Fuel Cell and Hydrogen Forecasts, 2016

This year’s fuel cell and hydrogen industry forecasts are, in brief:

1. Increased relationships between the fuel cell and oil and gas industry
2. Emergence of new niche markets
3. China starts to position itself as a serious player
4. The emergence of new, critical stakeholders
5. Hydrogen for energy storage under increased focus
6. Investment shifts
7. The industry structure continues to evolve
8. Japan Hydrogen Society impacts start to be felt in the hydrogen market
9. The power of partnerships
10. Service provider companies start to break away from the pack

1. Increased relationships between the fuel cell and oil and gas industry

With exploration costs now far outstripping the current and projected prices of a barrel of oil, and the industry coming under increased pressure from governments to clean up and reduce emissions right along the supply chain, the industry is looking at its options!

In terms of the fuel cell sector, there are a number of areas in which the relationship with the oil and gas industry will increase in 2016:

1.1. In 2016, expect to see an increased interest from the US and UK governments, especially, in understanding where stranded or underutilized assets are, and what level of the jobs losses can be reinjected into the fuel cell sector.

1.2. In 2016, expect to see more companies announce pre-deployment tie-ups to the oil and gas industry, with test units being deployed in various countries and environments. We have to stress that with the test units here, as with the telecoms sector, there will not be more than a small handful of companies successfully deploying into the oil and gas industry.

1.3. It is likely that, in 2016, one of the oil majors will start to make investments directly into the fuel cell sector. We are forecasting that this investment will only be one or two investments in 2016.

1. Emergence of new niche markets

Because of this potential short term stalling of the drone market for fuel cells, we will see the industry focus on other niche markets.

There are clearly a basketful of them, and creating systems and products for these will be the focus of a number of companies in 2016.

1. China starts to position itself as a serious player

For the fuel cell and hydrogen sectors, we can expect to see a continued stream of major tie-ups, JVs and partnership agreements with China, to develop and deploy products into China. In the short term at least, the focus will be on working with overseas companies, but expect to see in the medium term a switch to localised manufacturing.

1. The emergence of new, critical stakeholders

As the industry is starting to settle down and become normalised, we are seeing the emergence of a new strata of necessary and critical stakeholders. These are the insurance agencies, the health and safety executives, the emergency services / first responders, etc.

In 2016, expect to see more of these groups attending industry events, asking pointed questions, needing to be educated, and requiring the industries themselves to ask the right questions to become another normal energy sector. Key word for these stakeholders – risk.

1. Hydrogen for energy storage under increased focus

Overall, if the hydrogen electrolyser sector can get organised, and sorry, but that is a big if, we could see agreements signed topping 40 MWs during 2016.

1. Investment shifts

In 2016, we should see interest in the sector increase as companies such as Bloom Energy, FuelCell Energy, Doosan Fuel Cell America, Plug Power and Fuji Electric move further into revenue through the service model. But these companies are only a tiny fraction of the industry and the pressure is on these companies to carry the flag of the sector.

The level to which corporate and private finance is likely to flow back in 2016 is forecast by 4th Energy Wave to be between $75 – 100 million.

1. The industry structure continues to evolve

For the supply chain in 2016, there are a number of potential acquisitions by Japanese companies, if form continues, and that the supply chain continues to condense into a smaller number of countries. Longer term, this could have real implications for the sector.

1. Japan Hydrogen Society impacts start to be felt in the hydrogen market

In 2016, we forecast the continuation of release of plans to produce high volume hydrogen in regions such as Australia for shipping back to Japan, and the opening up of one new route, potentially the Patagonia. This could well put pressure on the hydrogen markets to develop a hydrogen futures market, and a more open hydrogen pricing system. But this will not emerge in 2016!

1. The power of partnerships

2016 will see the development of a batch of new JVs between some of the biggest power companies in the world and the fuel cell industry, and potentially an odd relationship developing between a car company and a power company.

1. Service provider companies start to break away from the pack

The quadfecta of FuelCell Energy, Plug Power, Bloom Energy and Doosan Fuel Cell America are increasingly proving that the service provider model is a winning revenue generation model. As these companies are well capitalised, have volume manufacturing capability, strong links, and good order books, 2016 will see them continue to pull away from the pack in terms of performance.

2016 will also see more of the second tier fuel cell companies and first tier electrolyser companies start to switch to a service model. Sell services not technology. This will require capital, and the first half of 2016 is when we see who is playing with whom. Fun times ahead!

For more information, background information and discussion on these forecasts Fuel Cell Monthly – Volume 3, Number 1, Special Edition is available to download from: www.4thenergywave.co.uk/fuel-cell-monthly