SHOW ME THE MONEY! - Subsidies and support for stationary fuel cells around the World. Part 1: The U.S. and South Korea
No company in the World has made a profit from selling stationary fuel cells [1-3] so strong support from governments is needed in order to spur investment and continued sales in this important product class. As a stationary fuel cell company therefore which countries and markets should you be targeting? Here is a brief summary of the countries with the most positive support for stationary fuel cells, starting with the U.S. and South Korea. Also just as important as the subsidies themselves are the reasons each country seems to offer support. Although reasons are hard to judge accurately, they give an idea on whether long-term support can be expected.
The U.S. and South Korea - strong support for stationary fuel cell deployment
Starting with the good news, there is a strong interest in stationary fuel cells in the US but mostly on an industrial scale. The federal government offers a subsidy via their Fuel Cell Investment Tax Credits that are worth up to 30% of the investment costs of fuel cells, and on top of this some states offer further support such as the California State Program SB700 (Self-Generation Incentive Program) to promote energy generation and storage. This has led to a large home-grown market in industrial stationary fuel cell companies in the US so competition is healthy. The reasons behind the subsidies are mixed, the federal government clearly sees an economic advantage for the US in developing fuel cell companies with technology for export around the World, while on a state level like California the reason appears more environmental. Unfortunately, small scale commercial and residential fuel cells are not well represented in the U.S. probably because the main initial driver for interest in fuel cells from the customer, the fear of the weak electrical grid that sometimes fails, is much more of a concern for large companies then it is for smaller businesses and individuals. A subsidy is not enough to push a sale if you don’t want a fuel cell in the first place. Sadly, environmental concerns to reduce CO2 or a national policy desire to reduce energy use in general are not strong motivators in the U.S. market hence weak interest in small or residential scale cogenerating fuel cells. If there is to be an interest in the U.S in smaller scale fuel cells then it’s likely to form around the problem of grid constraints or microgrids.
The other main country interested in industrial fuel cells is South Korea, with Doosan being a well established leader in this field. However, there has been mixed messages of support from the South Korean government and after some initial strong support,[6,7] further budgets have not been allocated for support since 2015 seemingly causing stalling in the market. Where previously South Korea had the lead on the US in installed fuel cell capacity, by 2018 its now seems that the US has almost 50% more (177MW installed in South Korea versus 235MW in the US). South Korea seems to be installing industrial scale generation not because of an attractive subsidy but mostly because of legislation. Regulations force the implementation of renewable power in all types of buildings but most impactful are the regulations forcing power generation companies to have more ‘new or renewable’ power generation sources. The 21 largest power generators had to have 2% by 2012 increasing regularly every year up to 10% by 2022 of their power from new or renewable sources of which fuel cells are included. However, while regulation is forward thinking it does not foster a market for the product, and even worse there are other ways to generate renewable power other than by fuel cells. The desire to move over to a more reliable (and growing) market was perhaps a large motivator for Doosan to buy out the failing ClearEdgePower in the US to found Doosan Fuel Cell America.
Why the mixed messages from the South Korean government? Initially fuel cells may have been a target for export but in the face of competition from the US on an industrial scale and from Japan on a residential scale these motivations might have died down. South Korea still has air pollution problems (from their coal power stations and of course nearby China) and security of energy supply and carbon emission targets to answer so there is still real potential for a fuel cell market to prosper. This in part explains the news this week of the partnership between UK based Ceres Power and Doosan, a south Korean company. The high electrical efficiency and modular SOFC stack is a good choice in technology to supplement Doosan’s established phospohric acid fuel cell business.
but what is China doing?
The missing country in this report is perhaps China. So far there has been no obvious interest in industrial scale fuel cell power generation or building/residential scale fuel cell cogeneration despite potentially having many of the same motivators as Korea and the U.S. Instead, the largest focus seems to be on fuel cells for transport, in particular heavy vehicles as well as personal cars. China has a well reported air pollution problem and so this makes sense politically to pursue fuel cells for transport in order to reduce the pollution, but if this was the only reason then industrial scale fuel cell power generation would also make sense. China may instead prefer fuel cell vehicles to stationary power because of the prestige involved in making high-tech cars so a change in attitude in that case seems unlikely.
Would a greater understanding of the market help your business? Please get in touch.
 The role of hydrogen and fuel cells in the global energy system - Energy Environ. Sci 2019,12,463 - https://pubs.rsc.org/en/content/articlelanding/2019/ee/c8ee01157e#!divAbstract
 Hard to know if the larger corporations such as Panasonic, Aisin or Doosan are making a profit in their fuel cell divisions or not as their financial reports are aggregated across the company as a whole. I feel confident to say that they are unlikely to have made a NET profit from stationary fuel cell sales once you consider their investment, at least at this time.
 State of the States: Fuel Cells in America 2017 - https://www.energy.gov/eere/fuelcells/downloads/state-states-fuel-cells-america-2017