scenario 2 which is identical to Scenario 1 except that the private market is assumed to be twice as sensitive to price, and (4) Scenario 3, a delayed, smaller federal procurement program beginning in 2011 increasing to a maximum of just over 1,000 units per year in 2012. The analysis suggests that the aggressive program of Scenario 1 would likely stimulate a sustainable, competitive North American non-automotive PEM fuel cell industry. Given plausible assumptions about learning rates and scale economies, the procurements assumed in Scenario 1 appear to be sufficient to drive down costs to target levels. These findings are conditional on the evolution of acceptable hydrogen supply strategies, which were not explicitly analyzed in this study. Success is less certain under Scenarios 2 and 3, and there appears to be a strong probability that existing OEMs would not survive until 2011. In the Base Case, no program, a viable North American industry does not emerge before 2020.
- Research Organization:
- Oak Ridge National Lab. (ORNL), Oak Ridge, TN (United States)
- Sponsoring Organization:
- USDOE Office of Energy Efficiency and Renewable Energy (EERE)
- DOE Contract Number:
- DE-AC05-00OR22725
- OSTI ID:
- 969964
- Report Number(s):
- ORNL/TM-2008/183; EB4208000; CEEB016; TRN: US201002%%1195
- Country of Publication:
- United States
- Language:
- English
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