Fuel Cells Market: Government Policies against Carbon Emissions Driving Demand, reports TMR

Global fuel cells market comprises only five manufacturers who hold 99.5% of the revenue share, finds Transparency Market Research (TMR) in a new study. The industry is dominated by FuelCell Energy, Inc. and Plug Power, Inc. who collectively hold 51.9% of the revenue share while Ballard Power Systems Inc., SFC Energy AG, and Hydrogenics Corporation are the other leading manufacturers. With wide distribution networks, manufacturers are leveraging their brand name and focusing mergers and acquisitions to gain additional market share. A case in point would be FuelCell Energy, Inc. The company recently announced its 20-year long-term contract with Pfizer Inc., one of the world’s largest biopharmaceutical companies, for the development of 5.6 mega-watt fuel cell project in Connecticut, U.S.

The revenue of the global fuel cells market stood at US$3.59 bn in 2015 and is expected to reach US$27.25 bn by 2024 at a CAGR of 23.64%.

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By Application, Stationary Applications of Fuel Cells Have Strong Demand

By application, the market for fuel cells has been segmented into stationary, portable, and transport. Out of these, stationary application of fuel cells, such as CHP and backup power systems, dominate the market for fuel cells. Stationary fuel cells alone had a market share of 64.82% in 2015. Portable applications include electronic goods such as laptops, tablets, mobiles, and cameras. The report states that the use of fuel cells in the transportation sector is very moderate.

Geographically, North America forms the key market for fuel cells with a revenue share of 21.69% in 2015 but rapid population growth in emerging regions, especially Asia Pacific, is expected to create fresh opportunities for the market in the East.

On the flip side, the demand for fuel cells is affected by the prevailing prices of fossil fuels such as coal, crude oil, and natural gas. However, harmful emissions caused by the usage of fossil fuels make fuel cells a very promising technology for the future.

Government Policies against Carbon Emissions Opening up Opportunities for Fuel Cells

Environmental concerns associated with the soaring levels of carbon emissions, to which conventional batteries contribute, have forced governments to make policies and regulations that are encouraging the take up of fuel cells. Fuels cells are now gaining popularity as the preferred choice for back-up power in commercial organizations and homes. Rapid population growth, high dependence on fossil fuels, increasing electricity demand, and high awareness about clean energy across different countries are other main drivers for the market for fuel cells. Moreover, fuel cells also have high energy density than conventional batteries which is expected to attract future buyers.

High Switching Costs Hindering Growth of Fuel Cells Market

Fuel cells come at a high initial cost that not all potential buyers are willing to invest in. Moreover, a very high degree of research and development is required as the market is still in its initial phase. Due to these factors, only companies with large funds and relevant knowledge can enter this market. These factors will likely stand in the way of the overall growth of the global fuel cells market, the report further states.

Key Segments of the Fuel Cells Market

Fuel Cells Market: By Type

• Proton Exchange Membrane Fuel Cells (PEMFC)
• Direct Methanol Fuel Cells (DMFC)
• Solid Oxide Fuel Cells (SOFC)
• Others

Fuel Cells Market: By Application

• Stationary
• Portable
• Transport

Fuel Cells Market - Global Industry Analysis, Size, Share, Growth Trends, and Forecast 2016 - 2024

A fuel cell is a device that uses a source of fuel and an oxidant to create electricity by virtue of an electrochemical process. Much like the hordes of batteries used in automobiles, a fuel cell essentially converts chemical energy to electrical energy.

Browse: Fuel Cells Market

There are many parallels between the generic batteries that produce electricity we see in our daily lives and a fuel cell but at the same time, there are also many differences.

Let’s speak of the similarities first:

Both convert chemical energy into electrical energy by virtue of a chemical reaction, for which the presence of certain chemical substances is required. Both have two electrodes, an anode and a cathode, where the chemical reactions take place. An Electrolyte, substance that carries the electrically charged particles between electrodes and a Catalyst, substance that speeds up the chemical reaction, are also common in both devices.

