Pretenders to power

The arrival of fuel cells as new power sources for portable electronics is a fait accompli that's yet to be accomplished. Yes, fuel cell engineering is as advanced as it has ever been, and the reigning battery chemistry, lithium ion, is about as advanced as it is going to get, but fuel cells remain untested in the marketplace.

Next year fuel cell developers—a mix of electronics heavyweights such as Toshiba Corp., NEC Corp. and Motorola Inc. and small, focused start-ups—will change that by rolling out their first products. Those initial fuel cells will power external chargers for laptops and phones, acting as alternatives to the wall socket. In the longer term—at least a few years from now, if ever—fuel cells may begin replacing batteries as well. In laptops, cameras, wireless phones and PDAs, fuel cells hold out the promise of many more hours of operating time. Given how crucial that benefit is in today's power-hungry electronics, the technology would be a sure bet, were it not for a series of technological, economic and regulatory concerns—the latter being the obvious drawback that the most popular fuel, methanol, is not yet allowed on airplanes.

The stakes out of the gate

"There's work to be done, but I do think it is a viable technology," says Arvin Danielson, vice president of product development at Intermec Technologies Corp. "Lithium ion batteries are very good, and they won't go away, but I think fuel cells really are the next generation of portable power." Next year the maker of ruggedized electronics for corporate customers plans to debut a RFID tag reader powered by a fuel cell from MTI MicroFuel Cells Inc.

Also planning rollouts in 2004 are Toshiba and Smart Fuel Cell AG. In March at the CeBIT electronics show in Germany, both companies offered flashy demos of laptop docking stations powered by fuel cells. Then in June NEC demonstrated a laptop with a fuel cell built in. Other companies with stated ambitions to commercialize fuel cells next year include Jadoo Power Systems, Medis Technologies Ltd. and start-up Polyfuel Inc. Of the myriad companies developing fuel cells, any company that isn't planning to debut a product in 2004 expects to do so the following year.

Any company that makes electronics should consider fuel cells' potential. The technology's promise is to bust the electronics industry through the ceiling imposed by lithium ion batteries. After years of moderate growth, the energy capacity of batteries is stalling whereas the power demands of portable electronics are not. This hinders the development and appeal of new hybrid devices, such as cell phones with cameras and color screens.

In theory, methanol-based fuel cells can store 10 to 20 times as much energy per liter as lithium ion batteries, meaning they could offer a gadget up to 20 times the operating time in a package of the same size. Because they draw their energy from the hydrogen in a disposable cartridge of fuel, they also work on demand—no recharging required. Instead of lugging around an extra battery or an AC adapter, a road warrior would instead carry a few vials of fuel similar to a trial-size bottle of shampoo. Stick in a bottle, and the device will run for perhaps 12 hours.

The reality, however, is that no company's prototype comes close to making that scenario real. Fuel cells are not solid-state electronic devices, so they are proving difficult to miniaturize. In fact, most fuel cell prototypes over the last few years have rivaled the size of the devices they power.

"Fuel cells can be commercialized today, but they are not competitive with lithium ion batteries," says Kurt Kelty, director of business development at Matsushita Electric Industrial Co. Ltd.'s battery R&D center in Cupertino, Calif. Kelty points out that docking stations and other external power packs—the bulk of the fuel cell products due out next year—are not as desirable as unimposing internal batteries. "The technology is limited to niche markets," he says.

Indeed, the forecasts for fuel cells are conservative, not only because of the technological questions but also because of uncertainty about market demand and regulations. It could take a year or more for trade groups such as the U.S. Fuel Cell Council to successfully lobby the Department of Transportation to let methanol onto planes, says Atakan Ozbek, an analyst with Allied Business Intelligence Inc. Ozbek predicts very slow growth for fuel cells until 2008, when an estimated 3 million will sell. Even in 2011, the volume will equal only 200 million—half the number of cell phones shipped worldwide last year.

So world domination is not imminent. Still, the prospect that fuel cells will eventually become the new batteries is still achingly close.

An industry without products

Aware of fuel cells' potential, dozens of companies are investigating the technology. Many major Japanese OEMs, such as Casio Computer Co. and Hitachi Ltd., as well as Motorola and Samsung Electronics Co. Ltd., have been doing their own fuel cell research for years, although analysts suspect that the level of commitment among them varies. Some are placing legitimate bets on fuel cells, whereas others may merely be hedging theirs, just in case the technology actually takes off, says Ozbek. Still, viewed as a whole, says Frost and Sullivan analyst Sarah Bradford, the research and development at the major OEMs should be taken seriously. Any OEMs ignoring the technology have fallen behind, although it is undeniably still early in the race.

In March, three major trade associations of Japanese OEMs announced they will work together in an informal consortium to establish fuel cell standards. The group includes the Japan Electrical Manufacturers Association, the Japan Electronics and Information Technology Industries Association and the Battery Association of Japan, which represent all the major OEMs. "The consortium believes in future demand for fuel cells," says Toshiba spokeswoman Midori Suzuki.

