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2010 will be the year for micro fuel cells, says expert

Posted: 03 May 2007 ?? ?Print Version ?Bookmark and Share

Keywords:micro fuel cells? portable fuel cells? direct methanol fuel cells?

Despite a flurry of announcements and investments in micro fuel cells for portable devices, the technology is not expected to become a mainstream product until 2010 or so, according to an expert in the arena.

The 'energy gap' in portable electronics is making micro fuel cells increasingly attractive, but the technology has been plagued by high costs, lack of standards, financial losses and bad publicity. For example, NTT DoCoMo has reportedly backed away from teaming up with Aquafairy Co. to develop a water-powered fuel cell for mobile phones, according to sources. Last year, NTT DoCoMo took a 36.5 percent stake in Japanese fuel cell company Aquafairy.

Last month, Medis Technologies Ltd. claimed it began commercial sales of its fuel cell line to Microsoft. But Medis was subsequently sued by shareholders, after it was revealed the firm only shipped a few products to Microsoft, which gave away the units at trade shows, according to sources.

"The micro fuel cell industry has been long in promises, but short on deliveries,'' said Paul Zimmerman, CEO of Angstrom Power Inc. one of the emerging developers of micro fuel cells.

In an interview, Zimmerman said that micro fuel cells will become more of a 'mainstream' product, when the overall business reaches a critical mass in the 2010 time frame. ''I think 2010 will be a watershed year,'' he said.

The worldwide micro cell fuel market is projected to range from $50 million to $100 million in sales by 2010, jumping to $100 million to $200 million by 2011, according to Angstrom Power. Until that time, there is expected to be a major shakeout in micro fuel cells, which consists of some 30 to 40 players in the arena right now, he said. Among the current major players in the market are Angstrom, Aquafairy, Teckion, Millennium Cell Inc., Mechanical Technology Inc. (MTI), Toshiba and others.

''It's an intriguing market, but the cost [of micro fuel cells] is the main problem,'' said Will Strauss, president of Forward Concepts Co., a market research firm. ''You also still can't take that stuff on a plane.''

Last year, the International Electrotechnical Commission (IEC) published a safety specification for small fuel cells, which supposedly opened the door for fuel cell use on passenger aircraft in the 2007 time frame. But it appears that this target date will get delayed for some time, due to safety issues.

Micro fuel cells are expected to constitute a $12 million market in 2006 and are predicted to reach $112 million in 2011, according to a new report by Innovative Research and Products. Among the various portable product categories, iRAP predicts, micro fuel cells' use in PDAs will show the highest average annual growth rate though 2011, of 89.8 percent, followed by usage in camcorders, chargers and other consumer electronics, with a growth rate of 83.7 percent, and in mobile phone applications, at 50.7 percent.

Among the various technologies being pursued, direct methanol fuel cells will capture the largest share, followed by hydrogen-based fuel cells and those based on proprietary fuels, according to iRAP. A micro fuel cell is an electrochemical device that converts the chemical energy of fuel, such as hydrogen or methanol or some patented fuel, into electrical energy, according to the research firm.

''Fuel cells have potentially higher energy density than batteries and promise a significant increase in power availability for portable electronics,'' according to the firm. ''However, developing a fuel cell system for portable electronics presents several engineering challenges.''

''There is some progress in the development of micro fuel cells,'' said Angstrom's Zimmerman. ''This is also an industry that has frustrated people.''

Losses, consolidation seen in market Angstrom Power itself is still in the prototype stage with its products, which are based on stored hydrogen technology. The family of products from the company are geared for refueling applications. For example, the company is developing the G2, a portable, 2W fuel cell system that powered by an array of eight modules. The G2 charges any electronic device with a USB power connector, including cell phones, PDAs and digital cameras.

One of Angstrom's competitors is Millennium Cell, a developer of hydrogen battery technology. The company has developed a pilot production line in collaboration with The Dow Chemical Co. and Edison Welding Institute.

But like most fuel cell firms, Millennium Cell is losing money. It recently reported a net loss for the quarter ended March 31, of $2.7 million, or minus 5 cents per share, as compared to a loss of $2.7 million, or minus 6 cents per share, in the same period of 2006.

Total revenue and cost reimbursements were approximately $618,000 for the first quarter of 2007, up from $438,000 in the same quarter of the prior year, reflecting increased military development funding.

"Our first quarter demonstrated significant progress in a number of key strategic areas for the company," said H. David Ramm, Millennium Cell's CEO, in a statement. "We have established pilot manufacturing capability for our 'Hydrogen on Demand' fuel cartridges, initiated new programs with our licensees for integrated power solutions and continued to attract government funding. Additionally, we recently signed a licensing agreement with Kuchera Defense Systems which will further our efforts towards commercialization of power source products comprised of PowerSkin fuel cells and 'Hydrogen on Demand' fuel cartridges."

Another supplier, MTI, also reported losses. MTI Micro Fuel Cells Inc., a subsidiary of MTI, is developing a cord-free rechargeable power pack technology for portable electronics. MTI Micro has developed a direct methanol fuel cell (DMFC) technology called Mobion.

Last month, the company reported a net loss of $3.3 million, or minus 10 cents per diluted share, on revenues of $2.9 million, for the fourth quarter. This compares with a net loss of $4.3 million, or minus 14 cents per diluted share, on revenues of $2.2 million, a year ago. For the 12 months ended Dec. 31, 2006, MTI reported a net loss of $13.7 million on revenues of $8.2 million.

In May 2006, MTI Micro signed a strategic alliance with Samsung Electronics. As part of this agreement, Mobion technology was chosen to be developed for prototypes designed for mobile phones and accessories.

Another vendor, Medis, recently reported financial results for the fourth quarter and year-ended December 31, 2006. For the quarter, the net loss was $6.7 million, compared to a net loss of $5.2 million a year ago. It reported no sales for the quarter. For the year, the net loss was $33 million, compared to a net loss of $18.6 million a year ago.

Based on the losses and false starts among the startups, there will be considerable ''consolidation'' in the market, said Angstrom's Zimmerman. To survive, vendors will move into a period of partnerships with OEMs, he said. ''The next two years will be a period of collaborative development,'' he said.

- Mark Lapedus
EE Times

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