Now let’s have a look at the differences:

Fuel cells do not require electrical recharging as batteries do. All chemical substances required for the chemical reaction in a battery are stored inside it. Once these chemicals run-out or become less reactive, the battery expires. On the other hand, a fuel cell is supplied with all the essential chemical substances (the fuel of the cell) from outside the cell. As such, it never runs out of them as long as the external supply is not terminated.

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Also, unlike batteries, fuel cells generate electricity without combustion and in the cleanest form – even its byproduct is water.

How do fuel cells work?

There are many kinds of fuel cells and all of them work slightly differently. But in the general sense, when hydrogen atoms enter the cell at the anode, it combines with the oxygen (i.e. ambient air), giving rise to an electrochemical reaction. In the process, both hydrogen and oxygen get ionized and get stripped of their electrons.

Both the hydrogen and oxygen atoms, which are now carrying positive charges due to ionization, are transported towards the cathode to form water. The negatively charged free electrons released in the electrolyte form the electric current, which can be transported through wires to do the work.

Benefits:

There are three major benefits of fuel cells:

• they creates energy in the cleanest form, the only byproduct is water
• they stop working only when the supply of hydrogen and oxygen to them ceases and do not require electrical recharging
• since they create energy by a chemical reaction and not by combustion as in conventional power plants, their use is not limited by the thermodynamics laws limiting the conventional power plants

So, why are they not very popular and common yet?

The basic working of fuel cells may well seem easy to illustrate. But building reliable, inexpensive and efficient versions of them is a far more difficult business.

Many different types of cells have been designed and formulated by researchers over the years in search of an efficient model.

But many issues arise due to the choice of electrolyte for the cell, which is not very abundant currently. In fact, only five major varieties – alkali, phosphoric acid, molten carbonate, solid oxide and proton exchange membrane – are in use.

The choice of electrolytes has a major effect on every aspect of a fuel cell. Such as, design of electrodes and the material used for making them both depend on the electrolyte being chosen. The type of fuel also depends on the electrolyte in the cell. Why only this, the operating temperature and the requirement of additional functionalities in the cell, such as pumps to circulate liquid electrolyte, also depend on the choice of electrolyte.

So, hardly any cheaper and efficient model of fuel cells is available in the today’s market, especially of the kind that would stand good enough to replace the conventional power generators.

Let us have a brief overview of the global scenario of the fuel cell market. But wait. Does any such market exist? Yes it does. And it is flourishing.

Global market analysts estimate that the use of various kinds of fuels in applications such as automobiles, data centers, telecommunications and forklifts is on a constant rise throughout the world. In the year 2011, this industry collected revenues of nearly USD 355 millions. In the next five years, this figure can well grow to USD 910.3 millions, growing at a CAGR of 15.0%, says a forecast report by Transparency Market Research.

The current demands as well as future growth opportunities seem bright in the Asia Pacific and North American parts of the world. Demand from European countries for sustainable fuel cells is also on a significant rise.

Fuel Cells Market Volume and Revenue Anticipated to Reach 1504,005 Units and US$ 27.25 Bn, by 2024

Transparency Market Research has released a new market report titled “Fuel Cells Market - Global Industry Analysis, Size, Share, Growth Trends, and Forecast 2016 - 2024”. According to this report, the global fuel cells market volume stood at 186,210 units and is expected to reach 1504,005 units by 2024 at a CAGR of 24.58% from 2016 to 2024. The global market for fuel cells, by revenue stood at US$ 3.59 Bn in 2015 and is expected to reach US$ 27.25 Bn by 2024 at a CAGR 23.64% from 2016 to 2024.