Not that Japanese OEMs are raving about fuel cells. "Fuel cells will definitely make a new market in the next five years and will become more of a consumer product," Suzuki says. "However, we don't believe that they will totally replace lithium ion batteries." NEC, which will roll out a fuel cell-powered laptop by the end of 2004, likewise believes that fuel cells will become an important differentiator for products ranging from laptops to phones, says spokesman Chris Shimizu, but the market is still only in the development stage. Although Matsushita is watching closely, Kelty says, it is committed to improving battery chemistry, which it feels is more likely to yield fruit. Although Casio has been researching fuel cells since 1998 and its engineers believe they have great potential, it is not committing to producing them and has made no prototypes public. Sony, meanwhile, "is still in an early exploratory stage with fuel cells and doesn't have much information to share," says spokeswoman Elizabeth Mousourakis.

Running alongside the giants is a bunch of tiny companies—namely Jadoo, Manhattan Scientifics Inc., Medis, MTI, Neah Power Systems Inc., Polyfuel and Smart Fuel Cells—for which portable electronics is a singular passion. Their challenge, however, is signing deals with the OEMs, manufacturing partners and channel distributors for fuel cartridges that would launch them into the big time. "A lot of OEMs are hesitant to jump at this before they see it working, especially in these harsh economic times," Bradford says.

MTI's deal with Intermec is not the only deal. In April Samsung and Millennium Cell Inc. announced a partnership to collaborate on fuel cell development, too. Medis has a deal with defense contractor General Dynamics to produce a prototype fuel cell PDA power pack, says Medis CEO Robert Lifton. But MTI and Intermec's partnership may be the most important, because they have publicly announced plans to produce and sell a specific product powered by fuel cells for the private sector. Bradford calls this partnership a first step.

"There's work to be done, but I do think it is a viable technology. Lithium ion batteries are very good—they won't go away—but I think that this really is the next generation of portable power." —Arvin Danielson, vice president of product development, Intermec Technologies Corp.

Well, not so fast. Before MTI and Intermec actually make or sell anything, Intermec will test MTI's fuel cells in the rigorous conditions that its ruggedized products encounter, Danielson says. The testing was scheduled to begin in Q2 of this year, and if all goes well, the company's engineers will collaborate on integrating a fuel cell into an RFID tag reader that attaches to a handheld computer. The reader is shaped like a gun handle, with a sleeve at the top into which the handheld can slide. Inside the handle, the fuel cell's modest job will be to charge a lithium ion battery that will actually power the reader. The hybrid of fuel cell and battery should allow the new device to operate longer in the field between refills, which will replace recharges. "It is going to start slow," Danielson says, noting that the product might not be any smaller or lighter than its current RFID tag reader. "We are not looking for any great improvements in this first design."

The tough road from lab to shelf

Achieving great improvements in fuel cells has always been a tough task for scientists. Chemistry and clever engineering underpin all the technology's vast potential and many of the vexing problems.

Both batteries and fuel cells convert the electrical energy stored in chemicals into a flow of useful current. In batteries, reactions evict excess electrons—negative electrical charges—from a substance and force them to flow through the device the battery is powering before they can resettle in a different chemical in the battery's positive side (see diagram, "How fuel cells work").

How fuel cells work

Fuel cells whisk away the protons—positive charges—of the hydrogen atoms in their methanol fuel, forcing the protons' newly lonely eletron partners to set out in search of them. That search takes the electron through the device they power before reuniting them with their opposite charges on the other side of the cell. This process produces considerable heat, so the membrane that seperates the protons from the electrons should remain moist.

Fuel cells draw the protons—positive charges—of the hydrogen atoms in their fuel through a membrane, forcing the protons' newly lonely electron partners to set out in search of them. That search again takes the electrons through the devices they power before reuniting them with their opposite charges on the other side of the cell.

Whereas batteries are trouble-free, sealed devices, fuel cells depend heavily on the outside world. Of course, they must be refueled, but they must also breathe. To accomplish the chemical reactions that generate electricity, they take in oxygen so that the hydrogen they process can be converted into water vapor and ejected as exhaust. The oxygen also combines with the carbon in methanol to create carbon dioxide exhaust. All the while, fuel cells produce considerable heat, and the proton exchange membrane that separates the protons from the electrons should remain moist.

Fuel cells themselves are not large at all. Some are as small as a quarter. It is the need to shuffle flowing gases and liquids around and to manage heat that have made fuel cells so tricky to miniaturize. In this regard, Toshiba's demo at CeBIT illustrated not only how far fuel cell science has come but also how far it still must go.

In one respect, Toshiba's gadget was a rousing success. It provided an average of 12 watts of power for 10 hours from just a 100-milliliter cartridge of fuel—that is, 1,200 watt hours per liter, quadruple what lithium ion batteries serve up. Although the cartridge is small, the entire docking station is not. Take those same 1,200 watt hours and divide that number by the 825-ml volume of the docking station, and you'll discover that Toshiba delivered only 145 watt hours per liter, compared to 300 for lithium ion batteries. NEC's laptop delivers five hours of 14-watt power from 300ml of fuel, or 233-watt hours per liter. The fuel cell package contributes 2 pounds to the 4.4 pound laptop's total weight.

