The industrial truck market is the new proving ground for fuel cells. The industry pioneers trying fuel-cell-powered lift trucks in their warehouses and distribution centers today will produce enough lessons learned for the automotive industry to start designing them into production models by 2015, according to several sources MHM has contacted. But fuel cells aren't the only strategy industry innovators are exploring. Researchers are finding that hydrogen is a good fuel to use with existing internal combustion engine vehicles.
The list of competitors in the race to find marketable alternative energy sources is growing, and many of them are doing research that could have a major impact on the industrial vehicles you use in just a few years. What follows are a series of interview MHM conducted with some of the leaders in this race. --Tom Andel, chief editor, Material Handling Management
First, a look at fuel cells.
Cellex Power Products, Inc. is a Canadian company based in Vancouver, B.C. and is focused on the development and commercialization of fuel cell power product solutions for Industrial Vehicles. Blair Lill is marketing manager for Cellex.
MHM: Why do lift trucks provide such an effective proving ground for fuel cells?
Lill: Lift trucks are becoming a strategic market space for fuel cells because they can deliver such a powerful value to customers who operate large fleets. We can command a very good price because the benefits are so great, and that's driving it to be one of the first markets to commercialize fuel cell products. We've been working on this since 1998.
MHM: Will fuel cells be making their way into lift truck product lines very soon?
Lill: There's still a lot to be done and we don't want to be promoting this without concrete ROIs and prices. We need more proven solutions on price points and fueling. Cars are ten years out. One of the reasons Cellex picked the material handling sector was because we believed in 1998 that this was going to be one of the first major applications to adopt units on a mass scale and it had an extremely high value proposition for the customer.
MHM: Will we be seeing a lot of competing formats and platforms out there, like it was with VHS and Betamax years ago?
Lill: We believe we have the right solution. Our strategy is to bring the complete product solution to the material handling market. We won't just make the power unit. Together with our partners we'll bring a total product solution to customers. That will include the delivery of fuel, the fueling infrastructure, the power units themselves, the distribution of the products, and the service and support of them.
MHM: But your competitors seem to be saying the same thing. How will you differ?
Lill: There's a lot to know about this market. One area of differentiation is to make sure you've sized the product correctly. You have lift trucks running around 24/7 with various duty cycles, so you want to make sure you have the right amount of power in the box. It takes time to understand that and how customers operate. We've spent a lot of time looking at that. We have a three-year jump on competitors in studying lift truck fleets.
MHM: What have you learned?
Lill: Guaranteed uptime is key. Users want their trucks on the floor with continuous power. We've designed our products to give them that. We're creating power, not storing it, so the only constraint here is fuel. This is an engine in a box. As long as you have fuel you'll be powering your lift trucks.
MHM: Is operator training a concern?
Lill: We're removing that concern, including the hassle of having to train operators to manage the batteries. All the operator needs to do is refuel the unit, and that can be done in seconds. In terms of product support, we have strong working relations with a distribution partner to service and support the units in the field.
MHM: How do you make that fuel widely available and easily retrievable?
Lill: There are a number of ways to get hydrogen to DCs, and that's a key piece to the whole equation--having fuel on demand and ease of fueling.
MHM: What will happen to industrial battery manufacturers? Are you expecting them to put up a great fight?
Lill: We don't expect anybody to roll over and die. The customer will have a decision to make. If we're going to deliver a far superior solution to how DCs have to power their trucks, that should be a straight-forward decision for customers.
MHM: Is it good to have so many fuel cell competitors?
Lill: It's a great thing. One of the major challenges we will face here is the cost. These things are not cheap. We're on the cusp of the next generation of energy, and that always has an expensive price tag. But the more players who get involved, that will drive the cost down. The more companies developing fuel cells in every market space, the better for everybody. That will bring the cost points down, and the solutions will become more attractive. Right now the high value is for the high throughput multi-shift operations.
MHM: It looks like the industrial truck world will be the proving ground for automotive.
