As a future fuel source, hydrogen inspires a lot of hope – and more than a little wariness. But one New Jersey startup has developed a hydrogen-powered fuel cell technology for portable devices that it’s promising can be as safe and even longer-lasting than today’s batteries.

Millennium Cell of Eatontown, N.J. has developed a proprietary process that uses sodium borohydride – a chemical synthesized from borax, a mineral commonly found in laundry detergents – to produce hydrogen. Stored in its liquid form, the sodium borohydride solution is passed through a chamber containing a proprietary catalyst, and hydrogen is released as needed. Millennium Cell doesn’t make the actual fuel cells, but instead partners with different fuel cell manufacturers that license its system.

Debuted at a recent trade show, Millennium’s “hydrogen on demand” process differs from most other fuel cell technologies geared toward portable devices. Typically, they rely on methanol (also known as methyl alcohol, or wood alcohol), which is considered more stable, but less powerful, than compressed hydrogen. Millennium sidesteps the issue of stability by storing its fuel in the form of the stable and non-explosive sodium borohydride solution, and converting it to hydrogen as needed.

Millennium isn’t the only company to move beyond methanol as a fuel choice.  New York City-based rival Medis Technologies utilizes a proprietary sodium borohydride chemistry to run its portable Power Pack. Nevertheless, fuel-cell technology is considered to be moving forward only slowly, as would-be developers, including some of the world’s biggest electronics makers, wrestle with issues of size, energy density, and even federal aviation regulations, which could keep such power sources off planes. In this atmosphere, the use of hydrogen, some feel, might help overcome existing challenges and propel the market forward.

Walter Nasdio, managing director for Ardour Capital Investments, a New York City broker-dealer focused on the energy sector, says Millennium’s technology “stacks up well” against methanol-driven competitors in terms of energy density and utility.

“Methanol got a toehold, and methanol is cheap,” Nasdio says. “But there are issues with handling it and putting it on planes.”  Concerns abound that flammable liquid methanol will cause safety issues if spilled, and therefore might not be allowed on airplanes for a long time to come.

As a replacement for batteries, fuel cells are looked toward as a longer-lasting power source for laptops and cellphones, which proponents say is needed to run today’s more-demanding mobile devices.

“There’s a market disconnect in portable electronics,” says Chris McDougall, program manager of portable electronics power for the Dow Ventures Group, the business unit of Dow Chemical, which recently invested in Millennium Cell. “Electronics are wanting longer and longer run times and wanting more and more power.”

Today’s batteries, he says, just can’t keep up. A typical rechargeable laptop battery will provide two to four hours of AC-free power. Meanwhile, lithium ion and nickel metal hydride batteries for cellphones offer as little as an hour and a half of talk time, depending on the model. As PCs and other mobile devices incorporate more power-draining features – faster processors for better graphics and faster run rates – conventional batteries are likely to hit a wall.

Dow Chemical sees potential in Millennium’s approach. The giant chemical company recently bought a three-percent equity stake in the Millennium Cell, with the option to buy up to 19.9 percent of the company. Dow’s McDougall says that Millennium has differentiated itself from its competitors in the fuel-cell development arena in the way it “utilizes hydrogen fuel.” Millennium is Dow’s only public investment in the fuel-cell market to date.

The prototype of the fuel cell that Millennium Cell showcased at the Intel Developer Forum in San Francisco in March is an external unit that’s just six millimeters thick, but was reportedly able to provide only three hours of charge for a laptop – not much more than some batteries today. But within a couple of years, Millennium’s makers expect their fuel cell to provide eight hours of power and cost about as much as a standard secondary laptop battery (around $150). 

Millennium’s chemical agent, sodium borohydride, is a synthetic compound produced from sodium metal and borax, a mineral often found in dried-up seabeds – with plentiful reserves in the United States, making it a cost-effective fuel, according to John D. Giolli, acting CFO of Millennium Cell.

Along with being “10 times as energy rich as lithium,” currently used to power lithium ion batteries, and slightly more powerful than methanol, Giolli says his Hydrogen on Demand system limits the need for platinum, which is typically used as a catalyst in methanol fuel-cell reactions, and which could drive up the costs of fuel cells when they come to market.

Hydrogen has been the fuel of choice for larger fuel cell systems, like the ones currently being developed to power automobiles some day; but until recently it has not been a popular choice for smaller power sources because of its storage needs.

“For all the advantages that hydrogen gas offers, you have to store it at high pressure, or store it very cool…which is fine [in a car] when you can have a giant reinforced tank in the back,” says Dan Benjamin, senior analyst for ABI Research of Oyster Bay, N.Y. “It wouldn’t be that viable for a small device. Methanol is not as good as hydrogen, but it’s been much easier to work with.”

Cost is still an issue for Millennium’s fuel cell system. So, as the company tweaks its process to drive down the expense for future consumer use, it is also developing applications for the military, where there’s a greater immediate need for the technology – and deeper pockets to pay for it. Millennium has partnered with Massachusetts-based fuel-cell maker Protonex Technology to develop fuel cells for U.S. Air Force personnel to use as a power source for running communications devices on field missions.

It may be late 2007 or early 2008 before fuel cells using Millennium’s system hit the consumer market, says Giolli. Indeed, most fuel-cell advocates believe it will be a few years before users are powering up their notebooks and cellphones with these battery replacements, but the market potential is apparent. ABI Research predicts that by 2012, portable fuel cells (or micro fuel cells, as they’re also known) will power nearly 15 percent of the world’s laptops.

Meanwhile, a few companies hoping to be early to market, including Toshiba and New York City-based fuel-cell startup Medis Technologies, have announced plans to release their first models this year.

Regardless of their approach, Benjamin says almost all of the major portable fuel-cell developers “are still wrangling with issues of size, price, concentration [of the fuel], and the functional life of the fuel cell.”

In spite of the forward movement he sees in the market, Benjamin advises mobile users not to plan on picking up a fuel cell for their laptop this Christmas holiday season. 

“It’s not exactly been a secret that [the release of micro fuel cells] keeps getting pushed back,” Benjamin says. “We keep hearing these ‘we hope to announce’ announcements, but we should look at this in 12 months and see if anyone’s released a product.”