The core technology in PEM fuel cells remains the MEA and membrane. Stack technology is becoming a commodity. But the solution to a low cost long term durable high performance membrane is elusive. The major player Dupont still owns this market with their nafion category of products. Several challengers have risen to try their hand, but really have ben unable to make a major dent in Dupont’s nafion, or the industry need. By my guess the challengers still have only in the very low double digit millions in revenue.

As an example, rapid growing Hoku Scientific, the latest craze for investors, is on a run rate of c. $5 mm in revenue. It is even making a bit of money. However with a market cap of $150 mm, a bit aggressive.

Take note: That market cap is close to the total volumes of commercial PEM fuel cell sales for Hoku’s entire target customer base.

Polyfuel, another membrane producer, took the AIM route, and is of a similar size.

The problem for the membrane and MEA producers is 3 fold:

With the advent of the challengers, their is not a big enough near term market for any of them to grow profitably (the whole PEM fuel cell market in terms of cost for total pilot and commercial units shipped is well less than $200 mm/year)

• PEM fuel cells are being supplanted in R&D spending by SOFC and DMFC or microPEMs (which either do not need membranes like these, or need far less square footage of membrane).
• The prices and performance are still not where the fuel cell industry needs them to be to commercialize, even if it can get the rest of its act together.

Oil prices continue a downward spiral. Oil has dropped to $58 from a high of $70. We have been saying on Cleantechblog for sometime that the oil market was overheated.

Big questions of the day – how does this impact cleantech? A couple of quick thoughts.

– Can a prolonged slide in oil prices and gasoline (I’m now back down to $2.25/gal in California) take the edge off of the hot California hybrid car market?

– Part of the slide is due to warmer weather in key markets. If natural gas prices (still holding up well) follow suit in the US, will that impact solar system demand?

One of the most disturbing things about the solar industry, the rising star of cleantech, has been its recent rising prices. According to the SolarBuzz.com survey, module prices are up close to 7% in the US this last year, after years of falling.

The main culprits according to most solar watchers are a combination of:

• High demand driven in large part by the US state and German subsidy programs
• Tight supply on module capacity
• Tight supply on silicon capacity

The first issue here is that rising solar module prices threaten the viability of the industry, at a time when it is gaining momentum and trying to reach critical mass. Worse, almost every manufacturer of solar modules is increasing capacity trying to take advantage of the industry growth. As a result, we think the industry may be in for a rude awakening if that capacity increase begins to outstrip demand, or if key subsidy programs underpinning growth falter for political reasons.

A new report from a group with a horrifically unwieldy name — the Renewable Energy Policy Network for the 21st Century (REN21) — indicates a record level of investment in renewable energy worldwide.

REN21 Report “Renewables 2005: A Global Status Report”

The lead author of the report Eric Montinot claims that “Renewable energy has become big business.” What am I missing here? Why do I find it difficult to agree with this assessment?

True, there are a lot of big corporations with a non-trivial involvement in renewables: BP, Shell, GE, FPL, ADM, and so on. And, there is no doubt that the renewable sector is growing rapidly and has grown tremendously from its earliest days. But, it strikes me that claiming renewables as “big business” is hype, premature at best. For the above firms, renewables represent a significant growth opportunity and an excellent PR position, but don’t represent a very large portion of their core business. Furthermore, there’s still an awful lot of “mom-and-pop” in the renewables sector, and an awful lot of green idealism or green policy rather than green money driving activity in renewables.

In any event, what does it really mean anyway for renewables to be “big business”? If it means being like Dell or Wal-Mart — improving the economics and delivery of products/services so that more customers purchase them because they represent truly valuable offers — then that (in my opinion) would be a good thing for the advancement of renewables. If “big business” means being like the average U.S. oil company, utility or auto manufacturer, those are the last role models I would like to see for the renewable energy sector.