The Backup Plan

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The truth is that hydrogen fuel cells have a long, slow road ahead before they appeal to the mass markets of homeowners and motorists. Indeed, making hydrogen fuel cells practical for small-scale applications is a problem that's vexed many companies. Plug Power was hardly the only outfit in 1999 and 2000 guilty of over-optimism.

But the Plug Power story exemplifies another, more positive truth in the world of business: sometimes markets for a new product can appear in unexpected places.

In Plug Power's case, surprise demand for hydrogen fuel cells grew out of a surge in an entirely different market: cellular telephone towers. According to the trade group CTIA-The Wireless Association, the number of wireless towers and antennas in the United States rose by a factor of 10 since 1994: from 18,000 to 175,000. While many cell towers are linked to the electric grid, they still require backup power in case of electrical outages. And many more towers are isolated from the grid and other conventional energy sources, and therefore must be powered by either gas-fueled generators or lead-acid batteries.

Plug Power found cell-tower builders and operators receptive to a pitch that they abandon batteries and diesel generators in favor of lighter, quieter, more environmentally friendly hydrogen fuel cells. (Plug Power is also targeting broadband suppliers and other utilities.)

Back in 1997, the company had committed most of its R&D and brain power to building a large, complex hydrogen-powered fuel source, GenSys, costing $175,000 to make and install, and intended to power homes, hospitals, apartment buildings, and other large, energy-hungry sites.

Saillant said his engineers took the guts from the GenSys machine -- its fuel-core stack -- and turned them into a far smaller product, GenCore, costing about $25,000, which could be built quickly and marketed rapidly. Then the company approached Verizon, Tyco, and other telecom players

"There are 80,000 to 100,000 opportunities a year for replacement or growth in the cell-tower industry," Saillant says, "and 30,000 are maybe suitable for hydrogen fuel cells, and if we get 30 percent of that -- well, it's enough to get us going if we can make the argument."

According to Saillant, the arguments go like this:

1. A hydrogen backup system, which is about the size of an outside central air-conditioning unit, takes up about 10 percent less space than the structures conventionally used to house diesel generators and batteries. And the fuel-cell systems are far lighter: 1,250 pounds per unit, compared with 2,750 for generators and 3,800 for eight-hour battery systems. Thus, hydrogen backup systems can be more readily installed on rooftops -- a common site for cell towers.

2. While diesel generators generate carbon dioxide fumes and lead batteries can be prone to leakage, hydrogen cells emit only water and heat.

3. Plug Power's hydrogen fuel cells last 15 hours -- or an average five hours longer than lead batteries.