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NISTIR
7161
The Role of the U.S. National Innovation System
in the Development of the PEM Stationary Fuel Cell
The following conclusions
can be drawn from this study.
Government
- Early drivers of U.S.
fuel cell innovation were the space and defense programs. Since the
1980s, the Department of Energy has been the primary source of funds
for fuel cell research both in basic research and in financing prototypes
and demonstration projects.
- National laboratories,
in particular Los Alamos in the early days, continue to drive innovation
in fuel cell research. State programs such as the New York State
Energy Research and Development Authority provide significant support
through research grants and demonstration projects.
- In November 2001,
in response to recommendations within the National Energy Policy,
DOE organized a meeting of 50 visionary business leaders and policymakers
to formulate a National Hydrogen Vision. In March 2002, DOE followed
up with a larger group of over 200 technical experts from industry,
academia, and the national laboratories to develop a National Hydrogen
Energy Roadmap. The Roadmap contains clear technical and commercial
goals that must be met in order to achieve a hydrogen-based economy
by 2030.
- Starting in 1998,
the Department of Commerce's Advanced Technology Program awarded
the first of 25 fuel cell projects as fuel cell commercialization
prospects improved. ATP provides cost-share funds for high-risk R&D
projects with commercial potential, thereby bridging the funding
gap between basic science and product development.
Environment and Deregulation
- Fuel cells have been
marketed as an emission-free technology. However, there are questions
about using fuel cells as a means to reduce carbon emissions, particularly
when one considers that the most economical methods for generating
hydrogen produce carbon dioxide.
- Deregulation of energy
markets spurred utility companies to pursue alternative business
strategies. Detroit Edison created Plug Power, a leading maker of
stationary fuel cells, partially as a response to deregulation.
- Long-term R&D
by utility companies has dropped as a result of the decoupling of
the power generation business from the power distribution business
by utilities in many states.
Expenditures
- Since the early 1980s,
federal R&D expenditures on energy dropped in real terms from
$6 billion in 1980 to $1.5 billion in 2001 (constant 1996 dollars).
- This trend may be
changing particularly in the area of fuel cells, which President
Bush has specifically targeted for a $1.7 billion increase in funds
available for research over the next five years.
Knowledge Creation
- A significant amount
of fuel cell research is funded by government but conducted by private
firms or universities.
- Private firms aggressively
patent in the United States . After averaging about 60 fuel cell
patents a year from the early 1980s to the late 1990s, the number
of fuel cell patents granted per year has recently almost doubled.
- In 1999, universities
conducted over $4.6 billion of R&D in the scientific disciplines
related to fuel cells.
Market Structure
- Fuel cell makers such
as Plug Power, Ballard, and Nuvera fit the criteria of a small or
medium-sized enterprise, but they need access to a large firm's capital
and to their markets.
- Since fuel cells are
at a pre-commercialization stage, large firms such as automobile,
utility, and energy companies pursue fuel cell opportunities with
some firm-sponsored R&D but also through strategic alliances
with the fuel cell makers.
- U.S. fuel cell makers
have strategic alliances with international firms to market their
products and use them as partners for demonstration projects (e.g.,
Vaillant uses Plug Power fuel cells in a German demonstration project).
The fuel cell makers include international firms in their strategic
relationships with suppliers (e.g., Plug Power has teamed with Celanese
to create a high-temperature membrane).
Market Development
- There are limited
tax incentives for fuel cells at the federal and state levels. The
fuel cell tax credits that are available are not large enough to
affect the decision to purchase a fuel cell.
- Government procurement
of fuel cells has been limited to this point.
- At this stage
of commercial development, demonstration programs appear to be the
most effective method for government to spur the commercial development
of fuel cells. The cost of fuel cells must be reduced before tax
policy or government procurement can be justified as a means for
spurring their introduction to the marketplace.
Public-Private Partnerships
- In July 2003, DOE
awarded a total of $96 million in 24 new awards in support of the
president's FreedomCAR and Hydrogen Fuel Initiative. These new projects
include research in advanced fuel cell technology for vehicles, buildings,
and other applications. In particular, the projects on hydrogen storage
technologies support DOE's priority to develop methods to safely
store hydrogen to enable at least a 300-mile vehicle range - a critical
requirement for successful vehicle commercialization. The recipients
of these awards have pledged an additional $40 million in cost sharing,
bringing the total value of these projects to $136 million.
- ATP awarded three
new fuel cell projects in September 2004, bringing the total number
of fuel cell projects awarded by ATP since 1997 to 25. The recipients
of these awards have pledged an additional $51.1 million in cost
sharing, bringing the total value of these projects to $109.3 million.
Development of Standards
- The National Institute
of Standards and Technology, which develops standards and measurements
for a broad range of products and technologies, will perform a vital
public good function through its Residential Fuel Cell Test Facility.
This program will provide purchasers with a realistic estimate of
annual electrical energy output, thermal energy output, and fuel
usage.
- In addition to practical
operating standards, a more long-term question involves safety issues
involving both fuel cells and particularly hydrogen, which can be
very dangerous. The role of government is extremely important.
Commercialization Prospects
- The National Hydrogen
Roadmap describes the period from 2003-15 as the technology development
phase; decisions on commercialization may not occur until 2015. However,
the prospect for commercialization of fuel cells for portable applications
or backup systems appears to be much sooner, with some electronics
firms talking about late 2004 or 2005.
- The financial situation
confronting fuel cell makers is precarious. Several firms have burn
rates of less than a year. Their near-term survival depends on continued
access to equity markets.
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section or return to Table of Contents.
Date created: March 29,
2005
Last updated:
August 3, 2005
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