June 1, 2009
technology review | Fuel Cell Technology

"cell-ing" the transition

"cell-ing" the transition

The stars may be aligning for a shift to hydrogen fuel cells to power the nation's lift trucks. Will industry buy off on it?

By Mark B. Solomon

In the process-driven world of material handling, where new ideas are often refinements of innovations that came before, few events qualify as "game-changers." But at a facility in Joliet, Ill., 40 miles southwest of Chicago, something is happening that just might measure up to the billing.

There, Central Grocers Inc., a food supplier co-operative serving Chicago and parts of Indiana, will be operating what is believed to be the nation's first distribution center whose entire lift-truck fleet—220 vehicles—is powered by hydrogen fuel cell technology. As of April 5, 140 order-picking trucks were running on fuel cells. The remaining 80 trucks will transition later this year or in early 2010. The company expects to save about $750,000 over five years, largely through productivity enhancements, says John Coari, vice president of operations for Central Grocers (see "green grocer," DC VELOCITY, May 2009, for more on Central Grocers' fuel cell program).

Yet as Central Grocers moves aggressively into the world of alternative energy, it is also hedging its bets. It does not own the fuel cells; instead, it leases the cells, the equipment, and maintenance services from Plug Power Inc., one of a handful of fuel cell manufacturers. It pays Plug Power a usage fee for the hydrogen. Plug Power, not Central Grocers, arranges for the shipping of hydrogen to the Central Grocers site. Central Grocers has an exit clause in its contract should the technology fail to meet its expectations. And since it already owns batteries and chargers, it can fall back on the old-fangled power source if need be.

The project, whose progress is being closely watched by the material handling/supply chain world, epitomizes the industry's current perception of fuel cell technology: The potential is there, but so is the reality of significant upfront and ongoing expenses. For warehouse operators with relatively small lift-truck fleets and which run mostly single shifts, fuel cells may not even be worth considering.

Then there is the natural reluctance to be perceived as a guinea pig. "No one wants to be the first penguin in the water," says Bill Ryan, vice president and general manager of the material handling division of LiftOne, a multiline lift-truck distributor.

Power plays
For one thing, fuel cells cost more to purchase than batteries. It costs about $10,000 to buy one fuel cell to power a lift truck. The cost of the fuel cell power pack, which includes the cell "stack," storage capabilities, and other necessary but expensive equipment and systems, is between $32,000 and $41,000 per truck, though the cost should come down if production ramps up.

A standard lift-truck battery, by contrast, costs between $3,000 and $4,000. Because the average battery life is about eight hours, a lift truck that works more than a single shift will likely require multiple batteries. For example, a vehicle that works three shifts round the clock will need three batteries to ensure one is at the ready while the others are recharging.

It is also more costly to power a truck with fuel cells than with electricity used in batteries. Blake Dickinson, technology manager for AeroVironment Inc., a Monrovia, Calif.-based company that makes equipment to quickly recharge lift-truck batteries, estimates a fuel cell-powered lift truck uses three times more energy than a truck using electricity.

From there, however, the road divides. Proponents of fuel cell technology maintain that high-volume users, broadly defined as those operating 50 or more trucks in two or three shifts in a 24/7 environment, will significantly reduce labor costs and increase productivity by eliminating the need to swap out batteries for washing and recharging. It takes, on average, 10 minutes to change a battery, while it takes about two to four minutes to fill a cell with hydrogen, according to data from The Raymond Corp., a leading lift-truck manufacturer. Some say the battery swap-out time can be as long as 30 minutes.

Users will also free up warehouse space previously reserved for battery storage and changing. They can also expect to achieve superior run times with their trucks because unlike batteries, whose voltage drops toward the end of a shift, fuel cells don't lose power until the cell is empty, fuel cell advocates contend.

Ryan says the hourly unit cost of maintaining a typical forklift battery is about $1, compared to 53 cents per hour for maintaining a fuel cell. He estimates that a warehouse or distribution center operator fitting the high-volume profile can save 15 percent a year by using fuel cells. This doesn't include the intangible environmental benefits that come from using a "clean" energy source, whose only by-products are water and heat, Ryan says.

According to an analysis by Raymond, a company operating a large distribution center with 125 trucks running two shifts will see an improvement of $3.2 million in its net present value through labor savings, reduced downtime, and increased productivity. That offsets the estimated initial $1.3 million investment in outfitting the trucks with fuel cell packs and developing storage and dispensing systems for the hydrogen, according to Steven Medwin, manager of systems and advanced engineering, and the official who prepared the analysis. Analyses from other companies in the fuel cell and lift-truck sectors peg the payoff time for fuel cell investment at two to three years, depending on fleet size and characteristics.

