Industry advocates agree that a massive transition to a “hydrogen energy economy” will begin with utility companies, but they disagree on whether to start with transportation or with power generation.

The split was evident among a panel of industry experts speaking at the opening of the National Hydrogen Association’s week-long conference Monday in Long Beach, CA. In a videotaped kick-off message, Gov. Arnold Schwarzenegger painted a bullish picture for the industry in the nation’s most populous state.

Noting California is “investing millions of dollars” to establish a network of hydrogen fueling stations along its highways, Schwarzenegger said more and more businesses are “proving that hydrogen power is practical, clean and here to stay. We are well on our way to a hydrogen future.”

But the half-dozen panelists comprising the “hydrogen utility group discussion” were unsure how quickly commercial-scale hydrogen transportation facilities can become a reality. Representatives from Arizona Public Service, BC Hydro in Canada and Detroit Edison’s parent company touted demonstration efforts in which they are involved in partnership with various government and industry groups. But none thought their individual utilities were prepared to make a major investment in hydrogen infrastructure.

Costs and economies of scale aren’t rapidly developing, and the industry seems consumed by the age-old “chicken-egg” debate about what is needed first — the massive fueling and distribution infrastructure or more mass-produced hydrogen-fueled vehicles (both internal combustion engines running on hydrogen and on-board fuel cell-powered vehicles).

“The reality is that hydrogen as a fuel is a long way off,” said Chip Schroeder, president of Proton Energy Systems, which sells hydrogen-based products for helping maintain turbines in generation plants. “If you think that your customer cares about your technology, you’re probably off on the wrong foot. To the extent that the hydrogen economy and hydrogen technology are answers in search of a question, I think we [the hydrogen industry] have a problem.”

Schroeder’s message to various representatives from the hydrogen, utility and research/development and government sectors was that the only questions that should matter are “the questions customers have.” He said the hydrogen industry needs to separate what customers want from what industry advocates hope eventually to deliver to the marketplace.

As one of the industry speakers who does not think transportation markets will be viable until various stationary uses of hydrogen are refined and made commercial, Schroeder said there still is no commercially viable hydrogen production unit operating today — all are demonstration, pre commercial units. He sees distributed generation applications, back-up power and fuel cells as the best areas for development now, compared with transportation.

Aside from the various views on what and who will jump-start hydrogen transportation infrastructure — utilities, oil industry or government mandates — Stephen Sanborn, a representative from GE’s Global Research Center, said GE is looking at the production, materials and end-use segments of the budding hydrogen industry, and one area that is getting a lot of attention is the use of baseload electric generation plants as sources for hydrogen during off-peak hours of operation.

“You take all that unused energy during the nonpeak times and use it to produce hydrogen; that’s where we want to go here,” said Sanborn, stressing that on a more general basis GE is looking at ways to develop commercially viable, industrial-scale electrolyzer technology. It can create another alternative to building new power plants, he said.

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