Lill: For automotive and other markets. The beauty of industrial trucks to automotive is these are the only things other than cars that are on wheels. Fueling is a big piece of the puzzle. When you get these large fleets of lift trucks, 200 plus in a distribution center, it's like a city. You can serve them with one fueling system. With cars it's all distributed and therein lie cost problems. With lift trucks you can optimize the cost of fueling over the fleets.
MHM: Describe the field trials you've been involved in.
Lill: In February of 2002 we took units to five customer locations across the US and Canada, and we ran them for 50 days continuously. Those units used methanol as the fuel source. Customers validated that we had something special. Then at the end of 2002 we took hydrogen demos to customer sites. Those trials were also successful. Although we started on a methanol path we're now working on next generation products which use hydrogen. You could use methanol at the original point and have an external reformer and use hydrogen directly aboard the truck. But in the initial field trials we carried methanol on board our product. Now we're carrying hydrogen on board the trucks in our next generation field trials.
MHM: How will service and support fit into your solution as you go to market?
Lill: That's a key piece. You can't just sell the power units, especially with brand new technology like this, and say see you later. We will be right alongside the customer. In the early years we'll have on-site support 24/7 to ensure they keep the trucks on the floor and any problems that come up are quickly resolved.
MHM: Have you found acceptance among the industrial truck dealers?
Lill: Yes. We intend to complement the existing distribution infrastructure. Dealers could carry several fuel cell solutions.
MHM: What kinds of customers are you targeting and how are you demonstrating benefits?
Lill: We're targeting the market leading, high-throughput, large DC operations, with big lift truck fleets and a million sq ft in size, and two shifts and above. We've built a demonstration warehouse at our facilities in Vancouver. We'll be demonstrating what we can do. We'll have a narrow aisle reach truck, a multi-level stock picker and pallet trucks working in tandem during the demonstration. We'll have a truck backed up to the bay door and we'll load it up. We'll do a live refueling and then go back to work.
MHM: Will this eventually filter down to mom and pop operations with five lift trucks?
Lill: Absolutely, that's a function of cost. Batteries may still be the answer for the single-shift operations, but as the cost curves come down, it will become more attractive for the single shift users and smaller fleets.
General Hydrogen Corporation is a private company based in Richmond, B.C., Canada, and funded through investment by its strategic partners and financial investors. The founding of General Hydrogen was initiated by Dr. Geoffrey Ballard, one of the pioneers in this field, to fulfill his vision of a hydrogen economy. Michael Routtenberg is president and CEO of General Hydrogen.
MHM: When do you think we'll see fuel-cell-powered lift trucks on the open market?
Routtenberg: Fuel cell technology will be viable in the lift truck market in 3-4 years. We want to start turning up distribution centers in 2006. We believe the cost targets will be such that it will be commercially viable at that time. 2004-2005 we'll be beta testing. We're looking at big box retailers, grocery chains, 3PLs, manufacturers, primarily in the US. We are working with two major lift truck OEMs.
MHM: The automotive industry has always been a leader when it came to proving technology. What has your experience been with them?
Routtenberg: General Motors is one of our largest share holders and they invited us to participate so they could show some of the early applications for fuel cell technology.
MHM: Conventional wisdom has been that fuel cells won't be commercial until well into the next decade. What's your take?
Routtenberg: We think it's correct to say fuel cell vehicles are ten years down the road, but it's not correct to say fuel cell technology in general is ten years down the road. Some time between 2012 and 2015 lift trucks will run only on fuel cells. We developed a battery replacement pack that will run the truck for 24 hours. There will be no diminishment in power and it will take one minute to refuel. In a typical warehouse or DC where these lift trucks are used an average of 14-40% in terms of pedal time, operators will refuel them once every three days in one minute, so you'll have a tremendous productivity gain.
MHM: What are the potential savings?
Routtenberg: You'll eliminate the battery rooms, all the problems with acid, all the maintenance. You won't have any of the damage related to power spikes with batteries, no replacement of brushes. It can also replace the backup power in a DC. If you look at a fleet of 100 lift trucks, you have 300-400 kilowatts of electric power, so in a power outage you could run over to a wall socket and plug them in and you have backup power for the building for free for 24 hours.
