Welcome to episode 376 of the Energy Talks podcast. I'm energy journalist, Marcum Hislop. There was considerable hype around hydrogen as an alternative fuel 2 or 3 years ago. But as the use cases for hydrogen dwindled so too did the hype. One case that may prove to be viable though is stationary power generation for mission critical applications like hospitals, airports, and telecommunications.
Operations that cannot tolerate a power outage. In this episode, I'll be talking to UK based ID Tech X analyst, Maya Benstead, about her new report, Stationary Fuel Cell Markets 2025 to 2035 Technologies, Players, and Forecast, which thinks that the stationary fuel cell market will exceed US $8,000,000,000 by 2,035. So welcome to the to Energy Talks, Maya.
No. Thank you so much for having me. It's it's great to be here.
Now this, there's a couple of drivers of the adoption of this kind of technology. We'll get into the the two dominant forms of fuel cells and their their specific applications in just a moment. But, you know, the press release that accompanied your report talked about how there was, you know, the IEA is predicting, electricity demand growing by an average of 3.4% annually through 2026. And of course there'll be markets where it grows faster than that and some that grow slower. And, but we're seeing that especially down in the in the US, questions of reliability and power, more frequent power outages.
Is that a big driver of the adoption of fuel cell stationery power generation?
Yeah. So it's certainly one of the factors that's helping to to kind of drive the growth. It's sort of as a combination of lots of different factors. So you have obviously increasing decarbonization goals. So there's many different global targets.
And so a lot of companies are looking to the replacement of traditional diesel generators, which are really high polluting. And obviously these are what are used in a lot of, mission mission critical sectors and for backup supplies to the grid in case of power outages. And so, companies are looking to remove these, old polluting systems and bring in more, renewable and cleaner technologies. And that's sort of why we're seeing this growth within, interest within stationary fuel cells, obviously. So, there's there's several sort of factors, I would say.
Obviously rising power demand, one of them along with decarbonization goals.
So I would imagine that for, you know, stationary power backup, when, if we go, you know, power goes out of a, in a hospital, you don't care what you're paying for megawatt hour. You know, you just, you need the power. It's gotta be there. That's that's all there is to it. Yeah. Is there, an economic case for this, for, especially for hydrogen to backup, to replace, backup diesel generators. Is it an is it economic yet?
Currently not. Unfortunately, that is one of the the downsides at the moment is that, hydrogen fuel itself, is quite costly to source, and there's a limited infrastructure currently in place. There is a growth to the hydrogen economy that is ongoing, and it is predicted to grow over the next 10 years. So that is one of the downsides. So at the moment, we're currently seeing, installations to to kind of companies that have the available, like, capital expenditure that are, like, with that added incentive of, say, their, like, green credentials, improving ESG portfolios, that sort of, kind of, growth kind of driver, really.
It's it's not necessarily cost competitive, right at this moment, but is expected to to reduce. And a lot of the companies that we spoke to were saying that they're hoping to bring the cost down in line with diesel power just as, obviously, economies of scale come into effect. So as the market does grow, the the cost should should come down accordingly.
I I talked to, someone in in Alberta who is involved in the, development of their hydrogen economy. And his point was it's not about efficiencies and it's not about costs. Those are not as paramount as they might be with other with other sources of fuel. We're we're willing to take, to tolerate, I guess, higher inefficiency, higher costs because of the necessity of reducing emissions. And is, is that, so that then, begs the question of, you know, what about what role does climate policy play?
Carbon taxes, subsidies, those sorts of policies. Is that a a significant driver of the adoption of this technology?
Yes. Definitely. That was probably the key key factor that's sort of helping to drive this this technology. One of the things you do kind of need to be aware of is that there are lots of different types of hydrogen fuel available in the market, and not all hydrogen fuel that we source is green and is a clean technology. Some of it does come from very polluting, feedstocks.
So, when we're referring to sort of, like, green hydrogen and stuff that can contribute sort of to decarbonization is hydrogen that's sourced from the electrolysis of water using renewable energy. And so that's something which the cost varies a lot at the moment. And so, obviously, the uptake at the moment is just that incentive of decarbonization, and renewable renewable goals.
Okay. So the the, the provision of green hydrogen is going to depend on the cost of electrolyzers coming down over time. Yes. Yeah. My understanding is that it's China that's leading in the scaling up of the manufacturing of electrolyzers and the cost of the future costs will depend on what goes on in China. Any insights into how, where we are in that process and when we're likely to see, you know, manu analyzers become economic.