One reason for the bulk is that fuel cells produce a lot of heat—mild at cell phone wattages and very hot at laptop levels. To dissipate the heat, Toshiba had to include a cooling fan in the docking station.

The heat that fuel cells produce is wasted energy and a sign of the low efficiency that has typically plagued the industry, which has struggled to shrink the cells, because their efficiency depends on how much surface area of the platinum-laden membrane can be exposed to hydrogen. The less surface area, the lower the efficiency.

A further impediment to fuel cell efficiency is that the tiny membranes in miniaturized fuel cells can process the methanol only at a certain rate. The membranes can become flooded by too much methanol. The fuel can then cross over to the other side of the fuel cell, ruining the electrical imbalance the fuel cell tries to create. For this reason, fuel cell developers have literally had to water down their methanol to concentrations as low as 3 percent to 6 percent; NEC's methanol concentration is 10 percent.

Beyond the efficiency challenges within the fuel cell itself, there are vexing problems of how to package fuel cells in useful electronic components. Scientists have been sweating to come up with diffusing materials and microscale manufacturing innovations that can route methanol, oxygen, water and carbon dioxide around—in the proper concentrations and at the proper rates—without the impractical moving parts in older prototypes.

Claims and perceptions

Recently fuel cell developers have claimed to have solved various parts of these problems. Shimshon Gottesfeld, CTO of MTI, says MTI's fuel cells—thanks to some proprietary wizardry—have virtually no moving parts and can use 100 percent-pure methanol.

Meanwhile, Neah's product marketing director, Gregg Makuch, brags about the company's advanced silicon manufacturing technology, in which the typical fuel cell membrane is replaced by a honeycomb of silicon and platinum. He says that it increases the cell's active surface without making it bulky. Neah can therefore use a 75 percent concentration of methanol, he says.

"A lot of OEMs are hesitant to jump at this before they see it working, especially in these harsh economic times." —Sarah Bradford, analyst, Frost and Sullivan

Medis does not use methanol or a membrane at all, CEO Lifton says. Instead, the highly proprietary design uses a liquid chemical catalyst instead of platinum and a fuel that is a combination of a different alcohol than methanol and a metal hydride—a metal that stores hydrogen. The result, Lifton says, is that Medis can produce all the energy it needs from one fuel cell, rather than stacking several in series, as is the norm. Jadoo also uses a metal hydride in its cells, and Samsung will use Millennium Cell's chemical hydride fuel in its fuel cell systems, says Millennium vice president Adam Briggs.

Every company's claims are based at least to some extent on science the companies won't share freely. So how is an outsider—an OEM or an investor—supposed to see through these somewhat opaque claims? ABI's Ozbek says he holds them to their benchmarks. Companies that fail to deliver what they promise will lose credibility in a competitive market.

To be sure, fuel cell developers need and want credibility with OEMs, because the technology poses a significant question that can be answered only case by case: What design and manufacturing modifications need to be made in electronics to accommodate fuel cells?

The answer overall is that the changes required might not be that major. "We want to make a fuel cell that is interchangeable with a lithium ion battery," says Neah's Makuch. Jadoo's marketing vice president, Lee Arikara, says his company's fuel cells for professional video cameras snap on just like a battery pack. "It is a standard interface," he says. "You just connect it and put a bottle in. It works autonomously and has its own control system." Toshiba designed its docking station to attach directly to its laptops with no modification to the PC.

Perhaps a bigger wildcard is consumers, who tend to be price-sensitive. Fuel cells will sell for at least 10 percent to 20 percent more than batteries initially, Ozbek says. For this reason, Jadoo is starting out in high-end niches and Toshiba's Suzuki acknowledges that the price premium will initially confine the company's fuel cell sales to big corporate customers.

Analysts Ozbek and Bradford wonder whether consumers will want to stock up on fuel cartridges. Although cartridges are not likely to be expensive—maybe a couple of bucks—they still must compete with the perception that recharging batteries is virtually free.

If fuel cells are indeed made cheap and convenient, will that be enough to spur demand? Critics of docking station models question how often people really are so far from a wall outlet that they would prefer to have a bulky attachment just for power.

If they succeed at all, the biggest changes fuel cells bring could well be in the new devices they enable. MTI CEO Bill Acker imagines that when electronics makers are freed from today's power limitations, they will be able to produce intensely power-hungry dream products. "Micro fuel cells have the potential to carry through the wireless revolution we have seen," Acker says. "A truly wireless device does not include a tether to a wall for AC charging."

What interests you most about fuel-cell technology? Send your thoughts tofeedback@eb.reedbusiness.com.

David Orenstein lives in Silicon Valley and writes about science and technology. He has written for Business 2.0, Upside and Computerworld as well as metropolitan newspapers.