How Soon Fuel Cells?

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This approach is called distributed power generation. We, or our fuel cells, become the grid, each fuel-cell-powered home connected to others, the power being pooled where needed. And the huge cost of transmitting energy through a centralized grid disappears. But don't fire your local utility just yet. America will not hop, skip and jolt to distributed power generation as it did from mainframes to distributed computing in the '80s. Particularly if the White House gets its way. Each coal- and gas-fired power plant that gets built will siphon off demand for the new technology. "[Stationary] fuel cells are going to find niche markets," says Steven Taub of Cambridge Energy Research Associates. "We don't see them undermining existing utility systems."

That is, once you can buy fuel cells, which aren't yet generally available. That has put undue pressure on new companies such as H Power or Plug Power of Latham, N.Y., valued last week at $260 million and $640 million, respectively, to get something on the market to keep antsy investors happy, a task that is proving increasingly difficult. Since a mid-May renaissance upon the release of the White House energy policy, these stocks have tumbled into a coal mine, each losing more than 60% of its value. "I think of them not as businesses but options on businesses," says Hugh Holman, an analyst at CIBC. "There's nothing there today, no profits. But options have value."

Even if a broad U.S. market for stationary fuel cells doesn't materialize, the companies expect to find takers in Japan and Europe. And the worldwide market for clean energy surged last month when 178 countries--conspicuously absent of U.S. participation--took the Kyoto treaty on climate change a step closer to reality.

Thomas Edison embraced distributed generation and installed some of his early direct-current generators in New York City households--too bad one of them blew up at a Vanderbilt mansion--only to see them eclipsed by alternating-current centralized power in the early 20th century. And although the light bulb that went off in Edison's head will soon shine on their front porch, it's still too early to ask the Moores if they will leave it on for the rest of us.