India telecoms to get fuel cell power

Bend, Ore.-based IdaTech (AIM: IDA) announced today that it signed a deal to supply up to 30,000 fuel cell systems to the Haryana, India-based Acme Group in what could be one of the biggest fuel cell supply contracts to date.

Vancouver, British Columbia's Ballard Power Systems (Nasdaq: BLDP) will supply the fuel cell stacks for the 5 kilowatt systems, which will be used for telecommunications backup power applications in India.

Ballard signed a deal with Acme earlier this year (see Ballard, Acme in fuel cell supply deal), but said this new agreement replaces that deal and represent an increase in volume of at least three times.

Financial terms of the new three party contract were not disclosed.

IdaTech, which uses proton exchange membrane, or PEM, fuel cell technology in its systems, plans to deliver an initial 310 hydrogen fuel cell systems in 2009, and 9,690 natural gas systems in 2010.

"We believe it's the largest PEM fuel cell order that's ever existed," James Cooke, CFO of IdaTech, told the Cleantech Group. "It gives us opportunities that we hadn't had before. India's an exciting market."

PEM fuel cells require hydrogen which can come in the form of direct hydrogen or through the reformation of fuels such as natural gas, propane, diesel or methanol. IdaTech is providing the reforming technology for the systems.

Acme, which provides solutions for the wireless telecom industry, cold chain management systems, alternative energy, and waste water treatment, was only founded five years ago but already has a strong foothold in the telecom market.

"They've been instrumental in growing that market," said Cooke. "They've got a very high percentage of the market share of base stations there, and we're going to be working with them to exploit the rapid growth in that market."

Under the contract, Acme has the option to get another 20,000 units, comprising two additional orders of 10,000 natural gas systems for delivery between 2011 and 2013.

The initial 310 direct hydrogen systems will be shipped to India from IdaTech's plant in Tijuana, Mexico, but the bulk of the Acme order will be assembled in a new, larger plant in India.

"We're going to model it on our Mexican facility which we established last year, at a relatively low capital cost," said Cooke. "It's essentially an assembly plant, rather than manufacturing, so you don't have a high degree of capital equipment."

The new plant will be a joint venture between IdaTech and Acme, with IdaTech owning the majority of the venture. This will be the second major manufacturing plant for IdaTech, which also has a small production facility in Oregon.

The new plant will be about three times the size in scale and capacity of the Mexican facility, which has a maximum output of 3,000 units per year. And it's expected to get up and running in a short space of time, with Cooke saying the aim is to establish it and to have it producing pilot builds by the end of the third quarter next year.

Earlier this year, Ballard signed a deal to provide its fuel cell stacks for integration into IdaTech's ElectraGen backup power systems (see Ballard, IdaTech in backup power deal). That three-year contract is for 3 kW and 5 kW methanol-fueled systems.

The two companies also made a supply deal in March, with Ballard agreeing to supply fuel cells for IdaTech's 250 watt iGen power supply (see Ballard, IdaTech in fuel cell agreement).

The move into India could be big for both companies, with a huge number of base stations likely to be rolled out in the country.

Cooke said, "The number of subscribers for wireless telco operators in India is expected to grow by 324 million between now and the end of 2012."

"And that translates into roundabout 210-to-250-thousand additional base stations to service those increased subscriber numbers."

IdaTech is already focused on critical power backup systems for the telecom market, but the India installations are likely to have a higher degree of demand than for installations in more developed countries. "The grid in India is very unreliable and goes out at least once, if not twice, every day," said Cooke.

Under today's deal, Acme will become IdaTech's exclusive distributor for 5 kW fuel cell systems in India.

Acme is also getting exclusive rights for the sale and use Ballard's fuel cells for stationary power applications in the Indian subcontinent and for telecom backup power applications in the Middle East and Africa, excluding South Africa, through mid-2011. That deal with Ballard could be extended into 2012 if Acme exercises its option for an additional 20,000 units.

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