A profitable fuel-cell company finally emerges amid industrywide losses

For now, SFC’s success is more exception than rule, but fuel-cell firms are betting that a green hydrogen revolution will soon reverse the entire industry’s fortunes.
By Eric Wesoff

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Several pieces of equipment are set up on a ledge in a snowy mountain range
Landslide monitoring equipment powered by an SFC fuel cell (SFC)

Since the invention of the fuel cell in 1839, no company has been able to earn a profit from this energy-generating technology.

Until the historic moment in which we now find ourselves.

Germany’s SFC Energy, a maker of methanol-powered fuel cells for portable and remote applications, reported in March that it had generated $1.8 million in profit on $78 million in sales in 2022.

But for now, SFC remains the exception to the rule rather than a harbinger of profitable fuel-cell firms to come.

Publicly traded fuel-cell companies have a long history of losing increasingly large sums of shareholder money. Ballard Power is in its fourth decade as a profitless company. Plug Power lost $724 million on $701 million in sales last year. Bloom Energy’s revenue is growing, but so are its losses.

Though fuel cells can use a number of input fuels, much of the buzz around the technology comes from its usefulness in harnessing hydrogen, which could in theory help decarbonize everything from transportation to home heating.

The recent hydrogen funding wave and the enormous potential of the hydrogen economy have bolstered the stock price of public fuel-cell companies. But those factors have not had the same effect on companies’ profits.

Take a look at the financial results of these firms over the last few years. Other than SFC, it’s the same grim story: heavy losses and no path to profitability. 

Table showing the revenue and profit/loss of fuel cell companies

A brief rundown of fuel-cell technology

Fuel cells electrochemically convert hydrogen and oxygen into electricity without combustion.

To do this, the technology employs an assortment of electrolytes, catalysts, membranes and temperatures. But in almost all cases, the membranes are expensive to fabricate, and the technologies require costly precious-metal catalysts (typically platinum or palladium) or high process temperatures. Input fuels range from fossil gas to methanol to hydrogen.

Ongoing research and development efforts, some led by the U.S. Department of Energy, are underway to reduce the need for expensive metals and to improve the reliability and lifetime of the fuel-cell stack.

Common fuel-cell technologies include proton-exchange membrane, solid oxide, phosphoric acid and molten carbonate. There are a number of other technologies, all more adept at destroying investor capital than they are at producing power. ClearEdge, GE, GM, Hyundai, Honda, Johnson Matthey, Panasonic, Siemens, Samsung, LG, Sharp, Toshiba and Toyota have all invested in (and in many cases ultimately abandoned) fuel-cell technology.

Pure-play fuel-cell companies such as Bloom Energy and FuelCell Energy build large stationary fuel cells using solid oxide and molten carbonate technologies, respectively. Plug Power, on the other hand, targets its proton-exchange membrane fuel-cell system at powering forklifts and other vehicles in the enormous materials-handling market.

While Bloom’s and FuelCell Energy’s equipment runs on fossil gas, Plug Power’s proton-exchange membrane fuel cells run on pure hydrogen and work most effectively with a hydrogen infrastructure at the customer site.

SFC Energy, the impetus for this article, is profitable, but it focuses on smaller-scale power for outdoor enthusiasts and ruggedized equipment at remote sites. It’s a premium-priced niche market and a reasonable use case for fuel cells, but it’s not a path for decarbonization and the epochal energy transition targeted by the unprofitable fuel-cell firms.

Green hydrogen gold rush

Spurred on by European Union mandates and tens of billions of dollars of production tax credits in the U.S. Inflation Reduction Act, global corporations and startups alike are expanding into relatively green hydrogen production. While fuel-cell companies have plenty of other problems to solve before they’re economically viable, access to clean(er), cheaper input fuel would be a boon to their efforts.

Gigawatts’ worth of electrolyzer production capacity has been announced by global corporations including Cummins, ITM Power, McPhy, NEL, Plug Power, Siemens Energy and thyssenkrupp, as well as startups such as Electric Hydrogen, Ohmium and Verdagy.

Andy Marsh, the CEO of Plug Power, spoke at an analyst day presentation this week, saying that the company is at an inflection point.” Plug’s revenue is growing, despite its losses, as it aggressively expands from its core fuel-cell and materials-handling business into the burgeoning ecosystem of green hydrogen production, delivery and transport across energy storage, EV charging and industrial verticals.

Matthew Klippenstein, executive director of Hydrogen BC and regional director at the Canadian Hydrogen and Fuel Cell Association, told Canary Media that he believes that fuel cells are now scaling up exactly as solar and wind did in previous decades and that electrolyzers, which produce hydrogen from water, are scaling up even faster, thanks to the imminent construction of green-hydrogen hubs.

Klippenstein added: I would imagine that electrolyzers will continue to significantly outpace the early growth of wind and solar and fuel cells. And I expect fuel cells to continue to be in the range of the growth curves of early wind and solar.”

A chart comparing the growth in production of wind, solar, fuel cells and electrolyzers

He views fuel cells and electrolyzers as somewhat self-reinforcing: As electrolyzers begin to produce higher volumes of cheaper, ideally green, hydrogen, fuel cells will have access to cleaner and more cost-competitive fuel sources.

The Department of Energy continues to fund hydrogen and fuel cell research and development, with about $400 million allocated to these activities in its 2022 budget request. The DOE’s goal is to drive the cost of hydrogen down to $1 per kilogram within a decade, making it cost-competitive with its fossil-fuel-derived hydrogen competition. The current cost of producing 1 kilogram of green hydrogen is between $3 and $6.

Klippenstein said, Once you have a network of hydrogen hubs with low prices at strategic points, you’ll start to see new businesses breaking loose.” He likened the hydrogen economy to cicadas that stay underground for 17 years and then suddenly they’re everywhere.”

Thanks to Michael Liebrich for pointing out SFC Energy’s profit event.

Eric Wesoff is the editorial director at Canary Media.