By Michael Ellis
HONEOYE FALLS, N.Y., July 29 (Reuters) - General Motors Corp. said on Monday it will enter the multi-billion market for back-up power systems by 2004 by selling stationary fuel cells to businesses that depend on a reliable supply of energy.
Pursuing companies that pay hundreds of dollars per kilowatt hour for an uninterrupted flow of energy, such as hospitals, cellular phone networks and credit card processing centers, will allow GM to refine its fuel cells as it works toward fuel cell-powered vehicles by the end of the decade.
The world's largest automaker, which has spent billions of dollars on fuel cell research, expects to have a prototype stationary fuel cell ready by late next year, and its first customers in 2004, said Tim Veil, director of distributed generation solutions with GM.
"It gets us into a real market long before we have (fuel cell-powered) automobiles. We have the opportunity to bring some early near-term revenues," Veil said.
GM officially opened a 64,000-square foot fuel cell development facility here on Monday which will help bridge the gap from concept to commercialization for fuel cells. The new facility, which will employ up to 100 researchers and engineers, is adjacent to GM's 77,500-square foot fuel cell research center.
MAKE FUEL CELL FUTURE HAPPEN FASTER
"Our intent with this new facility is to make the fuel cell future happen faster," said Larry Burns, GM vice president of research and development. "We want to see a return on our investment as soon as possible."
Veil said that with commercialization, GM will begin making money on every fuel cell unit that it sells. While many companies are battling over the residential power market, Veil said there are few competitors in the premium power market. "We see an immediate market sweet spot," he said.
GM's proton exchange membrane fuel cells, which create electricity through an electrochemical process using hydrogen and oxygen, have many advantages over diesel engines and batteries that many businesses currently use as an emergency source of power, Veil said.
Diesel engines are noisy and spew out pollutants; fuel cells are quiet and their only byproduct is water. Batteries are unreliable and frequently need changing, but fuel cells have few moving parts and could last for 15 years, Veil said.
GM will announce by the end of this year partnerships with some established power suppliers to sell its fuel cell stacks to businesses, Veil said. The largest market for the back-up power supply will be in the United States and Japan, where the government is aggressively pursuing fuel cell use, he said.
GM, which has committed itself to being the first automaker to sell 1 million fuel cell vehicles, doesn't expect to see a significant number of fuel cell cars and trucks on the roads until late this decade, Burns said.