Logical Output by Tim Sharp: Quiet DG storm building

If the recent low-key announcement that Ishikawajima-Harima Heavy Industries (IHI) bought 7% of U.S.-based Mosaic Energy didn't exactly blow your mind, fellas, you're forgiven. I mean, who would have? But pay attention now, this is heavy stuff!

Mosaic's been running field tests of its residential proton exchange membrane (PEM) fuel cell at a Chesterton, IN housing development for close to nine months now. Its parents are NiSource and the Gas Technology Institute (GTI). Guess you're beginning to sit up.

And IHI's not just a name to conjure with over in Japan, but its itty-bitty shareholding gives it Pacific Rim distribution rights for Mosaic's product.

That's right. IHI's going to combine Mosaic's fuel cell stacks with its own fuel processing and balance-of-plant technology to offer distributed power generation to Japanese gas stations, convenience stores, supermarkets, apartment blocks–pretty much the cream of the country's commercial and residential power markets!

More than that, the deal means Mosaic is on track to begin prototype production any time now to ramp up to full scale operations by the second half of 2002.

So 15 to 18 months from now, the first commercial units carrying quite some pedigree – that's GTI, guys, home-building exposure to iron out the glitches, IHI's muscle will be out there offering 15% savings on overall household energy bills.

But even that's not the nub. See, last October IDACORP's IdaTech (IT) wound up a three-week road-show that demonstrated a 3kW residential methanol-based PEM fuel cell system to Japanese government, electric and gas utilities, developers, industrial plant managers, appliance and equipment manufacturers, engineering firms, the works.

Sure enough, by year-end they'd hitched with Tokyo Boeki (TB), a 52-year-old privately held trading and marketing company, to have TB manufacture, distribute and sell IT fuel cell components and systems in 14 Asian countries including Japan.

TB is testing units in the field and "localizing" the gear this year. It will sell U.S.-manufactured systems next year and begin Asian production in 2003. You got it, guys. Two serious players for the Asian distributed residential power market neck and neck!

And that doesn't touch International Fuel Cells (IFC)/Toshiba with IFC's phosphoric acid PC25 system and Toshiba's PEMs. They teamed up just six months ago to develop and market stationary fuel cell technology in Japan.

Then there's GE/Kubota and FuelCell Energy/Marubeni and though there ain't much signs of life in these two, hey they ain't in it just for kicks. Now are they?

But even that's not all. See tucked away in the woodwork there's quite a bit of depth building in Asia. Like Cheung Kong Infrastructure (CKI)–that's Hong Kong's other energy multinational with some heavy involvement in Australia–teaming with Canada's Stuart Energy Systems to develop hydrogen fuel equipment sales and service markets in AustralAsia.

Or Shell teaming with IFC to develop, manufacture and sell fuel processors for the emerging fuel cell and hydrogen fuel markets. OK, this deal isn't Asia-specific but Shell does just happen to supply around half Japan's liquefied natural gas (LNG). Gotta be some kinda deal there somewhere.

And still there's more! See you look at Asia, you look at natural gas. Not just in the big importing countries like Japan and South Korea, but in Bangladesh, Myanmar, Indonesia, now Pakistan and the Philippines, Thailand, Vietnam, China, Malaysia—guys, it's everywhere.

And as just two examples you maybe wouldn't think of, Myanmar's got some 1,500 kms of natural gas pipeline–not quite a grid, guys, but not nothing neither. Also, just the day before IHI bought into Mosaic, China's first private sector gas distributor piped up to announce 180 million new shares to finance six more mainland city reticulation grids on top of its present four.

I haven't even discussed coal, which is Asia's most abundant widespread fuel and the oldest city gas source of all. So the fuel's going to be on tap, guys, the technical support, the systems themselves.

Quite a storm brewing over the water, fellas, which the present power sector, privatized or not, isn't going to like one bit.

About the author: Besides writing Logical Output, Tim Sharp shares his insight on the Asian power market through features and book reviews for Power Online and other VerticalNet energy communities. To reach Sharp, email tsharp@loxinfo.co.th.

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