Fledglings in the Hydrogen Economy
M. COREY GOLDMAN SPECIAL TO THE STAR SPECIAL TO THE STAR INVESTING
MONTREAL—It is hard to compete with a product that has been under development for more than a century, is accepted by millions of people and runs on readily available liquid energy that, even with recent rising prices, is cheaper than bottled water.
The gasoline engine/oil industry partnership and all the cars, buses and SUVs it pushes along seem in no rush to pull up stakes, despite Canada's ratification of the Kyoto agreement and U.S. President George W. Bush's $1.2 billion (U.S.) vision of putting a hydrogen-powered car in every driveway.
Even so, a number of Canadian companies and many other different public and private players have made it their mission to develop a range of new products and services that they say will one day have us filling our cars with hydrogen and heating our homes and offices with fuel cell technology.
It is time to buy in, on the ground floor? Well, despite concerns about global warming, depletion of the ozone, disappearing non-renewable resources and the threat of war disrupting oil supplies, analysts and experts alike caution that, from an investing point of view, alternative energy is not likely to provide quick-and-dirty profit. Some firms may succeed, many will fail and all will have to wait 10, 15, or even 20 years before their products, if they succeed, enjoy a mass-market.
"It's very hard for something new to come in and compete with something that has already had 100 years of development and has been streamlined so well," said professor Ron Venter, head of hydrogen and electrochemical studies at the University of Toronto and vice-president of the Canadian Hydrogen Association.
Even if there were a cheap, effective way to produce hydrogen and an engine that ran efficiently on it, there is currently no infrastructure to distribute it to those who would use it — a hydrogen station on every corner, if you will.
And the host of companies in Canada and around the world willing to give it a shot aren't, at this stage, mainly in it for the money. Among their principals and backers are many who want to see the world become less dependent on dirty, environment-destroying and war-sparking fossil fuel.
Oil and gas companies such as Shell and Petro Canada have large and growing areas that focus on alternative energy research.
Energy companies such as Hydro Quebec and Enbridge have divisions devoted to alternative fuels research. Automakers including General Motors and Honda also have divisions devoted to developing and producing zero-emission cars and trucks. Ballard Power and Stuart Energy — two of the biggest firms currently involved in hydrogen and fuel cell development — have investments and spin offs working on all kinds of alternative fuels projects. And universities across Canada have funding in place devoted to alternative energy research.
"Our long-term vision is to have cars running on hydrogen with the hydrogen derived from renewable energy resources, but that's not going to happen tomorrow," said Nick Beck, chief of transportation and technology with Natural Resources Canada.
Figuring out who is working on what for what purpose is not an easy task. Producing a complete list of all the public and private companies, institutes, research labs and think-tanks related to alternative energy research is equally trying. Who will prove to be the Microsoft of alternative energy is anyone's guess.
Here is an A to V sampling of Canadian companies trying to get into the nascent hydrogen economy. Most operate in one of three emerging sectors — fuel cell technology itself, distribution and delivery, and storage systems.
Angstrom Power, http://www.angstrompower.com, is working on what it calls micro-structured fuel cells that can run portable devices that normally rely on batteries.
According to the company, its fuel cell will be small, powerful, and mobile. The company just secured $2.85 million (U.S.) in a first round of financing. It is privately held. v Azure Dynamics, http://www.azuredynamics.com, has a patented technology that makes hybrid vehicles that use an engine or fuel cell, an electric motor and a battery in any particular combination to run more efficiently.
Their niche is that they work on the technology, software and mechanics that make a car smarter about which resource it is going to use, depending on whether the driver wants to speed up, slow down or just idle.
Azure Dynamics trades on the TSX Venture Exchange under the symbol AZD.
Ballard Power Systems, http://www.ballard.com, is among the global ringleaders in developing and manufacturing zero-emission fuel cells. v Ballard is working with the likes of DaimlerChrysler, Ford, Honda, Nissan and Volkswagen to provide fuel cell engines for transportation applications and fuel cell systems for portable and stationary products.
Ballard is also commercializing electric drives for fuel cell and battery-powered electric vehicles, power conversion products for fuel cells and is a major supplier of friction materials for power train components.
The company trades on the Toronto Stock Exchange under the symbol BLD and on the Nasdaq exchange under the symbol BLDP.
Cellex Power Products, http://www.cellexpower.com, based in Vancouver, is focused on powering industrial vehicles with fuel cell technology.
Its strategy is to develop both the technology and a proprietary system to combine fuel cell stacks, fuel processors, hydrogen systems and other fuel-cell components into commercial products.
Cellex is a privately held company backed by other fuel cell industry investors.
Dynetek Industries, http://www.dynetek.com, makes aluminum-lined pressurized tanks that store hydrogen or natural gas for buses, cars, taxis and other vehicles.
Their tanks vary in size, ranging from grain-silo size for industrial use to barbecue size — something that would fit into trunk of a car. v The company announced last month that its storage system was selected by John Deere for a fuel-cell-powered tractor prototype it is working on. Dynetek is listed on the TSE under the symbol DNK.
Fuel Cell Technologies. (http://www.fct.ca) FCT is developing a fuel-cell generated product that provides electricity for residential, small commercial and remote facility applications.
Their technology will provide electricity for the home, cottage, or business, and supply hot water and heat. It works by converting hydrocarbon fuels directly into electrical energy and heat without any kind of combustion process.
FCT raised $4.6 million in private placement money at the end of last year. It is privately held.
General Hydrogen, http://www.generalhydrogen.com, is working with General Motors developing the HydroGen3 fuel cell propulsion system for the automaker's next generation of cars. General Hydrogen is a privately held company.
