SHOW ME THE MONEY! Subsidies for stationary fuel cells around the World. PART 2. The E.U & Japan.
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, this time focussing on the EU and Japan. 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 E.U. and Japan.
In Europe, unlike the U.S., the electricity grids tend to be greener and more resilient and this is a double blow for large scale fuel cell deployment. The higher resilience means that fewer companies are interested in generating their own power and the green grids in Western Europe means nations are subdued in offering subsidies to a natural gas using technology. If anything talk of decommissioning of whole national gas grids in the future (in Holland and the UK) make fuel cells a potential future stranded asset risk for companies. These two arguments have been the dominating frame of mind in Europe for a number of years and is unlikely to change in the near future, although hydrogen is beginning to open up the discussion again about the applicability of fuel cells. Nevertheless, this explains why Europe had at the end of 2017 only 16MW of industrial scale fuel cell power generation, there is not much interest and a lot of uncertainty.
On a smaller scale, for mini or micro-cogeneration fuel cells the situation is slightly better. There are deployment programs and fuel cells are included in subsidies for many nations within the EU. For instance, the EU as a whole has PACE funding, a funding scheme to deploy 2,800 micro-CHP units in homes around the EU by 2021 by offering to subsidise a percentage of the upfront capital cost to homeowners. Separate to PACE, Germany has its own Kfw433 Programme for fuel cells for home renovation (0.25KWe - 5KWe) where capital grants are available to homeowners (as well as separate low interest loans to complete the purchase). So far the KfW programme 433 has been reasonably successful with applications for funding in the last fiscal year (2018/2019) averaging about 1,000 a quarter . This number is slowly rising but maybe not as quickly as expected as the funded scheme is targeting 70,000 such installations a year. There is also a separate and older mini-CHP subsidy for cogenerating technology under the KWK programme  but this is less generous than the Kfw grant and sadly can’t be used together.
Other countries in Europe such as France and Italy do have fuel cells included in their subsidy programs but these are not as generous and sales are low. The UK had managed to install over 500 mCHP units  but this year (as of March 2019) stopped their feed-in-tariff subsidy for micro-CHP which is likely to have a major impact on further sales.
The reasons behind the support for smaller scale cogenerating fuel cells are mixed. For Europe as a whole cogeneration offers a potential solution to the difficult problem of decarbonisation of heat, however the dilemma of supporting a natural gas fuelled technology is a headache for European policymakers and their green targets. For Germany in particular they consider small-scale CHP fuel cell as an exportable technology and hence offer stronger support to build up the industry.
Overall then in Europe support for large scale fuel cells is weak and Germany remains the only obviously attractive nation for supporting micro-CHP. Until EU policymakers can be convinced of a clear role for fuel cells, possibly swayed by the hydrogen transition, this is likely to remain the case.
Where the EU is ambivalent about fuel cells for power generation, Japan is famous for it’s ene-farm program, a government directed scheme and subsidy program to bring residential fuel cells to the Japanese market. Since 2009 Japan has installed over 300,000 ene-farm units and most of them in the less than 1KW output range. The journey to this point has been difficult, with subsidies dropping away gradually each year as part of the program and only one company remains in each of the technology categories PEM and SOFC. Panasonic is selling a PEM fuel cell, which now sells with no subsidies at all, while Aisin-Seiki remain selling a higher priced solid-oxide residential unit that has a small subsidy of less than a $1000. That micro-CHP are still selling at these near unsubsidised prices is an encouraging sign that the market in Japan might be self-sustaining.
While the government program and subsidies for residential micro-CHP is reaching its end, the 80 million yen budget is being re-allocated by the government in preparing a new program to support larger scale commercial and industrial SOFC. Called the commercial and industrial CHP subsidy this program is currently in the R&D stage but will roll out with commercial support for larger SOFC units from 2020. Companies like Miura (that recently announced a partnership with the UK’s Ceres Power to source their SOFC stack) and Kyocera with their 4.3KW and 3KW CHP units respectively are part of the rollout.
The strong support and direction from the Japanese government has been a key component in the success of the stationary fuel cell deployment to date. Although part of a larger plan for Japan to transition to a hydrogen economy in 2050. in the shorter term fuel cells allow Japan to make better use of its imported natural gas fuel and develop new technology for export. Given the relative success of the residential mCHP program, the government is likely to be equally supportive of the rollout of the larger SOFC commercial units and even hydrogen fuel cells in the future.
Looking forward 5 years, the markets in South Korea and Europe are likely to remain receptive but subdued especially while policy support is inconsistent. While South Korea will become more interested as prices per KW for fuel cells drop, in Europe fuel cells might have to find niche fields in biogas or hydrogen in order to get around policymakers concerns over using natural gas. Also China could jump in at any point and use their size to start an internal industry in stationary fuel cells but so far policymakers are more focussed elsewhere on mobility so this is unlikely to happen. Instead, the most interesting developments will be the contest between fuel cell manufacturers in the US and Japan; as US fuel cell manufacturers grow downwards from industrial scale power generation and Japan grows up from residential fuel cells to the middle ground between them. The understanding of customers needs and motivations will be key in capturing a market share in countries for both U.S. and Japanese companies alike as well as for any new entrants to the field.
Thank you all for reading. Could a greater understanding of the stationary fuel cell market help decide your future business plans? Sign up for the free micro-CHP newsletter to hear about latest developments in the industry or if you have a specific concern then please get in touch.
Final note: As I was writing this blog I came across an EU technical report written in the last year or so about global deployment of stationary fuel cells . While being older, the report does offer a deeper look into the topics discussed here in the blog.
 Global deployment of large capacity stationary fuel cells - Drivers of, and barriers to, stationary fuel cell deployment. - http://publications.jrc.ec.europa.eu/repository/bitstream/JRC115923/jrc115923_stationary_fuel_cells_16042019_final_pubsy_online.pdf
 https://www.ifri.org/sites/default/files/atoms/files/nagashima_japan_hydrogen_2018_.pdf - see table on page 69