Dean Frankel, an associate at Lux Research in New York City, says, “The fuel-cell makers have to drop costs by about a third to make economic sense without subsidies, and to do that they’re going to have to scale production dramatically.” That harsh reality can be daunting, even for a Fortune 500 company. The cells can, at best, generate electricity for about 15¢ a kilowatt-hour, compared with a national average of about 10¢ for power from the grid. Even today fuel cells don’t make economic sense without hefty federal and local clean-energy subsidies. The big impediment to growth has always been the cost. When fuel cells are used to power a car, only water vapor leaves the tailpipe. And even when you add in the production of input fuel, the greenhouse-gas footprint of fuel-cell energy is far lower than coal and marginally better than natural gas. Fuel cells themselves generate near-zero emissions. How does it work? An electrochemical process converts hydrogen - derived from natural gas or biogas - into electricity and heat as particles move between a positively charged anode plate and a negatively charged cathode plate. First invented in 1838, fuel cells were used by NASA to power the Apollo spacecraft. The technology itself has a long history. Sales should grow to $3 billion by 2030, with revenues pretty evenly split between stationary fuel cells and automotive ones. In 2013 the fuel-cell market had $350 million in revenue, according to Lux Research. But the future of the business suddenly looks promising. As investments, they’re highly speculative. It has a market capitalization of $500 million despite the fact that it hasn’t posted a profit since 1997 and lost $34 million in fiscal 2013. FuelCell Energy, headquartered in Danbury, Conn., makes large-scale, stationary fuel cells for factories and utilities. Publicly traded since 1999, it has raised money through stock offerings five times since the start of 2013, most recently via a nearly $125 million sale in late April. Plug Power, based in Latham, N.Y., just north of Albany, was recently trading at 27 times revenue, with a market value of $1 billion. The bad is that none of the companies are profitable - yet. After Plug Power announced in February that over the next two years Wal-Mart would purchase roughly 1,700 of its fuel cells to power forklifts, its stock surged. And companies such as Wal-Mart (WMT), Procter & Gamble (PG), and Mercedes are starting to use fuel-cell-powered electric forklifts in their warehouses. (Exhibit A: the blackouts caused by Hurricane Sandy.) Major carmakers such as Toyota (TM) and Hyundai have said they plan to launch hydrogen fuel-cell cars over the next year or so. Hospitals, supermarkets, factories, and utilities are installing fuel cells onsite to replace or supplement grid power and provide a reliable stream of electricity that’s less susceptible to extreme events. 27 five-year closing high of $4.00.What has attracted Wall Street’s attention all of a sudden? Increasing evidence that this niche energy market will soon be growing fast. 18 six-week closing low of $2.90, and sits 4.5% below the Nov. The stock has now rallied 32% since the Dec. Plug’s stock shot up 18.3% to $3.82 on volume of over 39.4 million shares, compared with the full-day average of about 11 million shares. “We commend this customer for its leadership in hydrogen and fuel cell adoption throughout the logistics business.” This sizable contract signifies continual market validation to customer’s rapidly moving material handling business thus far,” said Chief Executive Andy Marsh. “The material handling industry remains our core growth market in the near-term. The contract is for the company’s GenDrive fuel cell power, GenFuel hydrogen fuel, storage and dispensing products, and for its GenCare aftermarket services. Said before Monday’s open that it received an order “at the close of 2019” for its hydrogen fuel cell deployments across a Fortune 100 customer’s distribution network over the next two years.
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