Small tech companies locked in high-stakes struggle for power

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May 21, 2003 — Feature-rich portable devices are getting hungry for more and more power. So, the race is on to meet the demands of energy-sapping digital multimedia through portable, powerful micro fuel cells (MFCs) that outlast rechargeable batteries. The companies that succeed have a billion-dollar market waiting for them.

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The problem is, there are so many business and technology barriers in their way, MFCs will probably remain niche products for the next several years.

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According to David Redstone, editor of Hydrogen and Fuel Cell Investor, no firm has demonstrated a commercial prototype with sufficient power in a small enough package that can fit inside a notebook computer, much less a mobile phone. Redstone said only one MFC maker, Medis Technologies Ltd., has reported achieving a “volumetric energy density” — or the ratio of energy output to its volume — that surpasses lithium ion batteries.

Nonetheless, MFC companies are attracting attention. In February, President Bush made a call on a mobile phone powered by a prototype from MTI MicroFuel Cells Inc. The president actually held the power pack in one hand, the phone in the other, with the two connected by a cable.

But early market entry won’t be found in the West Wing. It will happen first in more industrial settings, where it’s critical that wireless devices can be charged instantly and run longer. MTI Micro said it would integrate MFCs into one of Intermec Technologies Corp.’s industrial wireless hand-held devices sometime in 2004, but would not say what size the fuel cell would be.

Portable power generation in remote locations will likely be another early market. New York-based Medis Technologies is building a fuel cell auxiliary charger to power a military PDA being developed by General Dynamics. Medis is aiming for commercial production in 2004. Redstone projects that Medis’ technology will cost between $2.50 and $3.50 a watt, vs. $5 a watt for lithium ion rechargeable batteries.

Jim Balcom, president of PolyFuel Inc., an Intel-funded startup that makes the critical membrane component for micro fuel cells, said that a prototype debuted in a laptop at the Intel Developers Conference in February. Balcom said the improved performance of PolyFuel’s membrane over a rival made by DuPont should help MFC makers reduce the size of systems.

Atakan Ozbek, director of energy research with Allied Business Intelligence Inc. and author of a new report on micro fuel cells, said his firm is less bullish on the near-term future for MFCs than it was three years ago — in part because some companies have delayed their prototypes. Nevertheless, Ozbek’s report predicts that the market for micro fuel cells will grow from a few commercial products in 2004 to 50 million units in 2010.

In the next two years, Ozbek said, MFC makers will have to solve technical problems before they can integrate them with larger devices — challenges that larger companies are better equipped to solve. That’s why Toshiba, Samsung, Hitachi, Motorola and NEC may come to dominate the fuel cell market.

Most analysts believe MFCs and rechargeable batteries will end up operating together to meet the sudden spike in power demands. Future small tech innovations in materials and microsystems may help shrink micro fuel cells to the sizes and power densities they need to reach. NEC is developing fuel cell electrodes that employ “nanohorns,” a variant of carbon nanotubes, to improve performance, and reports it will begin shipping fuel cells for laptops in 2004.

Neah Power Systems Inc. has developed technology based on microscopic channels machined into a cube of silicon and lined with catalytic nanoparticles. Methanol fuel and hydrogen peroxide interact to produce electricity. “Just as Wi-Fi is cutting the cord to Ethernet connections, we’re aiming to help sever ties to the AC power outlet,” said Gregg Makuch, Neah’s marketing director.

The ultimate question for competitors in the MFC market is when. “Medis should be commercial in two years,” said Redstone. “Neah could easily be six years away.”

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