At least that's the hope of investors who have lobbed the first of potentially billions of dollars at a simple chemical principle that an obscure British scientist named William Grove discovered in 1839: when hydrogen and oxygen molecules combine to form water, heat and electricity are produced. Tapping that energy, by binding individual cells into what is known as a "stack," could mean efficient, continuous and clean electricity for everything from long-lasting cell-phone batteries to industrial power generators. And although fuel cells have generated buzz at least since astronauts took a prototype into space on Gemini 5 in 1965, it is only in recent years that a technology suitable for commercially viable hydrogen power has emerged: proton-exchange membrane fuel cells.
"That's one of the misconceptions of this business," says Paul Lancaster, vice president for finance at Ballard Power Systems in Vancouver, Canada. "They've had a phenomenally rapid development. People overpromised them" before a consumer-compatible technology emerged. Ballard (2000 revenues: $41 million), partly owned by Daimler-Chrysler and Ford, is the leader in automotive fuel-cell development.
The technology works, but now the race is on to develop products and bring down costs to levels competitive with all things fossil fuel. "We're trying to do in a 10-year period what it took the internal-combustion engine 100 years to do," says Byron McCormick, director of General Motors' Global Alternative Propulsion Center. For GM and the other leading car manufacturers, it will take investments of hundreds of millions of dollars each to introduce mass-market hydrogen cars by 2010. The target: reduce costs of a fuel-cell engine to $50 per kW for a 70-to-80-kW engine, or about $3,500, the average cost of an internal-combustion engine. (GM's early prototypes stand at 10 times that per kW target.) Toyota Motors will reportedly roll out a fuel-cell car "on a limited basis" in Japan by 2003. No word yet on the cost.
Several companies preparing to market stationary units for home use are shooting for a price of $1,000 to $1,500 per kW, but expect a multiple of that price initially. Meanwhile, Calpine builds natural gas plants for about $500 per kW. The cost to actually run fuel cells will depend largely on the price of natural gas--the fuel from which hydrogen is generally extracted--but eventually could compete with grid electricity costs, which the Energy Department forecasts at 6.2[cents] per kW by 2005. Hydrogen pioneers could initially pay what amounts to 25[cents] to 30[cents] per kW--expensive, perhaps, but for some an improvement over no power at all. Last week GM joined the stationary chase, announcing a fuel-cell generator that pairs advances in two areas: a more efficient fuel-cell stack based on its HydroGen1 vehicle, and a processing technology adapted from an engine prototype that uses gasoline as a source for hydrogen.
Among the most immediate beneficiaries of fuel-cell technology will be homeowners like Timothy Moore, a retired policeman who last spring moved with his wife Patricia and two children from Los Angeles to Cedaredge, Colo. (pop. 2,000). Their new home will be a two-story log house with all the conveniences of the Internet age on 40 pristine acres.
To power his new home, not yet built, Moore thought he would have to dig nearly $20,000 from his pocket and mounds of dirt from his yard so that he could bury half a mile of wire from the local electricity grid and then place a transformer on his property. But he won't have to, largely because his timing is good. H Power, a Clifton, N.J., company that is currently beta testing residential fuel cells, has an $81 million deal with Energy Co-Opportunity (E.C.O.), an organization of rural utilities, to unveil its 4.5-kW fuel-cell generator in homes near the grid's outer limits. Not only does Moore expect it to be a cheaper, more convenient and more efficient power system than conventional electricity, but its by-product--170[degrees] water--will reduce the burden on his water heater. Initial interest in Cedaredge and its neighboring towns is so great that Paul Bony, marketing manager of the Delta-Montrose Electrical Association, an E.C.O. utility, has had to turn away prospective hydrogen pioneers from informational meetings. "We're hoping this fuel cell becomes the magic bullet," Bony says. "It'll change the way we think about the grid."