The Backup Plan

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By Plug Power's calculations, a GenCore hydrogen backup power system will soon cost $22,500 installed, versus $17,200 for a battery backup system. But Plug insists that the 10-year cost of maintaining and resupplying its hydrogen backup system rises only to $28,800, while the cost of a lead-acid battery system hits $35,300. In addition, Plug Power says it can use computer software to remotely monitor the level of power available at its backup sites, allowing for more efficient maintenance.

The company says it will have 500 of its smaller backup systems in place in the United States, Europe, and Asia by the end of 2005. Plug Power hopes the defense and utilities industries will take notice of them, and the company says it has a deal with Tyco Electronics Power Systems that will lead to the manufacture and installation of hundreds more units stateside and in Europe. Other customers are the states of Florida and Louisiana and the Federal Emergency Management Agency, which, in the wake of the flooding after hurricanes Katrina and Rita, are experimenting with backup power systems that might better survive hurricanes.

Plug Power admits that many potential customers are still skeptical of hydrogen, though, and more comfortable with batteries and diesel for backup power. "Cell-phone tower installers are very familiar with lead acid batteries, and that's their default mode," says Saillant. "If they put in a lead-acid battery and that fails, they don't get fired, but if they put in a hydrogen cell, they can get fired."

In addition, he says, Plug Power and its industry peers need to persuade both clients and communities that hydrogen is not risky to health and safety. Localities, he says, see hydrogen as a flammable chemical, not a fuel.

Finally, the logistics of refilling hydrogen tanks at remote locations remains a concern for buyers, who already have contracts with diesel-fuel or led-battery resuppliers.

Meanwhile, Saillant wants to discourage the kind of speculation that drove Plug Power's stock price to unrealistic highs. He tells investors "some things will not happen in the next 10 to 20 years: the grid will not go away. No green technology will supply all the energy needs of the planet. Fuel cells will not power every single American home."

On November 9, the company reported total revenue for the first nine months of 2005 of $10.8 million and a net loss of $35.3 million. And Plug's share price still hovers in the $5-8 range. So whether Salliant's new foundation will be strong enough to build on remains unproven.

Tom Mashberg is a reporter at the Boston Herald.