Politicians, economists, and environmentalists have dreamt of a hydrogen economy for decades, where hydrogen fuel cells provide a significant portion of our power demand for stationary and transport applications. While such utopian technology visions will always persist, rigorous analysis leads to a different reality. Factoring in all the technology options and competitive solutions, proton exchange membrane (PEM) fuel cells for telecom power and backup will need until 2030 to reach $1 billion, while fuel cells for residential, commercial, and utility generation will not prove cost effective or appealing, even if the hydrogen is free. The automotive fuel cell visionaries may point to their own game-changing potential where a PEM fuel cell market of $2 billion can be projected by 2030, but on the backs of forklifts and light-duty vehicles. Unfortunately, fuel cell buses will remain miniscule. The fate of PEM fuel cell passenger vehicles is even more dire. While the need for infrastructure is a perceived bottleneck, such hydrogen vehicle fueling infrastructure is certainly necessary but ultimately insufficient to overhaul the passenger vehicle market hamstrung by the cost of the fuel cell itself and storage of hydrogen. Corporations looking to benefit off of a potential hydrogen economy will need to win in the handful of countries with very favorable policies towards fuel cells, or tightly defined regions with existing chlor-alkali capacity and islanded grids will offer niche markets for some hydrogen technologies. Fuel cell utopia, as it turns out, is a grand vision that will turn out to be a modest hyper-local reality.
Source: Lux Research report “The Great Compression: The Future of the Hydrogen Economy (client registration required).”
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