Article31 Oct 2022

Fuel Cells Power-On When Batteries Can’t

A new report by Citi Research’s Martin Wilkie delves into the current and potential role of fuel cells in green energy.

After many false starts over the years, fuel cells could be about to play an increasingly important role in enabling decarbonisation and energy resilience, supported by the emergence of new energy policies.

Fuel cells using hydrogen are a key tool for decarbonizing transport, though penetration is still very low. But this is not the only market. Distributed power generation from fuel cells using natural gas reduces CO2 emissions compared to grid power, enables the integration of more intermittent solar/wind power, reduces NOx emissions, and creates the option of a future switch to hydrogen.

Government energy policies have become more supportive of fuel cells and electrolysers - most notably in the US under the Inflation Reduction Act and the EU’s “IPCEI” program.

Fuel cells compete most directly with both the direct combustion of hydrogen and with battery electric solutions. Forklift trucks and datacentres are two early adopters of hydrogen fuel cells that are already viable alternatives to batteries. Fuel cells could also find applications in transport segments such as marine, heavy-duty trucks, buses and rail.

National targets (and strategies) vary.  While Japan has been a pioneer in micro combined heat and power (CHP) applications, South Korea has arguably the most ambitious national strategy in fuel cells, across cars, trucks and power generation.

The EU recently announced €5.4bn of hydrogen-related funding for 41 projects, 16 of which are in fuel cells. While the US does not have a national strategy, it is second only to South Korea in installed fuel cells for stationary power applications. (Stationary power is generated at a fixed position, unlike automotive fuel cells.)


Stationary fuel cells market is dominated by the US, South Korea and Japan

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Installed base break-up (MW)

Source: Citi Research Estimates, International Partnership for Hydrogen and Fuel Cells in the Economy (IPHE)


Fuel cell size is increasing

Forklifts, a segment that was an early adopter of fuel cells, have relatively low power needs, typically from 1.5kW to 12kW. Automotive adoption has increased the average size and heavy-duty applications will increase this further.

Domestic applications – more common in Japan and certain US states (California) – are usually small, often less than 0.5kW.

Fuel cell pricing data is opaque and varies significantly by technology type and end-use. It is also highly correlated to volume; shipments are still at low levels, though, at around 86,000 fuel cell units in 2021.

For more information on this subject, and if you are a Velocity subscriber, please see Global Capital Goods - Industrial Tech & Mobility: Fuel cells – powering the parts that batteries cannot reach

Citi Global Insights (CGI) is Citi’s premier non-independent thought leadership curation. It is not investment research; however, it may contain thematic content previously expressed in an Independent Research report. For the full CGI disclosure, click here.


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