We estimate in 2006 or 2007 when this become commercially viable it will result on a three to four year return on investment. We'll sell our Hydricity packs and the hydrogen fueling infrastructure. If in year one you buy that stuff and avoid in that same year the cost associated with batteries, you should have that all paid pack in year 4. As a rule of thumb, after that payback period you'll save about $5,000 per year per lift truck on average. If you have 100 lift trucks in your fleet you might be looking at $1.5 to $2 million in net retrofit costs then you're saving $500,000 a year. But the rule of thumb is $5,000 per truck and that is comprised of all the hard costs associated with battery changing, the extra maintenance costs associated with maintaining batteries and trucks as a result of problems with the batteries, the reduced productivity because the drivers have to stop and drive over to the battery changing station, and voltage droop that comes during the last half hour of battery life.
MHM: How do you envision financing?
Routtenberg: At the outset the user will finance it, but going forward it will be like any other equipment with third party lessors who will buy it and lease it back to the end users.
MHM: Do you really think battery-run lift trucks will go away?
Routtenberg: Eventually all lift trucks will be hydrogen fuel cells. You'll have the best of both electric and fuel worlds. You'll have the zero emissions profile of electric trucks and the energy density fueling profile and power of propane. An electric motor can deliver enormous torque, the problem is the battery is an inefficient means of storing energy and you drain the battery. Chemical energy is much more efficiently stored. That's why battery-run cars have never caught on and hybrids are catching on. Fuel cells will catch on because, again, by far the most efficient way to store energy is in chemical form. You get 30 times more energy per kilogram of hydrogen or gas than you do in a battery. You'll remove all the bulkiness of batteries and all the inefficiency, but you'll have the same emissions profile.
MHM: But not all industrial trucks have the same characteristics and power requirements.
Routtenberg: Right. For the counterbalanced trucks you still need the weight and we're adding the weight. For the pallet riders where you have the battery right on the forks themselves, you don't want the weight so we can get rid of it. It will give rise to a whole new class of lift trucks where you won't be limited by the design constraints of batteries. You'll get better performance because you won't have weight where you don't want it and you won't have that great big ugly battery pack stuck in the middle of everything. You'll be able to distribute components throughout the vehicle.
MHM: This is a lot of change you're talking about. What kind of time frame are we looking at?
Routtenberg: Battery replacement will happen commercially in 2007. Complete redesign of the lift truck will happen by the end of the decade.
MHM: What about existing market players like the battery manufacturers?
Routtenberg: This is a major threat to the existence of the battery manufacturers, and we would hope that we can create wins by having these companies work with us. If they sell batteries today they could sell our Hydricity packs. Our philosophy is to invent as little as we possibly can. It almost always makes sense to buy vs build, unless there's a completely new technology that doesn't exist, then you have to build it. In terms of distribution, it makes sense to work with existing distribution channels. This is a threat for companies late in embracing the opportunity. We're not keeping this secret, just working strategically with core customers and lift truck manufacturers. We're willing to do business, and we don't consider ourselves an island. We would like to become an important part of the material handling value chain. We're working with our supply chain on getting the prices down to the right level.
MHM: How will you do that?
Routtenberg: GM has a huge interest in getting fuel cell costs down because this market develops at a much higher price point than the automotive market. This is a path they have to cross. The price point has to make this market practical before we can get into automotive. Air Products is our other strategic partner. GM is the largest automotive manufacturer in the world and they're bidding $1 billion on hydrogen fuel cell technology. Air Products is the world's largest merchant supplier of hydrogen for industrial use. They see an opportunity to supply vast quantities of hydrogen fuel. Both are our partners and both recognize that we are the pathway to that end game because of the cost targets. It's very easy to compete with the lead acid battery. It's 100 year old technology that has all kinds of problems and limitations. Everyone we talk to hates them. That's low hanging fruit, whereas the internal combustion engine is something you need enormous respect for. It's a marvel of engineering and efficiency, and it's very tough to displace because it's so good at what it does. Even at today's high oil prices, the cost of energy per mile is pretty darn low and the cost of transportation base in IC technology is pretty low. It's tough to compete in that market. You have to get way down the price curve.
