Fuel cell demand predicted to increase sixfold

Commercial fuel cell demand, which accounted for less than 10 percent of total
spending in 2007, is forecast to expand almost sixfold through 2012 to $975 million and reach $3.3 billion in 2017, when it will represent half of all fuel cell spending, according to The Freedonia Group, a Cleveland-based industry research firm.

Total U.S. fuel cell spending -- consisting of research and development (R&D) funding, investment in fuel cell enterprises, revenues associated with prototyping and test marketing, and demand for fuel cell systems, associated products and services -- is expected to reach $3.7 billion in 2012, the firm adds. Prospects for fuel cells vary by market, with success being dependent on how well fuel cells stack up to other potential energy sources.

However, the motor vehicle market for fuel cells -- currently consisting mostly of spending for prototypes, demonstration and test marketing programs -- is expected to rise at a below-average pace, as cost barriers (such as high-priced platinum catalysts) continue to delay widespread commercialization. The growing popularity of gasoline-electric hybrid vehicles will also restrain growth in the segment.

Fuel cell-powered vehicles are likely to face increasing competition from all-electric vehicles. By 2017, however, fuel cell-powered vehicles are expected to expand their market presence, as ongoing developmental work will ultimately drive down costs.

Among the six main fuel cell chemistries, the market for direct methanol fuel
cells is expected to advance at the most rapid pace through 2012. These and other trends are presented in Fuel Cells, a new study from The Freedonia Group.

The largest market for fuel cells is electric power generation, which is expected to
rise more than 40 percent annually to $450 million in 2012. The electric power
generation market will continue to comprise almost half of commercial demand in 2012, as molten carbonate fuel cells (MCFCs) and solid-oxide fuel cells (SOFCs), which have proven to be effective for electricity production, continue to become more cost efficient.

The market for fuel cells used to power portable electronic devices is expected to
advance at the most rapid pace through 2012, as technological advancements have enabled these fuel cells to outperform most types of batteries used for similar purposes.

As portable wireless devices continue to advance in intelligence and functionality, fuel cells will be better able to meet their increased energy requirements, while
simultaneously eliminating the need for an electrical outlet for recharging, The Freedonia Group adds.