Distributors Look For Hydrogen-Fueled Opportunities

Hydrogen Fuel StationIn a State of the Union address, former U.S. President George W. Bush said, “With a new national commitment, our scientists and engineers will overcome obstacles to taking these cars from the laboratory to showroom so that the first car driven by a child born today could be powered by hydrogen, and pollution free.” But that was 2003, and nearly a decade later that commitment seems to have taken a back seat to other energy projects. The promise of hydrogen-powered vehicles has gone long unfulfilled, which raises the question: is a hydrogen-powered world in our future—and more importantly, will gases and welding distributors play a role in serving this market?

Safety First
One major hurdle in bringing hydrogen to market is educating the general public on the issue of safety. Steve Unrein, vice president at High Plains Gas & Supply (Colorado Springs, CO), says, “When people think of hydrogen, they think of the Hindenburg. They want to know if it can be used safely in a vehicle, that they can drive their kids to school in that vehicle.”

Public perception proved to be a major hurdle in San Francisco this July, where concerns about the potential for an explosion halted plans for a hydrogen fueling station at San Francisco International Airport. The airport had already spent $61,000 on the project, and will now have to give up $1.7 million in state grants.

The decision in San Francisco was likely a reaction to a fire at a hydrogen fueling station in nearby Emeryville just two months earlier. A faulty valve led to the release of hydrogen at high speed, and the hydrogen flashed. The station’s safety systems kicked in, and the fire had burned itself out before fire fighters arrived on scene.

Alliance Welding Supplies (Oakland, CA) President Marvin Rodgers III says incidents like this can be scary for people outside of the industry. “People look at hydrogen differently,” he says. “Nobody is worried about propane tanks, and yet there are thousands of propane fires every year. In my opinion, hydrogen is considerably safer.”

Mission: Infrastructure
Safety concerns are only a small part of a larger challenge to build an infrastructure capable of supporting hydrogen vehicles. In all of 2011, only 12 new hydrogen fueling stations were constructed across the globe, bringing the total number of stations at the end of last year to 215. Meanwhile a report by Pike Research estimates that the number of fueling stations could eclipse the current total by more than 5,000 by the year 2020.

Can gases and welding distributors take advantage of the projected expansion? Marvin Rodgers says he doesn’t see much opportunity for distributors in the short term, adding, “Once the stations become less costly to install, we’ll start seeing the large companies let somebody else’s dollars do the work.” He feels that the market will be more of a niche than a core product for traditional distributor, presenting a possible opportunity for distributors who choose to branch out. “Hydrogen will be similar to propane,” he says. “Some welding supply distributors are very heavy in the propane business, and others don’t sell any.”

Dave Fischer, president of General Welding Supply Company (Denver, CO), says that he would love to put a hydrogen dispenser in to sell fuel to hydrogen vehicles when the time is right, but with one caveat. “Producing hydrogen fuel has to be cost-effective,” he says, noting the tens of thousands of dollars spent by local biofuel companies and the Colorado Energy Research Institute on proof-of-concept energy solutions. “If natural gas were $1 a gallon, and hydrogen were $5 a gallon, it wouldn’t make sense to spend the money to install hydrogen dispensers. If we can sell natural gas, I wouldn’t mind selling natural gas for vehicle use.”

One distributor recently looked to gain entry into the growing market for hydrogen by investing in a hydrogen generator that could produce UHP oxygen. But as they discovered, the hydrogen market is not easily mastered. The company’s president says, “The project fell through because the hydrogen and the UHP oxygen were too wet. We still sell hydrogen, but not to the volume we expected. It seems that many of the projects for hydrogen fuel cells have died off.”

Obstacles aside, the general consensus among these GAWDA members is that the hydrogen vehicle fueling market will continue to be dominated by industrial gas suppliers. “Our industry’s involvement in vehicle fueling will come mostly from the gas producers,” says High Plains’ Unrein. “I don’t see distributors playing a big role. We’re focused on taking care of our customers’ basic needs.”

Distributors on Standby
So what exactly will distributors’ role be in all of this? Alliance Welding Supplies’ Rodgers says that fuel cell technology holds great promise for distributors—only he’s not talking about fuel cell vehicles. “There is a lot of promise in fuel cells for standby power. Here in the South Bay, the technology companies all require backup power for their servers.” Google, for example, uses fuel cells that use natural gas off the pipeline. In places that don’t have access to the natural gas pipeline, or where there’s lower load demand, cylinders of hydrogen, propane or natural gas are commonly used as a fuel source. “Four to eight cylinders of gas will allow a cell tower to run for 8 to 16 hours, more than enough time to restore power. The gas producers are not set up from an accounting standpoint to deal with these smaller accounts, which could become a great opportunity for distributors.”

The further emergence of hydrogen vehicles—even as they become commercially available—may not put money directly into distributors’ pockets. But as automakers work to perfect fuel cell technology and make it more cost effective, advancements are likely to spawn new uses and new opportunities, much like standby power systems, that distributors can capitalize on.

Gases and Welding Distributors Association