MHM: The list of competitors in the fuel cell industry seems to be growing.
Routtenberg: That's a good sign because if you're involved in an idea whose time has come and makes sense, there should be a number of competitors. If you're the only one, you're probably doing something wrong. What distinguishes us is we're providing a complete solution, not just selling a battery replacement pack. We're co-developing complete with other manufacturers complete hydrogen fueling solutions, right up to the dispensers and hydrogen storage systems ideally suited for these kinds of environments. With Air Products we'll provide a turnkey system.
MHM: How will you deal with the infrastructure challenges?
Routtenberg: For distribution centers the infrastructure already exists because hydrogen will show up in a 3,000 kg liquid tanker truck and it will just be offloaded. Hydrogen is routinely transported and used in industry that way. In large plants it's liquefied and delivered in a bulk tanker the same as oil. The difficulty is in privately owned vehicles it may only take 5 kg because your cost of delivery are astronomical, but when you're delivering hydrogen in very large 3,000 kg quantities, Air Products does that on a routine basis.
The role of hydrogen in hybrid vehicles
Dr. Addison Bain, whose groundbreaking research proved that hydrogen did not initiate the Hindenburg fire in 1937, has begun a new project to demonstrate use of hydrogen/compressed natural gas blends for fueling today's automobile engines. The use of hydrogen in internal combustion engines offers one potential bridge towards the development of hydrogen fuel cell-powered automobiles.
A retired NASA hydrogen program manager who has developed and tested hydrogen systems for more than 40 years, Bain has designed a simple hydrogen/natural gas fueling system that allows him to fuel a modified passenger car with an easy-to-operate fuel gas production and blending system. The system allows him to safely blend hydrogen (H2) and compressed natural gas (CNG) inside the tank of his internal-combustion engine Crown Victoria.
During the next eight months, Bain will incrementally boost the percentage of hydrogen-to-compressed natural gas in the tank. He will document how increasing H2 in the mix not only affects vehicle performance, but also the ease and cost of H2-CNG fueling. Bain's test project has brought together a variety of companies and organizations that have contributed products and engineering support, including Proton Energy Systems, Inc. and Collier Technologies. MHM interviewed Addison Bain, Dave Wolff, v.p. communications and marketing at Proton, and Kurt Collier, Collier Technologies, to see if all this research could be applied in the world of industrial trucks. Here are their comments
Addison Bain: This concept is strictly an Internal Combustion Engine application, using compressed natural gas primarily. With the addition of hydrogen, as the percentage goes up, emissions are dramatically reduced, particularly the NOX. You still have some CO2 but it's minimal compared to gasoline or diesel fuel. The application I'm doing is more of a fun project. I can go up to at least 15% hydrogen mixed into CNG, but I've been associated with some programs that have tried to optimize that mix and it appears that a 30% hydrogen, 70% CNG mix is probably the optimum in terms of emissions. That's kind of neat, because you're taking CNG, which is much less expensive than other fuels like gasoline and propane. But as you start introducing the hydrogen, you're taking the benefits of hydrogen in the emissions world, but starting to add incremental cost. At 30%, the overall cost in terms of the fuel is in parity with some of the gasoline prices.
MHM: Do the savings you get with the fuel make up for the necessary investment in the equipment?
Addison Bain: To have a CNG compressor and a hydrogen generator, you have some front end capital there. You have to do a back-of-the-envelope analysis for each application to see if you're going in the right direction. One of the most impressive companies looking at this is Collier Technologies in Reno. They started back here in Florida in the Solar Energy Center. In fact I worked with them on a lot of NASA projects on hydrogen blends. We were driven by emissions and didn't worry about cost at the time. Then also you had to make sure you didn't do anything to the engine to reduce its performance. When you start getting above 30% hydrogen, you start taking a hit on performance and you have to do some other things because of that factor.
MHM: Is all this applicable to lift trucks?
