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Fuel Cell Economics Market and cost analysis of fuel cell technology. Commercialisation of fuel cells, like any other product, entails both financial and technical risks. Most of the fuel cell literature has focussed upon technical risks, however, the most significant risks during commercialisation may well be associated with the financial funding requirements of this process. Successful commercialisation requires an integrated management of these risks Like any developing technology, fuel cells face commercialisation: hindrances to enter the market, the production costs must come down, however, to lower these costs, the cumulative production must be greatly increased (i.e., significant market penetration must occur). Unless explicit steps are taken to address this dilemma, fuel cell commercialisation will remain slow and require large subsidies for market entry. To successfully address this commercialisation dilemma, it is necessary to follow a market-driven commercialisation strategy that identifies high-value entry markets while minimizing the financial and technical risks of market entry. The financial and technical risks of fuel cell commercialisation are minimized, both for vendors and end-users, with the initial market entry of small-scale systems into high-value stationary applications. Small-scale systems, in the order of 1-40 kW, benefit from economies of production -- as opposed to economies to scale -- to attain rapid cost reductions from production learning and continuous technological innovation. These capital costs reductions will accelerate their commercialisation through market-pull as the fuel cell systems become progressively more viable, starting with various high-value stationary and, eventually, for high-volume mobile applications.
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Index of technical reviews |
Compatibility with the fuels infrastructure is facilitated by a separation of functions between stack conversion and fuel processing, i.e., external reforming using low-cost, on-catalytic under- oxidized burners. Even for fuel cell technologies capable of internal reforming, the separation of functions offers the advantage of separate optimisation of the fuel cell stack and fuel processor, leading to fuel flexibility and lower systems costs.
The combination of small size fuel cells, high market values, low development and demonstration costs, low market entry costs, and availability of off-the-shelf balance of system components, provides a low financial and technical risk scenario for fuel cell commercialisation.
Two significant factors that provide major impetus to the early commercialisation of small-scale distributed fuel cells:
First, the utility industry worldwide does increasing market pressures for lower energy bring about undergoing a major restructuring because of pending deregulation and privatisation services costs through competition. In addition, the electric power quality and reliability requirements are becoming more stringent due to the increased deployment of electronics in the home and workplace.
As a result, the utility industry is in the process of changing from highly centralized government franchise monopolies to decentralized private organizational structures with a major shift in emphasis from large-scale central power plants to small-scale distributed, customer-oriented markets in terms of strategic planning.
Secondly, the costs associated with new generation and transmission and distribution (T&D) since the early 1970's are rapidly escalating, both in real and actual (nominal) currency units. Due to a variety of reasons, including costs of access and environmental considerations, the transmission and distribution costs for new developments are nearly equal to the generation costs.
These changes in organizational structure and strategic planning, coupled with the rising generation and T&D costs, as well as potential EMF problems (real or imagined), provide an ideal opportunity for the emergence of small-distributed systems.
Small-scale fuel cells are ideally suited for such distributed applications.
References
- Commercializing fuel cells : Managing risks- Peter B.Bos - Journal of Power sources
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