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Will Hydrogen Fuel Ever Make Its Way to Your Home?

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For more than a decade, the thought of a clean hydrogen-based economy has been the dream of engineers and environmentalists. In theory, hydrogen seems like a logical clean-energy source that can be used to power everything from lawnmowers to power plants.

But hydrogen hasn't taken off on a large scale, and outside of big visions from Honda (NYSE: HMC  ) and a few other automakers the hydrogen market is pretty small today. Here's a look at where we stand now and where hydrogen fuel may go in the future.

What we use hydrogen for now
The use of hydrogen to power vehicles or other electrical devices is currently pretty limited.

Honda FCEV Concept fuel stack. Image courtesy of Honda.

Honda makes a hydrogen concept car, and over the next few years Toyota and Hyundai are expecting to join that market. Even when they're released it's expected that they'll only be available in California, where there's some hydrogen infrastructure. Autos are a high-potential market, but hydrogen isn't even as developed as electrical vehicles, so there's a long way to go.  

FuelCell Energy (NASDAQ: FCEL  ) and Ballard Power Systems (NASDAQ: BLDP  ) both make the fuel cells that turn hydrogen into electric energy. FuelCell Energy makes primarily natural gas fuel cells and is targeting larger energy-backup services and large scale fuel cells. Ballard is more aggressive in the direct hydrogen-fuel space, providing everything from backup power to bus power systems to material handling fuel cells. 

Plug Power  (NASDAQ: PLUG  ) is using hydrogen fuel cells to power primarily indoor-material-handling equipment like forklifts. The advantage over batteries is that there's no need to constantly remove fuel cells for a recharge; you just refuel like a car. The output from the equipment is just power and water.  

The vision is to expand into other equipment like transportation-refrigeration units, ground-support equipment (think airport-baggage vehicles), and range extenders for electric vehicles. FedEx recently gave some credence to the EV concept, ordering 20 fuel-cell range extenders for delivery trucks. Transportation is where a big opportunity is for fuel cells, but making hydrogen affordable and readily available for the industry is a challenge.

You can see that the companies making hydrogen-fuel cells are currently focused on relatively narrow markets. Even success in forklifts and backup power aren't exactly a guarantee that larger-scale applications will work for fuel cells.

Most hydrogen comes from natural gas
One problem with the argument for broader hydrogen use is that it's not as clean as people think. Most of the hydrogen produced today comes from natural gas, with some CO2 given off as a result. Sure, the hydrogen vehicle you drive may be 100% emissions free, but the fuel you're burning still comes from fossil fuels.  

In the future, the goal would be to turn clean energy power sources like solar and wind into hydrogen by using electrolysis or another chemical method, although that's proven difficult. If made economically viable, this would help these intermittent energy sources store energy and allow for it to be transported around the country. But we're years, if not decades, from that happening.

The bottom line is that hydrogen isn't as clean as the industry wants you to think.

You still need a battery to go hydrogen
The other challenge for expanded use of hydrogen is that it isn't as easily converted into energy as gasoline or electricity in a battery. It's a chemical process that usually requires a battery to store energy for on-demand use. 

Honda's fuel-cell drivetrain includes a battery, so what's the advantage over an electric vehicle? Hydrogen is really just adding more components to the process, and when you consider hydrogen is a dirtier source of energy than electricity, in many cases it hinders the value proposition. 

What hydrogen needs to go big time
Despite the challenges facing hydrogen, this is definitely the highest potential of all alternative energy fuel sources. If technology advances far enough to allow truly renewable energy to be stored and transported with hydrogen, then the fuel cell that's available today for forklifts may be viable in your typical passenger car.

One high-potential stock for your portfolio
Investing in fuel cells is still high risk and if you're looking to balance your portfolio with some safer stocks, The Motley Fool's chief investment officer has selected his No. 1 stock for 2014. You can find out which stock it is in the special free report: "The Motley Fool's Top Stock for 2014." Just click here to access the report and find out the name of this under-the-radar company.

Read/Post Comments (3) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 21, 2014, at 7:20 AM, ICanFool wrote:

    Whereever there is an industry that needs Hydrogen, AirLiquide, Air Products, Lynde etc are there to provide Hydrogen, Nitrogen and other gases. Wherever There is a PLUG Power customer like BMW, Mercedes Kroger and Walmart warehouse, Ther will be a hyrdrogen Infrastucture and they will start selling Hydrogen to the public as well, Your information is totally False. (Even when they're released it's expected that they'll only be available in California, where there's some hydrogen infrastructure... False statement think about it )

  • Report this Comment On January 21, 2014, at 11:19 AM, GuyNonplussed wrote:

    @IcanFool I think you misunderstood the author's point about hydrogen infrastructure. He is referring to public infrastructure that could be used to fuel an automobile. According to the US Department of Energy there are 10 public hydrogen filling stations in the US -- 9 of them are in California.

  • Report this Comment On January 21, 2014, at 3:49 PM, limbo wrote:

    Look at HYGS and their energy storage technology. They are succesfully generating hydrogen using the excess electricity from wind and solar farms, not natural gas. This hydrogen is then stored in existing gas pipelines (up to 15% of the pipe´s capacity).They have contracts with Germany´s E.ON ("This past June the largest Power to Gas facility in the world went live with the first direct injection of hydrogen in this gas pipeline using Hydrogenics technology. This 2 megawatt Energy Storage installation run by E.ON in Falkenhagen use the surplus renewable energy to produce hydrogen for storage in the countries natural gas pipeline network."). More of these energy storage related electrolyzers will start functioning in Bolzano, Italy early in 2014 as well.

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Travis Hoium

Travis Hoium has been writing for since July 2010 and covers the solar industry, renewable energy, and gaming stocks among other things.

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