GlobalTech., http://www.globaltech.ca, is a Toronto-based research and development company developing a hydrogen and oxygen system for retrofit to regular internal-combustion engines.
It says its Hydrogen Power System, or HPS, decreases emissions in regular engines while increasing torque, horsepower and mileage. GlobalTech is privately held.
Global Thermoelectric, http://www.globalte.com, based in Calgary, is the world's largest manufacturer and distributor of thermoelectric power generators that people can use in remote locations.
It is developing fuel cell products compatible with natural gas or propane and is testing systems for residential and remote applications. Global Thermoelectric trades on the Toronto Stock Exchange under the symbol GLE.
Greenlight Power Technologies, http://www.greenlightpower .com, makes test stations for fuel cell stacks, components, fuel reformers, electrolyzers and fuel cell systems.
Its technology is used to test stationary, portable and automotive fuel cell applications. Greenlight has supplied more than 300 pieces of fuel cell test equipment to fuel cell stack manufacturers, component manufacturers, system integrators and research organizations around the world. The company is privately held.
HERA Hydrogen Storage Systems, http://www.herahydrogen.com, based in Montreal, makes tanks, storage materials and testing equipment for hydrogen fuel — tools an increasing number of manufacturers demand as hydrogen and fuel cell usage ramps up.
HERA is a private company owned by Shell Hydrogen, Gesellschaft für Elektrometallurgie (GfE) and Hydro-Quebec CapiTech — the alternative energy investing arm of the utility. HERA last year received $400,000 in research funding from the Quebec and federal governments.
Hydrogenics, http://www.hydrogenics.com, makes fuel cell systems and testers for the commercial and industrial markets.
Hydrogenics designs and builds what are called integrated proton exchange membranes, or PEMs. The PEMs are used for industrial clients that need to pack a lot of power. Hydrogenics trades on the Toronto Stock Exchange under the symbol HYG, and on Nasdaq under the symbol HYGS.
Kinectrics, http://www.kinectrics.com, designs and assembles commercial and residential fuel cells. It has facilities for the testing of single cells and cell bundles under pressurized conditions and it operates the world's largest pre-commercial solid oxide fuel cell heat and power fuel cell demonstration.
Ontario Power Generation, the Government of Canada, Siemens Westinghouse Power Corporation and the U.S. Department of Energy are co-operatively funding the $18 million project.
Kinectrics is formerly a division of Ontario Hydro. It is privately held.
M4 Technologies, on the Web at http://www.m4.ca, is Montreal-based and designs, develops and supplies electric drive, power generation and power electronics systems.
Because non-gas-powered cars, trucks and buses don't necessarily need things like transmissions, differentials and drive shafts, M4 makes the computerized equipment that ensures all the parts move and respond correctly and safely. M4 is privately held.
Palcan Fuel Cells, http://www.palcan.com, is one of the world's leading developers and manufacturers of what it hopes will one day be a mainstay among consumers — small, portable fuel cell power systems that will replace batteries and small internal combustion engines in everything from electric scooters and bicycles to go-karts.
Palcan trades on the TSX Venture Exchange under the symbol PC. The company has also received funding from grants and through private placement.
QuestAir, http://www.questairinc.com, industrial and commercial systems that condense and purify hydrogen.
Its systems are used by the industrial gas and chemical processing industries to keep methane and other gases that seep out of landfills from entering the atmosphere.
It is also working on developing small, portable units that would do the same thing at hydrogen refuelling stations. QuestAir has received funding from several investors including Shell Hydrogen and Ballard Power.
It has also tapped some venture capital and counts Merrill Lynch and the Ontario Teachers Pension Board among its investors. It is privately held.
SMC Pneumatics, http://www.smcpneumatics.ca, is a global company that works on both aiding and participating in the development of fuel cell research and applications. The company's products and research focus on improving fuel cell systems, fuel cell manufacturing automation systems and related testing equipment. SMC is a privately held company with Canadian offices in Mississauga.
Stuart Energy Systems, http://www.stuartenergy.com, is another global leader in the development of hydrogen supply systems.
Its systems incorporate water electrolysis technology designed to provide power for transportation and regenerative electric power engines. Stuart makes a product called the Community Fueler, a fuelling unit ideally that sits on a corner lot or at a main site, the Bus Fueler, which can top up an entire hydrogen bus fleet, and the Personal Fuel Appliance, a prototype being developed for use at the family home to fill up the car or generator with hydrogen.
The company's shares trade on the TSX under the symbol HHO.
Teleflex (Canada) Ltd., http://www.teleflexcanada.com, is a Richmond, B.C.-based company that designs and manufactures hydraulic and thermal technology products for the fuel cell industry. It is privately held.
Turbo Genset, http://www.turbogenset.com, makes high-speed motor generators that can be coupled to machinery such as compressors and gas turbines that incorporate fuel cells. Shares of Turbo Genset are listed on he Toronto Stock Exchange and the London Stock Exchange under symbol TGN.
Vandenborre Hydrogen Systems, http://www.hydrogensystems.com, based in Montreal, makes a product that produces hydrogen on-site, on-demand through water electrolysis, and delivers it without the use of any kind of special compressor or pump. Stuart Energy last year bought Vandenborre for approximately $28 million in cash and stock.
Ventures West Management, http://www.ventureswest.com, Ventures West is a privately held venture capital group that invests in early-stage technology companies across Canada. Since its founding in 1968, Ventures West has invested more than $400 million in more than 150 companies involved in alternative energy endeavours. It funds start-up alternative energy companies.
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