Hydrogen supply hurdles
But there are roadblocks. Opponents cite the cost of the fuel cell packs and the hydrogen itself, as well as the infrastructure required for storage and dispensing. Then there is the expense of building either an in-house hydrogen generation system or having the gas trucked in by industrial vendors. Relying on vendor shipping networks—the most common means today of delivering hydrogen to distribution centers—carries its own hefty price tag, especially if the gas quantities must support the needs of larger fleets and if the distance between the vendor's location and the distribution center is more than 100 miles.

Praxair Inc., one of the largest suppliers of hydrogen, does not have a presence in the lift-truck market, mostly because so few lift trucks use fuel cells. Yet Tom Harrison, hydrogen product manager for Praxair, predicts strong future demand for fuel cell technology, especially among the large manufacturers and retailers that run warehouses and DCs. "The market size right now doesn't appear to be a stumbling block," Harrison says.

Ryan says the cost of transportation and distribution is the main barrier to aggressive adoption of fuel cell technology. "If we had hydrogen generation centers around every corner, there would be a rush to the door for fuel cells, regardless of the other issues," he says.

Dickinson of AeroVironment says he "would question the value of fuel cells even for heavy-duty users." He says that the fast-charge battery process is far more cost-effective than using fuel cells, and that the charging can be completed on workers' lunch breaks or other off-duty periods so as not to drive up labor costs and impact productivity.

The only scenario where battery charging makes less sense than fuel cells, he says, is in distribution centers whose trucks operate with virtually no downtime and don't even have an opportunity for battery recharging.

Charging ahead
Still, companies who see the long-term promise in fuel cells are forging ahead. Billerica, Mass.-based Nuvera Fuel Cells Inc., one of the nation's few fuel cell manufacturers, has developed an onsite outdoor hydrogen generator for customers that use more than 25 kilograms (55 pounds) a day. The unit uses a steam-reformation process to generate hydrogen for $4 a kilogram (2.2 pounds), which the company says is the most cost-effective solution.

In October, lift-truck maker Crown Equipment Corp. of New Bremen, Ohio, launched a project to upgrade 20 of its trucks at the Pentagon's Defense Distribution Depot in Warner Robins, Ga., with fuel cell packs. The 20 trucks are "counterbalanced," meaning they have sufficient ballast to offset the lighter weight of fuel cells relative to batteries, thus avoiding the need to reduce the amount of weight the trucks handle.

Toyota Industries Corp. and Toyota Motor Corp. continue to test a prototype in Japan of an integrated, ergonomically advanced fuel-cell lift truck that was introduced at ProMat 2007 in Chicago. There is no set launch date, according to Cesar Jimenez, electric product planning & product marketing manager for Toyota Material Handling, U.S.A., Inc.

In April 2008, Raymond launched a joint venture with fuel-cell maker Ballard Power Systems to research designs for integrated fuel-cell trucks with Ballard's technology to power the vehicles. Medwin of Raymond would not comment on the project's status other than to say that it is moving forward.

Efforts to advance fuel-cell technology have received two important boosts from Washington. The bank bailout legislation signed by President Bush last October included an eight-year extension of a tax credit equal to 30 percent of a fuel cell's unit price or $3,000 per kilowatt hour of use, whichever is less. The $787 billion economic stimulus plan signed by President Obama in mid-February authorized until Jan. 1, 2011, a 30-percent tax credit, up to $200,000, for investment in hydrogen refueling systems. The prior ceiling had been $30,000.

The expansion of the tax credit for refueling systems should dramatically shorten the time needed to achieve a return on the initial investment, says Russ Keller, senior director of the alternative energy program at the South Carolina Research Authority, a Charleston-based organization that provides research and development support for government and academia. "The challenge [to obtaining a return on investment] is the fueling infrastructure," Keller says. The sweeteners in the stimulus law will "make a nice dent in reducing the ROI," he adds.

For all the promise, however, the jury remains out on fuel cells. Batteries and internal combustion engines rule the lift-truck world, and they are not expected to disappear. Jimenez of Toyota says there is room for both power sources to co-exist, with the choice of battery or fuel-cell power depending on the demands placed on the lift trucks. Companies that require their trucks to be used continuously will find fuel cells more practical and economical, while those that use their trucks less frequently and have more downtime will continue to opt for battery power, he says.

Those placing their bets with fuel cells say time and trends are on their side. When asked at what point the material handling industry can reasonably expect fuel cells to be a viable alternative, Erik Jensen, manager of new technology, research, and development at Crown, replied, "That day is today."

About the Author

Mark B. Solomon
Executive Editor - News
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

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