Ballard opening market for fuel cell

The company is just two years away from meeting all technical requirements to see its fuel-cell system in widespread household use KAMAKURA, Japan - Every time they flip a light switch or turn on the television, Setsuko and Yasushi Isayama join the few hundred Japanese homeowners who are using made-in-Vancouver technology to beat Japan's high cost of electricity.
The Isayamas, who live in this small community an hour's drive south of Tokyo, get the power to run their home not from the electric grid, but from a fuel cell designed by Burnaby's Ballard Power Systems. It does everything from running their fridge and stove to heating the water that comes out of their faucets.
For homeowners in Japan, where the fuel-cell-powered systems have been running for the past year or so, they offer a way to easily monitor their electricity use as well as potential cost savings of $600 to $800 a year.
For Ballard, which has been in the news in recent years more for its plunging share price than for profits, getting its fuel cell into a product on the fast track to commercialization is welcome news to pass on to disgruntled shareholders still waiting to see a fuel-cell-powered car in every driveway.
"We see this as one the first real markets for fuel cells in volume," says Noordin Nanji, the company's vice-president and chief customer officer.
If everything stays on track, Ballard's home cogeneration system -- so named because it provides both electricity and hot water -- is just two years away from meeting all technical requirements for widespread household use. Compare that to its long-promised automotive fuel cell, which Nanji admits is "probably nine to 10 years away from true commercialization."
Part of the reason for that long timeline, he says, is because the delivery mechanism (the car, truck or bus) is complex, performance demands are high and fuel delivery is an issue -- your corner gas station doesn't yet haave pumps dispensing hydrogen to power the car's fuel cell. A home cogeneration system, by contrast, is relatively simple and most households already have a built-in fuel source, such as natural gas, to power it.
All homeowners like the Isayamas need is a relatively compact two-part system, which sits neatly outside the house. One part, less than a metre tall, houses the Ballard fuel cell that converts natural gas (supplied by the line that also provides gas for heating the house) into electricity. The second unit, about twice that size, is the tank that holds the water heated by the conversion process.
The cogeneration system -- created by Ballard and Japanese partner Ebara Corp. -- runs eight to nine hours a day and provides about one kilowatt of electricity at any given time, providing most of what the Isayamas need to run their home. Any power they need beyond that is supplied seamlessly from the electric grid, to which they remain connected.
From inside the house, the only notable piece of the system is the electronic monitor on the kitchen wall, about the size of a digital thermostat, that shows how much electricity the household is currently drawing from the cogeneration unit and how much (if any) is coming from the grid. As well, it shows the temperature and level of water in the hot water tank. This monitor alone has changed the way the Isayamas consume electricity. It has made the couple and their two children -- daughter Hiroko, 16, and son Shuhei, 12 -- conscious of exactly how much power is consumed by every device in their house, from the television to the vacuum cleaner.
The family will go out of its way to stay within the power-supply limits of the cogeneration system. Setsuko, a homemaker, will check the monitor before turning on the stove or plugging in the iron to avoid pulling costly electricity from the grid. A "cheat sheet" taped to one side of the monitor tells her exactly how much power various appliances use.
And there's even a more delicate balancing act in their daily routine. When the water tank is full, the cogeneration system shuts down because aside from heating the water, it has no other way of expending the heat it generates. So the Isayamas have changed their daily routine in order to reduce the water level in the tank and keep the system running -- for example, Setsuko now does laundry in the morning when the tank is full, rather than in the evening.
Setsuko and Yasushi, a manager at Ebara Ballard, have no problem making such compromises and for the most part, their children are on board. At school, they have been bombarded with information about the need for the country to reduce energy consumption and pollution-causing emissions, so they are pretty savvy power consumers.
"Their one comment was that it would be nice if it could put out even more power than the house could use that it could be sold back into the grid," says John Harris, Ballard's managing director for Japan and Asia Pacific, who translated for the Isayamas on a recent visit to their home.
And that's not a purely utopian concept. "That's quite honestly a political issue rather than a technical one -- we could do that today," Harris says.
Japan's many private electric companies see cogeneration as a challenge to their turf, he says, so they are understandably reluctant to allow gas-powered cogeneration systems to contribute power to the grid. But, Harris says, "as this market becomes more and more commercial, I think that in fact will take place."
The Isayamas don't watch a lot of television and spend a lot of time on activities that don't consume electricity, such as playing the piano or the board game Go. But kids will be kids, so Hiroko and Shuhei aren't quite so enthusiastic about energy conservation when it hits them where it hurts. On summer evenings when Setsuko decides it's cool enough outside to turn off the air conditioning, she sometimes hears complaints from the generation that doesn't pay the electric bill.
In the 10 months the family has had the Ebara Ballard system, that bill has dropped by 13 to 50 per cent a month, compared to their electricity costs for the same month the previous year. But part of that savings comes from the fact that as participants in the monitoring phase of the cogeneration project, their natural gas costs are partly subsidized.
And they wouldn't have a cogeneration system at all without a huge subsidy from the Japanese government -- it kicked $54,000 US per unit last year and $41,000 this year. But Nanji points out that the subsidy is set to drop sharply over the next few years.
"The ultimate target is, by 2012 or so, to get to the point where no subsidy is required and the cost of the unit is $4,000 to $5,000," he says. "So if you think about a $600-to-$800 saving [in electricity costs] for a year, it's roughly a five-year payback."
The challenge for Ebara Ballard over that period, says Harris, is to reduce the cost of the cogeneration system and ensure that it has a life span of 40,000 hours, or about 10 years in normal household use.
The company also has to make sure its product can hold its own against the other players in the cogeneration field, all major Japanese manufacturers: Matsushita (which makes the Panasonic brand), Sanyo, Toshiba and Toyota, which is just getting into the field.
The "market entry" phase of its cogeneration program began in 2005 and by the end of this year, Ebara Ballard expects to have its system in 270 Japanese homes. That's about a quarter of all the cogeneration units that will be operational this year, but even the industry-wide total is a drop in the bucket for the Japanese government's ambitious target of seeing 1.2 million fuel-cell systems in homes across the country by 2010.
Outside Japan, Nanji sees Germany and Korea as potential target markets because of the same combination of high electricity prices, lower prices for fossil fuels and an interest in fuel-cell technology. Certain U.S. states with high electricity prices, such as California and New York, may also be prospects, he adds.
But right now, Ballard is focusing all its efforts in the cogeneration field on the Japanese market because of the critical government support it's receiving and the potential it sees there for cogeneration, he says.
"We really think it's critical that we get it right in Japan and we have a tremendous opportunity to do so there," Nanji says. "So we don't want to get deflected from that."