Fuel cells are electro-chemical devices that transform the chemical energy into heat and electricity by the oxidation of fuel (hydrogen, natural gas and methanol) contained in the fuel cell. The fuel cells usually comprises electrodes and electrolytes between which the oxidation reaction takes place. Electrolytes used in fuel cells are materials that contain many ions (atoms or molecules that have a net electrical charge), making it easy for an electric current to flow through them. Basic fuel cell components include electrodes, membranes, catalysts, polymers, and ceramics. These components are procured from the suppliers along with the components such as valves subsystem, membrane electrode assembly (MEA), which are then forwarded to the system integrators. Catalysts (platinum, nickel, and conductive ceramics) are used to speed up the reaction at the electrodes

The only byproducts are water and a small amount of nitrous oxide due to which fuel cells are eco-friendly, safe, and secure to use. Fuel cells are not thermal energy based, they generate power using hydrogen as a basic ingredient. The heat and electricity generated from fuel cells is utilized in various industries for different applications such as stationary, transportation, and portable. Fuel cells involve hydrogen and other gases as one of the basic components for generating power. Hydrocarbon fuels such as methanol, ethanol are also used in extracting hydrogen during reformation procedure. This procedure leads to carbon dioxide emissions up to a certain extent, however, highly efficient plants release negligible amounts of carbon dioxide.

Research and development activities in demonstration and adoption of improved and efficient fuel cell technology would reduce carbon dioxide emissions and enhance the efficiency of power delivered. Rapid population growth, high dependency on fossil fuels, increasing electricity demand, strict government regulations to minimize carbon emissions, and high awareness in different countries about clean energy usage are the main drivers for the fuel cells market

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Fuel cells are emerging technologies, which are currently utilized as a source of heat and electricity in buildings and the commercial sector. The use of fuel cells in applications such as stationary, portable, and transport is expected to increase significantly throughout the forecast period as even more stringent environmental legislation are enforced. Currently, stationary applications of fuel cells, such as in CHP and backup power systems, dominates the market for fuel cells. Portable applications mainly include consumer electronics such as laptops, tablets, mobiles, and cameras. The use of fuel cells in the transportation sector is moderate. However, constant research and development activities going on by different governments and companies to integrate efficient fuel cell system in vehicles such as buses, trucks, cars etc. would boost the demand for fuel cells in transportation sector in the next few years.

The fuel cells market has been segmented in terms of type, application and geography. By type, the fuel cell market has been segmented into proton exchange membrane fuel cells (PEMFC), direct methanol fuel cells (DMFC), solid oxide fuel cells (SOFC), and others. By Application, the market has been segmented into stationary, portable, and transport. By type, proton exchange membrane fuel cells (PEMFC) held the largest share (62.42%) of the market in 2015. By application, stationary held the largest share (64.82%) for the market in 2015.

Growth in the fuel cells market is driven by the need for adoption of cleaner fuel sources, high electricity demand, excess depletion of fossil fuels and stringent regulatory norms to minimize carbon emissions. Rapid population growth followed by high electricity demand has resulted in a paradigm shift towards alternate sources of electricity generation such as fuel cells. Rapid rise in the industrial application of hydrogen gas is expected to boost the demand for fuel cells globally. However, distribution and transportation challenges associated with hydrogen coupled with the high cost of fuel used in fuel cells such as hydrogen or other gas as against fossil fuels may restrain growth of the fuel cells market. Key players in the fuel cells market include AFC Energy PLC, Ballard Power Systems Inc., Doosan Fuel Cell America, Inc., FuelCell Energy, Inc., Hydrogenics Corporation, Nedstack Fuel Cell Technology B.V., Plug Power, Inc., Panasonic Corporation, SFC Energy AG, and Toshiba Corporation. The fuel cells market has been segmented as follows:

Fuel Cells Market: By Type

• Proton Exchange Membrane Fuel Cells (PEMFC)
• Direct Methanol Fuel Cells (DMFC)
• Solid Oxide Fuel Cells (SOFC)
• Others

Fuel Cells Market: By Application

• Stationary
• Portable
• Transport