Unfortunately, that's sort of out of my scope and remit of this report. I've mainly focused on this kind of fuel cell side of things. We have other analysts that sort of specialize more in the electrolyzer technology. So I don't want to say a comment just in case I get it completely wrong. It is something that we're expecting to scale up and the market is predicted to grow, and we have reports covering that, but it's not something that I have much expertise in really.
Yeah. Fair enough. And the reason I asked the question is because 2 or 3 years ago, when the hype was hydrogen hype was at its height, I had, analysts like, Michael Liebrecht, on here and Paul Martin, an engineer, who went through the physics of of using hydrogen and the economics of it and they weren't as rosy as the hype would suggest and I think that their take on it has been borne out. And so it seems it seems like now the applications for hydrogen will be, not in any kind of a, you know, transportation or anything that moves. It's gonna be stationary.
You're going to make hydrogen either on-site or very close to the site. I've talked to 1, company that's in in the industry and he says, well, you know, we can ship it about a 100 kilometers economically and that's really about it. So this idea, you know, we we that there was a lot of talk about, well, we'll manufacture hydrogen on the, you know, the Canadian West Coast and then we'll ship it over to Japan or or over to over to Europe. I don't think so. That that's looking less and less likely all the time.
So really, for the widespread adoption of fuel cell stationary fuel cell power generation, it looks like we're going to have to see the development of both, cheap and efficient electrolyzers and, supply infrastructure.
Yes. Yes. Definitely. The the hydrogen economy needs to to ramp up. That's for the case of, using hydrogen with fuel cells. So there are various different types and they all operate using, hydrogen fuel. And so, yeah, if if sorry, I'm probably getting ahead. But, for the use of hydrogen, then definitely there needs to be ramp up of the economy and infrastructure in place to to supply that.
Well, look, let's talk about the 2, fuel cell technologies that you mentioned in your report, proton exchange membrane and solid oxide fuel. Well, let's start with, the PEM. Give us an overview of that technology and then the applications for it.
Yeah. Of course. So, protein exchange membrane fuel cells, are a type of fuel cell technology that have actually gained the greatest amount of commercial traction and interests so far. It's probably predominantly due to all of the hype within the automotive sector because that's the type of fuel cell that they use there. These fuel cells operate at low temperatures, so they operate at temperatures below a 100 and 100 degrees c.
Not getting too much into the tech technical side of it, but that's essentially because the, membrane within inside the cell, which allows the cell to function, must remain hydrated. And so that's why you have it operating below a 100 degrees c. But a benefit of that is it means that these fuel cells have really quick startup times. And so we're seeing that they're often going to be used for backup power applications because they will turn on and ramp up to maximum power output within less than a couple of minutes. This technology does, however, can only operate using, ultra pure hydrogen.
So the hydrogen fuel that you input into the cell must be above like 99.9% purity. Any carbon monoxide impurities within that, fuel, it can, it basically, degrades the cell. It blocks the, catalyst and prevents any of the reactions from taking place with inside the cell. But moving on to solid oxide, which is one of the large sort of growth areas within the stationary fuel cell market. These, operate in an opposite way to chromatin exchange membrane fuel cells.
So they operate at really high temperatures above 600 to 650 degrees c, and they make use of, a ceramic electrolytes. The high temperature operation means that they are mainly used for continuous applications, so we can't really use them for backup power. They need to be operating continuously and always on, and that's due to something called a high thermal CTE mismatch. So essentially, as you, heat up the, fuel cell, if you keep doing that with thermal cycles, it degrades the cell. And so these are mainly going to be used for for continuous applications.
They
I I wanna talk about, the PEM, cells for a moment because, say that they're highly susceptible to carbon monoxide poisoning. And what is that?
So, carbon monoxide is in the gas that's within the air. If that's present when you, say produce hydrogen fuel, it basically blocks the catalyst. So the catalyst that's usually in a protein exchange membrane fuel cell is a platinum catalyst. And so carbon monoxide basically blocks the active sites on the surface of the catalyst. And so it prevents, electrochemical reactions from happening within inside the cell, which is essentially the powerhouse of the cell and and that we need that to then produce power to then power an external load.
Is it very likely that, fuel cell, PEM fuel cell would be, exposed to carbon monoxide? I mean, under what conditions might that happen?
So, they're not regularly going to be exposed to carbon monoxide. It just depends on your fuel that you input into the cell. So it means that there's less fuel flexibility, really with the fuel cell, which is one of the downsides is that so you have to, like, make sure that the, fuel that you're input is really highly pure. It can result in further, like, downstream processing of the fuel before you can pause it into the into the hydrogen, fuel cell, which can obviously increase operating costs, for customers. But sort of leading on from that, the limitation with that I mentioned with the fuel flexibility, that's something that obviously is very important whilst the hydrogen economy is still developing.
