Overview: This report focuses on key trends in fuel cells and hydrogen, along with battery technologies. The findings are from the Alliance's most recent alternative energy survey, completed February 10, 2006. A total of 121 members working in the alternative energy industry participated, including 25 working in companies involved with Fuel Cells.

Bottom Line: Respondents working in alternative energy believe that over the next two years the Fuel Cell sector will experience the biggest new technology breakthroughs in the industry. Moreover, when we look out five years, respondents also believe that Fuel Cells will experience the most rapid economic growth of any alternative energy sector.

We asked industry respondents to identify the fastest growing mid-tier companies within Fuel Cells for the next 12-24 months. We also asked respondents who work exclusively in Fuel Cells, to identify the company they believe will have the biggest market impact over the next 1-3 years. In both cases, the same three leaders were identified:

Fuel Cell Energy (FCEL)
Energy Conversion Devices (ENER)
Ballard Power (BLDP)

We note that respondents also think Energy Conversion Devices (ENER) will have the biggest market impact in Hydrogen Storage/Distribution and in Battery Technology.

What are the biggest barriers to more rapid adoption of Fuel Cells technology? Three-in-five who work in the Fuel Cell sector say 'The Cost of Fuel Cells is Too High vs. Other Energy Sources.' High Cost was also cited as the biggest barrier to more rapid adoption of hydrogen-related technology.

Where will Fuel Cells have the greatest economic impact over the next 3-5 years? More than half (52%) of respondents who work in Fuel Cell companies believe that it will have the greatest impact in Stationary Power for Buildings.

Here's a further look at additional key findings:

(A) Fuel Cells

    * Reasons for Rapid Growth. Respondents who think Fuel Cells will experience the most rapid growth over the next 5 years cited Technology Advances (37%) as the top reason why - followed by Cost of Energy/Short Supply (23%).
    * Palladium Seen As Alternative to Platinum. Respondents cited Palladium (28%) as the most viable alternative to the platinum catalysts needed for fuel cell reactions.

(B) Hydrogen Technology

    * Leading Hydrogen Packaging Technologies - Metal Hydride Tanks. In terms of packing large quantities of hydrogen in low-weight, low-volume systems, Metal Hydride Tanks (28%) are seen as having the best chance of succeeding in the marketplace over the next 3-5 years.
    * Electrolysis of Water vs. Steam Reformation. By a 2-to-1 margin, respondents also believe Electrolysis of Water (50%) will be the number one trend in hydrogen production for the next 3-5 years, with Steam Reformation of Methane/Natural Gas (24%) ranked second. 

(C) Battery Technology

    * Lithium-Ion Polymer - Tops in Battery Technology. Fuel cell industry respondents rank Lithium-ion polymer (32%) and Lithium-ion (12%) as the battery technologies that will experience the highest growth rate over the next 3-5 years.

Summary of Key Findings

Fuel Cell Sector Well Positioned for Future Growth

Which Sector will Experience Biggest New Technology Breakthroughs in Next 12-24 Months?
Fuel Cells (27%, up 5-pts), Hybrid/Electric (27%, unchanged)

Which will Experience Most Rapid Economic Growth - Next 5 Years
Fuel Cells (25%), Solar (22%), Hybrid/Electric (20%)

Reasons for Rapid Growth in Fuel Cells
Technology Advances (37%), Cost of Energy/Short Supply (23%)

Where Will Fuel Cells Have Greatest Economic Impact in Next 3-5 Years?
Stationary Power for Buildings (52%), Aerospace/Military (24%), Automobiles (16%)

Fastest Growing Fuel Cell Areas
Proton Exchange/ PEM (44%), Solid Oxide (20%), Direct Methanol (16%)

Biggest Barriers to Rapid Adoption
Cost of Fuel Cells Too High vs. Other Energy Sources, Complexity of Technology/ Too Many Technical Hurdles Still Ahead

Leading Companies

Fastest Growing Fuel Cell Companies - Next 2 Years
Fuel Cell Energy (33%), Energy Conversion Devices (17%), Ballard Power (14%)

Biggest Market Impact - Next 3 Years

Fuel Cells
Fuel Cell Energy (28%), Energy Conversion Devices (24%), Ballard Power (24%)

Hydrogen
Energy Conversion Devices (24%), Ballard Power (11%)

Battery Technologies
Energy Conversion Devices (45%)