Kurt Collier, Collier Technologies: You could do a hydrogen internal combustion engine with a lift truck and that would make sense. We have an electric lift truck here, and we're not a heavy user as far as energy is concerned. But there are businesses where the duty cycle is so intense that batteries are not very practical. How you charge a battery can have a significant effect on its life, which is the biggest cost with an electric lift truck.
MHM: Are you suggesting there's a need for hybrid lift trucks?
Collier: There's a benefit to a hybrid electric lift truck that's not obvious. With electrics you're relying on the lift truck operator to perform his recharge in a timely manner. The lifetime of a battery has a great deal to do with depth of discharge before recharging. If the operator isn't fastidious about recharging, you limit the battery life, where if you had a hybrid electric with a small engine, you could use the batteries for the high power times and then get automatic recharging with a hydrogen fueled engine. The contaminants in exhaust is below any allowable breathable limit for anything--NO, NO2, or CO. The EPA says it's legal to breathe those directly, so they should be allowable indoors. That would solve a lot of problems. You don't have the investment in batteries you had before, the engine is much smaller, and I believe you could find sufficient room with the new compression technology to get enough hydrogen on these vehicles to give you a life before refueling that's better than the batteries would be. The nice thing about a hybrid electric using an engine is that the engine can be much smaller than the engine normally used in an engine driven lift truck. The smaller engine allows more room for the hydrogen storage and that makes the technology comes together.
MHM: Is this a good alternative to fuel cells?
Dave Wolff, v.p. communications and marketing, Proton: People are concerned about their cost and longevity. Therefore there is some renewed interest in a very low risk pathway, which is hydrogen blend IC engines. Where you really see interesting potential in indoor vehicles such as lift trucks, those could be a first step. First, the world of material handling is one where emissions are very important. Second, material handling equipment is very heavy in order to balance the load, therefore components that are heavier than what would be acceptable for an automobile are OK. Third, the ability pay a significant capital cost for something provided it does a better job is more with industrial equipment than it is for a consumer automobile.
MHM: That seems to make a case for fuel cells, as well.
Wolff: Fuel cells and other gaseous fuel systems are of interest to material handling and we're seeing some early approaches. Several years ago we worked with a company interested in fuel cell vehicles, one was a man lift, another was a lawn mower for golf courses, where they're interested in eliminating hydrocarbon fuels that can spill. They wanted a silent unit so they could get a longer work day. A lot of that work has been put aside by those folks because fuel cells have moved more slowly and the economy demanded they do things that were closer at hand. Kindled by interest that this project awakens, maybe people will come back and say we really want to do this but maybe we'll do it with IC engines. Since the technical risk for that is extremely low, some companies have already commercialized gaseous fuel injection systems including hydrogen injection systems for IC engines. Anybody with a Master Card can buy that. Because a lot of folks who run lift trucks are used to gaseous fuels, the whole idea of gaseous fuels in propane tanks doesn't phase those folks.
MHM: Does Dr. Bain's approach look promising for industrial trucks?
Wolff: Addison has shown the way to using a system which is very much like what they do today--you take a low pressure hydrogen generator, bottom fill your cylinders, then top fill with a high pressure gas. Therefore you don't need a hydrogen compressor and your equipment is less costly. Given those situations coming together it wouldn't surprise me if this kindled some interest. Proton would love to be in the position to provide the hydrogen production equipment. It's the size of a battery charger, but instead of taking hours to fill it might fill much more quickly.
MHM: How do you value the extra cleanliness you get from going from CNG to CNG plus hydrogen?
Wolff: I don't know that people can value that. The only way to get to a return on investment for this stuff is if you had a particular problem. Say someone is running a food warehouse or a medical item warehouse where an electric lift truck is not powerful enough but they don't want to use propane because it puts out CO and other pollutants. This might have a payback then, but it's not commercial yet. It's in the realm of exploring benefits and it's a niche product so far. The news is that Addison has demonstrated a very interesting way to achieve a significant reduction in emissions and hydrogen fueling capability is starting to become available. If you have a way to use it, you can get hydrogen for use as a fuel.