We are wrapping up the last few years of a demonstration phase, and are now focusing on the transition to the commercial market. This includes building retail hydrogen stations, working at grassroots level with community outreach, actively participating in codes and standards development, and preparing for retail sales of hydrogen. The goal is that one day in the future, millions of people could be driving fuel cell vehicles. To get to millions, we have to start with thousands.

In February 2009, the California Fuel Cell Partnership published an Action Plan to guide the coordinated rollout of fuel cell vehicles and hydrogen stations as we move into the early commercial market. In summary, the CaFCP Action Plan calls for ongoing support for the six existing public stations, and building 40 new stations.

The stations are focused in three geographic areas, with the emphasis on passenger vehicles in southern California, transit buses in the San Francisco Bay Area, and development of regulations, codes and standards in Sacramento. To support this level of effort, stations need to be funded during the next four years, and be built and begin operating over the next six years. To accomplish these goals, CaFCP estimates the total investment needed from government and industry is $180 million.

How many vehicles?

For the passenger vehicle strategy, CaFCP first needed to know how many vehicles automakers planned to place in California, where they were going, and the approximate timeframe. In January 2009, we asked our nine automaker members – General Motors, Chrysler, Daimler, Honda, Hyundai, Kia, Nissan, Toyota, and Volkswagen – how many FCVs they plan to place in California communities over the next three years, as well as in the 2012–14 and 2015–17 timeframes. The results are shown in Table 1.

The survey revealed that most passenger vehicles will be in southern California, focused in four specific Los Angeles-area communities: Santa Monica, Torrance, Newport Beach, and Irvine. CaFCP assumed that vehicles require approximately 1 kg of hydrogen per day, so these vehicle numbers translate directly into kg/day demand. Perfectly matching customers’ demand for fuel with the supply is impossible, but using the automaker survey results, CaFCP could describe a way to build stations to meet demand for hydrogen in 2014 and prepare for the 50 000 vehicles coming by 2017.

How many stations?

Figure 1 illustrates one way to deploy stations by 2014. This sees building multiple stations in each of the first hydrogen communities (large circles), starting in 2009, and continuing with a new station funded each year through 2012, to meet growing customer demand for fuel.

Fueling customer demand

Customer demand for fuel can be met with a variety of approaches, such as using primarily portable fuelers, building one or two large stations, or building multiple small stations. CaFCP chose a scenario that balances customers’ needs for multiple fueling stations, with the need to begin building larger stations to prepare for an order of magnitude growth in vehicle numbers beginning in 2015.

Focusing on Torrance as an example, Table 2 shows the years in which the stations need to come online to support the vehicles the automakers plan to sell or lease in Torrance. The Action Plan has a similar scenario for each of the first six hydrogen communities.

The second focus area is transit. The San Francisco Bay Area transit program, a unique collaboration among five transit agencies, is moving forward to jointly own and operate 13 fuel cell buses starting at the end of 2009. With funding support from the US Federal Transit Administration, fuel cell buses will soon serve passengers in San Jose, San Francisco, Marin County, Oakland, Berkeley, and communities in between. By 2014, the consortium could have up to 60 fuel cell buses in the fleet. This area will also require fueling stations for passenger cars – almost 700 by 2014.

The Action Plan calls for a new type of station, a ‘mixed-use’ station that serves both buses and passenger vehicles (Figure 2). This type of station will enable a network in the San Francisco Bay Area to support both transit and individual drivers. Many of the stations should have a dispenser in the bus yard and a second dispenser outside the yard, creating a more customer-friendly, retail-like station.

The third focus area is regulatory. California is the first state to regulate hydrogen as a transportation fuel. The California Department of Food and Agriculture’s Division of Measurement Standards and other regulatory bodies are creating the regulations, processes, and procedures required for selling hydrogen as a retail fuel. Transparent access to a state-of-the-art station in the Sacramento area is vital to their success. Funding to support this activity is also recommended in the Action Plan.

Hydrogen stations are the centerpiece of the Action Plan. The cars and buses are coming, and we need to provide fuel for customers. Unlike the current demonstration stations, these stations must sell fuel to daily commuters, soccer moms, and weekend travelers.

