Chain of Thought

Bullish on Fuel Cells

Last year we ran a lift truck update stating that fuel cells were a power source mainly for big fleets. You needed scale to make the case for using fuel cells to power lift trucks, our sources said. The spokesperson for one OEM told us he was seeing the demand for this type of technology decline in the lift truck industry. Why?  The costs associated with the hydrogen fuel and the infrastructure housing and dispensing that fuel.

You’d think that assessment would scare away most investors in this technology, but just the other day Plug Power Inc., a major player in the fuel cell market, announced it intends to offer and sell—subject to market and other conditions—common stock in an underwritten public offering. The company intends to use the net proceeds of the offering for working capital and general corporate purposes, which may include capital expenditures and potential acquisitions. 

Sounds like they’re not buying into the naysaying about potential market growth. They have back-up for that position. According to the Freedonia Group, Inc., a Cleveland-based market research firm, the global appetite for commercial fuel cell products will almost triple to $4 billion in 2017 and then triple again through 2022 to $12 billion.

Freedonia analyst Karen Grasso says this growth will be stimulated by technological advances funded by companies like Plug Power, and these investments will help reduce costs to competitive levels in a growing number of applications. She forecasts that nearly half of fuel cell revenues in 2022 will derive from motor vehicle applications.  Factors other than falling prices will also spur market growth, including government mandates concerning the use of alternative energy sources and pollution abatement and government subsidies.

Freedonia’s report, World Fuel Cells, states that electric power generation is the most successfully commercialized fuel cell application to date, accounting for three-quarters of all commercial revenues in 2012.  But what about lift trucks?

Freedonia puts that under motive power applications, which they project will grow sevenfold to $225 million in 2017 and then almost triple to $580 million in 2022.  Forklifts and related material handling applications, such as walkie trucks, currently dominate this market. 

Take a look at our video gallery on the value of fuel cell power for forklifts and you’ll see a variety of takes on its value and future. Click here to go there.

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