NISTIR 7161
The Role of the U.S.  National Innovation System in the Development of the  PEM Stationary Fuel Cell

I. Introduction to the Study

The motivation for this study came from a request by the Organization for Economic Cooperation and Development (OECD) to study the U.S. national innovation system's impact on energy technologies, which focused primarily on emerging fuel cell technology developments. Our mission was to study developments of residential/stationary fuel cell technology in the United States and, in particular, the influence of the national innovation system on its development. 1 We were asked to answer certain questions by OECD. For example, what are the drivers of innovation? In what manner do governments and universities assist in this effort? What is the role of public-private partnerships?

We answered these questions at an industry level, but in order to understand innovative processes, we believed it was necessary to examine the experiences of individual companies. We determined that the scope of fuel cell development was enormous, even though there are only a few commercial products available in the marketplace. Therefore, besides researching broad-based industry trends, we focused our efforts on an individual company, Plug Power, in order to highlight its experience with the national innovation system and, hopefully, to gain some insights. We felt that it would be helpful to illustrate how research and development (R&D) in this field has progressed to date and to explore marketplace issues by citing experiences of one of the major players in the field. Plug Power, an Advanced Technology Program (ATP) awardee, was willing to share considerable detail about its fuel cell experiences, and so we include the information in the report. Citing this example, as well as similar information regarding other fuel cell companies, does not constitute endorsement of those firms or their products by the National Institute of Standards and Technology (NIST).

These topics are organized into the following structure. Section II contains a description of the fuel cell, the types of fuel cells available, and their potential commercial application. Section III describes the drivers of innovation within the fuel cell industry. Section IV describes knowledge creation within the fuel cell industry. Section V focuses on commercialization issues. Section VI presents several conclusions drawn from the study.

The purpose of this publication is several-fold:

• The study provides a snapshot of the state of the fuel cell industry in 2004 as it relates to the national innovation system, private sector players, and the intellectual property arena.
• The study provides a detailed explanation of efforts by ATP and NIST in the fuel cell area.
• Conclusions for this study were used in the comprehensive OECD study covering nine other nations' efforts in fuel cell development.
• This study will be summarized into a 15-page report, which will then be combined with similar summaries from the nine other nations.
• The conclusions from the comprehensive fuel cell study will be combined with other large multi-country studies related to biotechnology and knowledge-intensive services in order to create a comprehensive "lessons learned" document, summarizing the knowledge gained from all three large studies.

Since its beginning, the U.S. Government has enacted policies and laws that encourage innovation. The national innovation system is not a formal institution per se, but a set of policies designed to advance science and technology and to commercialize new discoveries. Some examples of the national innovation system from history include the following:

• The Constitution provided for a national patent system.
• Alexander Hamilton promoted government tariffs as a way to protect new industries from competition.
•  The Morrill Act of 1862 created land-grant colleges. 2
• The Federal Government provided free land to build canals and railroads.

Although circumstances and times have changed considerably, the U.S. Government continues to pursue policies that encourage and support innovation.

One of the greatest innovations in human history was the ubiquitous deployment of electricity. Thomas Edison understood that large amounts of capital were needed to commercialize new technology, which is why he placed his first electric power station in the Wall Street district of New York in 1882. Edison envisioned a world of distributed power wherein the power was generated at the plant that used the energy or in the home. However, by the 1920s, the electric power industry followed a model that relied upon centralized power generation and distribution across wires. By the 1980s, the efficiency gains from building ever-larger power plants dissipated, and the trend of larger plants and declining prices reached a sudden end. 3 Another technology that generates electric power, the fuel cell, has experienced steady technical advances over the last four or five decades. This study examines the development of the fuel cell through the U.S. national innovation system.

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1The OECD mission statement can be found at www.oecd.org/dataoecd/25/45/ 2495364.pdf.

2In 1862, Congress's first Morrill Act granted each state 30,000 acres of federal land for every senator and representative. Each state was to sell the land and invest the proceeds in an endowment in order to establish at least one college whose mission was-and continues to be today-to incorporate the traditions of the liberal arts and sciences with those of the practical, mechanical, and industrial.

3Dunn (2000), p. 6.

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Date created: March 29, 2005
Last updated: August 3, 2005

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