By Jennifer Kho
The Vancouver-based company plans to sell the cells - 1,000 in 2009 and 9,000 in 2010 - to a new joint venture between IdaTech, which makes fuel-cell systems, and the Acme Group, which sells green-energy and energy-efficiency systems to telecom companies and others.
The cells are slated to provide backup power for Acme customers' wireless base stations, which connect calls to and from mobile phones. The agreement gives Acme exclusive rights to sell Ballard's fuel cells for stationary power applications in India and for telecom backup-power applications in the Middle East and Africa, except for South Africa.
It's a big deal for Ballard. Guy McAree, director of corporate relations and strategic marketing, said it's the biggest supply agreement the company has ever signed, and probably the biggest one in the industry.
To compare, the company shipped 850 fuel cells in 2007 and wants to ship about 1,700 cells this year, he said. So 9,000 in 2010 would be a big jump.
"This high-volume, binding agreement represents a big step forward for Ballard and the broader fuel-cell sector," Ballard CEO John Sheridan said in a company statement. "The 10,000-unit volume will enable significant cost reductions."
The agreement also marks a change for the company, which has been making hydrogen fuel cells. The cells it is making for Acme will use natural gas instead of hydrogen.
"This new low-cost, natural-gas fuel-cell product will be an important enabler for the acceleration of product adoption in other stationary power markets," Sheridan said in the statement.
The use of a fossil fuel might raise questions about the environmental benefits of the fuel cells. After all, natural-gas fuel cells emit carbon dioxide and sulfur, while hydrogen fuel cells' byproducts are water and heat.
But according to the Edison Electric Institute, the emissions are far lower than in other methods of converting natural gas into electricity, such as the turbines used in power plants, because fuel cells don't burn the gas.
And most hydrogen today - 95 percent, according to a 2006 Popular Mechanics story - is made from natural gas.
Ballard wouldn't disclose the size of the deal. But each fuel cell will deliver a gross power output of 7 kilowatts, McAree said. (The announcement said the net power level would be 5 kilowatts).
The company has previously said it is targeting a price of about $500 to $800 per kilowatt, and - because of the large volume of this deal - the price will likely be toward the lower end of that range, he added.
At $500 per kilowatt and 7 kilowatts per cell, the price would be $3,500 per cell, indicating a deal size of at least $35 million.
Putting them to good use
Fuel cells produce power by mixing fuel with air and water inside a thin, reactive film membrane. They store energy, like batteries, but can produce electricity as long as they have fuel - meaning they can be quickly refueled instead of recharged.
Fuel-cell companies, such as Ballard, have long been struggling to find a profitable use for the technology they have been developing for decades.
Ballard, founded in 1979, first introduced its fuel-cell technology at a vehicle demonstration in 1993, when automakers expected to have the technology ready in just a few years.
Mainstream fuel-cell vehicles have yet to materialize, and Ballard last year agreed to sell its automobile business to Daimler and Ford Motor Co. (NYSE:F). At the time, the company said it would retain the right to use automotive fuel-cell technology in non-automotive applications and to pursue fuel-cell buses.
Other companies have been promising to bring fuel cells to consumer electronics for years, but also have hit obstacles.
Earlier this year, MTI MicroFuel Cells said it was developing fuel cells for extra-small tablet PCs and other portable devices (see MTI, NeoSolar to Develop Fuel Cells for Portable Devices). The company also is pursuing fuel cells for chargers, cell phones and digital cameras (see Fueling More Flash).
Meanwhile, as companies continue working to push fuel cells into mainstream applications such as electronics and cars, fuel cells have been finding their way into niche applications, such as backup power, professional video cameras and forklifts, as well as industrial and military equipment.