Fuel Cells Explained


GRAPH denoting what fuel cells need to achieve in order to be competitive with existing solutions

Cost Reduction

The high capital cost for fuel cells is by far the largest factor contributing to the limited market penetration of fuel cell technology. In order for fuel cells to compete realistically with contemporary power generation technology, they must become more competitive from the standpoint of both capital and installed cost (the cost per kilowatt required to purchase and install a power system).

In the stationary power market, fuel cells could become competitive if they reach an installed cost of $1,500 or less per kilowatt. Currently, the cost is in the $4,000+ range per kilowatt. In the automobile sector, a competitive cost is on the order of $60 - $100 per kilowatt, a much more stringent criterion.

The high capital cost (on a $/kW basis) today has lead to a significant effort focused cost reduction. Specific areas in which cost reductions are being investigated include:

  1. Material reduction and exploration of lower-cost material alternatives
  2. Reducing the complexity of an integrated system
  3. Minimizing temperature constraints (which add complexity and cost to the system)
  4. Streamlining manufacturing processes
  5. Increasing power density (footprint reduction)
  6. Scaling up production to gain the benefit of economies of scale (volume) through increased market penetration.

Fuel Flexibility

Fuel cells must be developed to use widely available fossil fuels, handle variations in fuel composition, and operate without detrimental impact to the environment or the fuel cell. The capability of running on renewable and waste fuels is essential to capturing market opportunities for fuel cells.


The primary fuel used in a fuel cell is hydrogen, which can be obtained from natural gas, gasoline, coal-gas, methanol, propane, landfill gas, biomass, anerobic digester, gas and other fuels containing hydrocarbons. Increasing the fuel flexibility of fuel cells implies that power generation can be assured even when a primary fuel source is unavailable. This will increase the initial market opportunities for fuel cells and enhance market penetration.

Specific RD&D [top of page]ics that are being addressed to increase the fuel flexibility of fuel cells include: (1) non-traditional fuel storage (H2), (2) transportation fuel reforming, (3) renewable fuels processing (reforming, gasifying, clean-up), (4) biogas operation, and (5) tolerance to gas supply variation.

System Integration

Two key systems integration issues for the success of fuel
cells are: (1) the development and demonstration of integrated systems in grid connected and transportation applications and (2) development and demonstration of hybrid systems for achieving very high efficiencies.

Integrated fuel cell systems must be developed and demonstrated in order to minimize of the cost of electricity. For most applications, this requires that the fundamental processes be integrated into an efficient plant when capital costs are kept as low as possible. Specific systems and system integration RD&D that is occurring today includes: (1) power inverters, (2) power conditioners, (3) hybrid system designs, (4) hybrid system integration and testing, (5) operation and maintenance issues, and (6) robust controls for integrated systems.

Endurance and Reliability

Fuel cells could be great sources of premium power if demonstrated to have superior reliability, power quality, and if they could be shown to provide power for long continuous periods of time. The high-quality power of fuel cells alone could provide the most important marketing factor in some applications. Coupled with longevity and reliability this could greatly advance fuel cell technology.

Although fuel cells have been shown to be able to provide electricity at high efficiencies and with exceptional environmental sensitivity, the long-term performance and reliability of certain fuel cell systems has not been significantly demonstrated to the market. Research, development and demonstration of fuel cell systems that will enhance the endurance and reliability of fuel cells are currently underway. The specific RD&D issues in this category include: (1) endurance and longevity, (2) thermal cycling capability, (3) durability in installed environment (seismic, transportation effects, etc.), and (4) grid connection performance.


There are many issues related to infrastructure. Some cross markets and some are market specific (e.g. fuel):

  • Fuel Infrastructure
    • Many of initial vehicles are hydrogen-based. Consequently, an infrastructure for producing, distributing, storing, delivering and maintaining hydrogen fuel is important.
    • In the case of portable applications, the most likely fuel is methanol-based and will be sold in a cartridge-like format. An infrastructure for producing, distributing, storing, delivering and maintaining such a device is imperative to support such a market.
  • Human Resource Infrastructure
    • Service: This is a brand new technology crossing a diverse number of industries. Qualified service and maintenance personnel will be needed.
    • Development: A critical need today is for qualified technical personnel to assist in the development and commercialization of these products.

Non-Technical Barriers

Over the next several years, RD&D will enable the widespread utilization of fuel cells for distributed power generation. However, there are other (non-technical) issues and barriers that must be addressed to enable this widespread use of fuel cells (as well as other distributed generation technologies). These issues include, but are not limited to:

  • How will codes and standards for permitting be determined and ultimately enforced?
  • Will unmanned operation be generally permitted?
  • What siting requirements and processes will be required for fuel cells?
  • What emissions regulations (if any) will fuel cells be subject to comply with?
  • How will competition transition charges (CTC) be assessed?
  • How will distribution charges be assessed?
  • Can insurance for these installations be adequately supported and obtained?
  • What interconnect standards will be set for distributed resources in various utility service territories?
  • What depreciation schedules will be allowed?

The answers to these questions and others will dramatically impact the market penetration of fuel cell systems and other distributed generation technologies.

Innovative Technical Development

Fuel cells need to experience a few breakthroughs in technology development to become competitive with other advanced power generation technologies. These technological breakthroughs will likely occur either directly through support of innovative concepts, or as spin-offs to the thought process and work entailed in innovative concepts. These innovative concepts must be well grounded in science, but can differ from the traditional fuel cell RD&D in that they investigate the balance of plant, controls, materials, and other aspects of fuel cell technology that have not been previously investigated. Innovative and fruitful concepts might be found in these areas:

  1. New fuel cell types
  2. Contaminant tolerance (CO, sulfur)
  3. New fuel cell materials (electrolyte, catalyst, anode and cathode)
  4. New balance of plant (BOP) concepts (reformers, gas clean-up, water handling, etc.).

Other Issues: Government Regulation, Insurance, etc.

Other issues affecting fuel cell commercialization include yet-to-be-determined governmental rules and regulations regarding siting, insuring, and certifying fuel cell products.

Also, business issues such as the depreciation rate for fuel cell products and the manner banks lend money for purchasing fuel cells will affect the market introduction of products. In addition, regulatory issues concerning criteria pollutants could become more restrictive in the future, thereby facilitating the compulsory installation and use of fuel cells. Another significant boost for fuel cells' entry into the marketplace could be government subsidized credits and financial reward for the aversion or reduction of gases contributing to global climate change, such as carbon dioxide.


Fuel Cells Explained


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