An Evaluation of the Economics of Fuel Cells in Urban Buses

Abstract

One of the contenders for a clean source of on-board electric power in a vehicle is the fuel cell: an electrochemical device that transforms the chemical energy stored in a fuel directly into electricity. While less widely known and less far advanced than batteries, fuel cells hold a considerable potential to provide the power for a novel generation of non-polluting vehicles. At present, fuel cell technology is entering the stage of commercialization, which is an appropriate moment to try and assess its economic potential in the field of transport. Based on a review of the present state of the technology, concentrating on the solid polymer fuel cell, a model is set up of a fleet of urban buses, widely regarded as one of the earliest applications of fuel cells in transport. Under the central assumption that the fuel cell stack cost is $300 per kilowatt, the fuel cell bus is found to be around 30% more expensive than its diesel counterpart. However, there are considerable cost reductions possible through economies of scale in the production of hydrogen, the fuel required for the solid polymer fuel cell. Remarkably, these economies of scale allow the cost of the fuel cell bus to drop below that of the diesel. What is more, the fleet size required for this-more than 25 vehicles-is by no means prohibitive. In a trade-off analysis, the possibility is investigated of reducing the cost by allowing one parameter to deteriorate, if this permits another one to improve. In particular, it is found that cheaper (mass-) production techniques for the fuel cell at the expense of reduced efficiency make economic sense if a relative drop in the efficiency of 1% is accompanied by a cost reduction of at least 1·06%-something that is likely to be attainable. A scenario for a direct methanol fuel cell, assuming a cost per kilowatt three times as high as for the solid polymer fuel cell, results in a slightly higher overall cost, without being able to offer the same economies of scale in fuel provision. The social costs are calculated also, taking into account the environmental externalities associated with the whole system including the fuel supply chain. The inclusion of externalities fails to shift the balance decisively in favour of the fuel cell, partly because of a cancellation effect between the diesel tax, which has to be excluded in a social cost calculation, and the externalities, which are added in. The main outcome is therefore that in order to succeed in the marketplace, the principal task for the developers of fuel cells is a further reduction While earlier projections of a rise in temperature and sea-level (IPCC 1990) have been corrected downwards, the main conclusion of the existence of man-made climate change is strongly upheld (Financial ¹imes, 1 December 1995). 496

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