The little engine (company) that could


The idea of an environmentally friendly power source that can easily switch between hydrogen, ethanol, ammonia and other bio-renewable fuels may sound like an advancement that’s far in the future. But such engines are now being shipped regularly from Hydrogen Engine Center Inc.’s plant in Algona. Buyers of the alternative-fuel engine have included a German city that is testing it in one of its buses. The Canadian government has ordered a generator set that includes the engines for use in a wind energy project. Other potential customers include airports that are looking for cleaner-burning engines for their baggage transport vehicles. In the agricultural market, HEC is targeting hog producers that need back-up generators as well as farmers seeking an alternative power source for irrigation equipment. Hydrogen Engine Center, which held its first shareholders meeting on May 19, has seen its stock price rev up along with its production capacity, which it hopes will reach 1,000 engines per month by the end of this year. About 100 people traveled to Algona from throughout the country for the meeting, an indication of the “very strong” interest in the company, said Ted Hollinger, founder of Hydrogen Engine Center. Its stock price has been another indicator. Last week, the stock, which is traded on the Over the Counter Bulletin Board under the symbol HYEG, was fetching about $15 per share, about double the $7 range it had been at for the past several months. To finance a planned expansion of its 60,000-square-foot factory and increased production, the company last week announced its intent to offer up to 1.5 million shares of unregistered common stock to accredited investors and qualified institutional buyers. HEC also plans to issue $35.5 million in five-year convertible notes. Hydrogen Engine Center claims to be the first and only manufacturer of hydrogen-fueled internal combustion engines in the industrial engine market. Rather than using hydrogen fuel cells, which have yet to become commercially viable, its engines can burn compressed hydrogen gas. “We see a lot of competition from fuel-cell (companies),” Hollinger said. “I don’t see them coming on real fast. I do think we’ll see more internal combustion people come into the game. I think the more successful we are, the more interest there will be.” Other than engines for use in local-run buses, HEC is not going after the on-road market, Hollinger said, in part because it knows it can’t compete head-to-head financially with corporate giants such as General Motors Corp. or Ford Motor Co. Additionally, its engines are better suited to short-range vehicles or to fleets that can refuel from a central point, such as at an airport, because the compressed gas is bulky to carry. The company started out by remanufacturing an industrial engine that Ford stopped making in 1993 – a 4.9-liter inline six-cylinder engine. Now, the engines, sold under the trademarked name Oxx Power, are built new from the ground up in the Algona factory. “We started replacing parts until there are now no Ford parts,” Hollinger said. “We have upgraded the engine with a number of small improvements. From the outside, it appears to be the same engine.” In March, the company introduced a three-cylinder version of the engine, which it plans to begin producing late this year, and a 7.5-liter V-8 in early 2007. HEC sells the engines through essentially the same network of distributors that had serviced the Ford engine customers. “When we went out to (those companies) to find out if they wanted to become a distributor, they were very enthusiastic,” said Joe Lewis, HEC’s vice president of engine sales. “We’re the only ones getting into (the industrial engine market), while everyone else is leaving. So it puts us in a very unique position.”Currently, only about 10 percent of the company’s customers are buying the engines with plans to fuel them with hydrogen, Hollinger said. He expects that percentage will increase over time, however. The greatest interest in the hydrogen internal combustion engines right now is coming from countries that have signed on to the Kyoto Protocol to the United Nations Framework Convention on Climate Change. To date, 163 countries have signed on to that agreement to reduce greenhouse gas emissions from the burning of fossil fuels. “For instance, I was in India last year, and their interest is combining natural gas and hydrogen to reduce emissions,” Hollinger said. “I think everybody is looking for a solution. I think we’re going to see a lot of applications, moving from gas to alternative fuels.” China will be HEC’s next market, he said. “We’re just ahead of everybody getting into this market, and we’re going to take advantage of it.” The engine has also been chosen for environmental test projects both overseas and in the United States. Earlier this month, Natural Resources Canada, an agency promoting the sustainable development of that country’s mineral, energy and forestry resources, ordered a 250-kilowatt generator set from the company to incorporate into a wind-hydrogen project. In that project, to be located on an island off the coast of Newfoundland, electric power will be generated from wind energy, with hydrogen filling in to produce power when the wind is not blowing. The project is meant to demonstrate the ability to smooth out peaks and valleys of wind energy production without using fossil fuels. In North Dakota, the Energy & Environmental Research Center at the University of North Dakota was recently contracted to build a hydrogen electric plant in Minot for Basin Electric Power Cooperative, a regional energy company. That alternative energy project is focused on demonstrating the feasibility of using wind to power an electrolyzer that extracts hydrogen from water.“We’re having discussions with HEC about using their generators to consume hydrogen,” said Brad Stevens, research manager for the EERC. “We’re in a position where we don’t want to be storing hydrogen. The HEC generator set that runs on hydrogen fits pretty well into that.” The electricity produced by the 60-kilowatt generator will be sold back to the power grid. “What HEC gets out of this project is they need to put some hours on these machines,” Stevens said. “We have a readily available hydrogen supply; they can do some proof-of-concept testing.” The project is expected to begin by later summer, with the generator in place by the end of the year, he said.
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