CIBC World Markets analyst Jeff Osborne issued a rosy outlook for the fuel cell industry -- the makers of renewable energy batteries that run on hydrogen instead of fossil fuels. Fuel cells are a potential pollution-free energy source, if produced from renewable means.

Among the reasons fuel cells interest has been renewed: "Production costs have come down, cash burn is getting better and governments are more actively seeking alternative sources of clean power generation," Osborne said in a note to clients.

The fuel cell industry fumbled during the tech boom. The stocks -- bid up by hopes that automakers would soon adopt the technology -- tumbled as the fuel cells were unable to meet the stringent performance, price and reliability standards of the auto industry. Today, fuel cell makers have shifted their focus to backup power, residential electricity and industrial systems, Osborne said.

The analyst started coverage of FuelCell Energy Inc. and Hydrogenics Corp. at "Sector Performer." He started Ballard Power Systems Inc. at "Sector Underperformer," with a forecast for the company to reach profitability for the first time in 2010.

Shares of Hydrogenics dipped 2 cents to $1.38 in midday trading on the Nasdaq, while Ballard Power shares fell 15 cents to $7.50. FuelCell shares slipped 8 cents to $6.97.