Ballard Power Systems (TSX:BLD) of Burnaby, B.C. - known for its hydrogen fuel cells - accounted for nearly half of the total revenues by all the companies surveyed, with $120 million US.

It was followed by FuelCell Energy of Danbury, Conn., with $34 million US, the survey found.

Net losses for all the companies surveyed fell slightly to $367 million in 2003, a four per cent decline from 2002.

"While the financial results for the fuel cell sector were mixed for 2003, there are encouraging signs that the industry may soon find its feet," John Webster, leader of PwC Canada's fuel cell practice, said in a release.

"We are seeing investment in fuel cells by large, well-funded multinationals on all continents, with strong government support in Canada, the United States, Japan, and a number of European Union countries," Webster said.

"With this public and private support, progress toward commercially viable technical solutions will continue and fuel cells should become more competitive with incumbent technologies."

Among technical challenges facing the fuel cell industry is the expense of producing power, compared with conventional sources, as well as the impact of cold weather and the need for a refuelling infrastructure.

Ballard Power Systems and numerous other companies in Canada and abroad have been working for years on fuel cells as an alternative power source for vehicles, industrial users and consumer products.

However, the industry expects it will still be many more years before fuel cells come into widespread use in automobiles, although there are some consumer products such as portable generators available as well as industrial trial projects.

Webster said the next two or three years are critical for the sector to launch successful products, such as micro fuel cells for electronic devices such as cellphones, lap-top computers, PDAs and cameras.

The 2004 Fuel Cell Industry Survey was released in Toronto at the annual Hydrogen and Fuel Cells conference.