Costs are manageable

Some critics say that building the infrastructure is too hard. They say that it costs too much, hydrogen can’t be mass produced, it’s impossible to store safely, and it cannot be priced competitively with liquid fuels. Certainly, the last three are not true, but we needed to address the cost of building and operating a station.

To estimate the investment needed for the hydrogen stations, CaFCP used a cost range that reflects a variety of station types and sizes, including estimates for site preparation, engineering, and permitting. We included operating costs to cover maintenance, insurance, taxes, and land costs. We assume that the cost of hydrogen station equipment begins to decrease by about 20% once 16 stations are in the building phase, which will be in about 2012 for most types of stations. We also assumed that we are pricing land in Los Angeles, an area with the highest land costs.

Using the scenario in the Action Plan, the total costs for 40 new stations and operations & maintenance (O&M) for six existing stations is about $180 million over four years. In the first years – through 2011 – CaFCP recommends that government pay 70% of the costs, a percentage that the California Hydrogen Highway Network found is the best cost-share for a nascent industry. In 2012, the cost-share can decrease to 50% for most types of stations – very large stations or those using innovative technology will still need to be funded at 70%.

Table 3 shows the yearly funding estimates. The plan calls for additional funding for outreach and regulatory development, so the total in the plan is about $182 million.

Adding more stations

Since publishing the Action Plan, seven new stations have been announced and awarded matching government funds. All fall into the target areas outlined in the Action Plan. Two are in the San Francisco area and will serve transit and passenger vehicles; five are in southern California (Figure 3). Two of the new stations will be retail stations, including one independent operator, and two will be accessible stations at universities. The fifth station is an accessible station at a wastewater treatment plant, where the hydrogen is 100% renewable from waste.

Learning the lessons

With these new stations, and others on the discussion list, CaFCP started tracking progress towards the goals. Learning from the stations that are operating in California, plus our own experience operating the station at CaFCP’s West Sacramento headquarters, have already provided a few lessons:

• We have learned that we need to move faster. Building stations six to eight at a time can provide an economy of scale for equipment, project management, permitting, and community involvement, as well as creating and linking clusters. It can speed up a process that currently takes years.
• The business case for hydrogen is difficult to justify in the early years. Small stations geared towards supporting the early markets can’t generate sufficient revenue. Government funding and other incentives can make the business case more attractive.
• Hydrogen has to compete with other fuels for funding, including electricity, when the playing field isn’t level. In addition to being the only fuel that can’t yet be sold by unit volume, hydrogen is also the only fuel that is required to be 33% renewable, which increases costs. Electricity is also required by California law to be 33% renewable, but has until 2020 to comply. Hydrogen has to comply today.
• Government leadership is important. Industry takes a cue from government. When the US Energy Secretary Steven Chu vocally denounced hydrogen as ‘too far away’ and proposed slashing the federal budget, it sent a ripple around the world. The vocal support of the US Congress for hydrogen fuel cell vehicles sent another ripple. The announcements from Japan and Germany caused more ripples. When government talks, industry listens.
• Local support is crucial. Having a champion can speed a project through city and county reviews. Without a champion, indecision and lack of knowledge can slow a project by months. It is vital to have key players at your side.
• Success is not just about building stations. The industry is entering a phase of early commercial deployment, and there are many milestones to achieve, some of which are listed in the Action Plan. Tracking progress against these milestones will help us measure our success and make adjustments as needed. This transformation is not an overnight process!

A concerted effort

To meet goals for improving air quality, reducing greenhouse gases and reducing petroleum by 2050, automakers need to begin introducing commercially viable technology into multiple production vehicle platforms by 2020. Several automakers have announced plans to have commercial introduction of fuel cell vehicles by 2015.

The focus is now on the stations. To maximize fuel availability and ensure the efficient use of funds, it is important to coordinate the rollout of vehicles and stations. People will not buy or lease vehicles that they cannot fuel. Station owners, who are primarily small business owners, will not invest in a fuel that customers don’t demand.

There are no easy answers, but the CaFCP Action Plan, and now the implementation of that plan, is an important step towards providing early fuel cell vehicle customers with accessible fueling stations.

About the author

Catherine Dunwoody is Executive Director of the California Fuel Cell Partnership, which is based in West Sacramento, California.