So solid oxide fuel cells, conversely, the because of their higher temperature operation, they, can internally reform alternative fuels. So you can import, fuels like natural gas, ammonia, like hydrocarbons, all of which are readily abundant and that we have the supply, infrastructure in place. So these are low cost, and you can operate the fuel cell directly from these. They can be inputted to the cell, which makes operation a lot cheaper to do at the moment, whilst, say, the the, technology itself is still much, like, higher cost. So it makes operating costs lower.
And that's one of the benefiting factors that we're seeing that's helping to drive sort of the adoption of stationary fuel cells is that solid oxide fuel flexibility.
What about the companies and their supply chains? And and, of course, Ballard Fuel, is based in Vancouver, which is just across the the water from me, on the West Coast of Canada in Vancouver. And who who are some of the other players in addition to Ballard?
So another one of the large players you've got, Plug Power, that's a US based, player, and that's again in the protein exchange membrane, fuel cell side. So these are probably the 2 largest competitors within the stationary, PEM market. Conversely, sort of within the solid oxide, you have a UK based, series. That's a licensing technology. And you also have my mind's now gone blank.
There are all the large scale players within the space, that are also driving. Sorry, Apologies. My mind, just went blank then.
No problem. That that happens, during the the the the hot glare of the, of the interview lights. Yes. Yes. You're not, you're not alone.
Let's talk about the conclusion of your report, which I find, interesting because, it looks like, solid oxide is probably the better technology, but the fuel isn't isn't available yet and it's still very expensive and and and so the hydrogen economy has to progress quite a bit before this will be a widespread source of power generation. So in the, in the, meet sorry. That was the proton exchange membrane. I had it backwards. I had it backwards.
My apologies. So it looks like, that will not take, will not, spread rapidly, but we're so solid oxide fuel, which can use natural gas and and other, hydrocarbons, that is your forecasting that that will grow significantly over the next decade. Have I got that
correct? Yes. Yes. That's correct. So, as we sort of touched on before, the the limitation with the protein exchange membrane is is the lack of, high the the limitations in fuel flexibility.
And so for that growth to to be seen, we are needing the hydrogen economy to ramp up. Whereas at the moment in the coming decades, we are expecting solid oxide fuel cells to grow significantly again due to their fuel flexibility. We have the fuel that we can operate, solid oxide fuel cells on. These fuel cells, once the hydrogen economy has developed, we can then easily switch. They can operate using hydrogen fuel.
It's not just that they can only operate using hydrocarbons. And so that's something that we're seeing. It helps to establish a secure sort of installation base of fuel cells whilst the hydrogen economy is developing. Solid oxide fuel cells as well, sort of why we are predicting it to grow the most in demand is because of the size of the systems that are being installed. So Proton Exchange are probably more suited to to smaller backup scale systems.
So they're operating, like you say, for a for a hospital or for a shop or for an offices, or for, other sort of backup construction sites. So they're smaller sort of power output systems compared to solid oxide, which will be operating continuously, powering large scale, like industrial sites, utility scale. And so that's why that's probably dominating this sort of megawatt demand, over approach and exchange membrane. The demand's there for both, but but solid oxide will be a significant factor.
I'm curious, can solid oxide scale up enough that it could be a viable backup source of power for utilities at the, you know, utility scale?
So you could scale it up. We are predicting that the the utility scale would would grow. The demand size, you can combine to be multiple megawatt scale size systems for backup for utilities. It would be more that they would act in parallel because they can't it takes so long for them to be switched on and off. It's more likely that you'll see them being operated in parallel with utility grid supplies.
And so that whilst you've got peak demand periods, that this can then essentially pick up the slack, for for, like grid power demand.
So there's a backup and and peak demand and, when, other sources of generation aren't aren't available. And, what, like if you were using a, a solid oxide fuel cell, any idea what a megawatt hour of electricity would cost generated with that technology?
Unfortunately, no. I don't have that sort of numbers numbers to hand. I wouldn't want to to predict, that. It is a higher in cost than general power traditional power facilities. So you have traditional, like, fossil fuel, why you've got coal, oil, gas, that is lower cost. It is still, above above that price, but I don't have an exact
Sure.
Like Okay. Dollars per month, unfortunately. Sorry.
Well, look, Maya, thank you very much for this. This has been really useful. And, we're not doing a lot of reporting on the hydrogen economy lately because there's been just a lot less interest than it than there used to be. And that's probably going to continue until we get we see cheaper electrolyzers and the supply becomes more widespread. We won't just want to see as many applications. So this is good to know. Thank you very much for this.
No. No worries. Thank you so much for having me. It's been, it's been great to meet you and chat to you today.