Michelle Rush might have guessed that something would go wrong. After all, she’s a PR flack for a fuel cell company. During a demonstration of Medis Technologies’ fuel cell-powered mobile phone charger in May, Ms. Rush could only make the prototype work after 10 minutes of shaking, tapping, prying, and mild cursing.

To be sure, other demonstrations have gone off without a hitch, but the flopped performance left one wondering if consumers would plunk down $20 for 20 additional hours of talk time if it came with 10 minutes of frustration. Medis says it will have a working fuel cell product on the market next year. No one who has followed the repeated promises of fuel cell makers will be surprised if that doesn’t happen.

But it’s not fair to single out New York City-based Medis. The fuel cell delay has truly been a global trend: Japan’s Toshiba, NEC, and Casio Computer have all announced commercial fuel cell products that never arrived on the market. Germany’s Smart Fuel Cell, meanwhile, has delayed its launch from 2006 to 2007, after originally promising a launch in 2004. Toshiba even claimed that “2004” really referred to the fiscal year that ended in 2005 when its long-awaited fuel cell for laptops failed to materialize last year. Now that launch has been postponed to 2007 at the earliest.

It looks like mass-market fuel cells—widely hailed as a potential solution to the “power gap” caused by increasingly power-hungry devices and traditional batteries’ failure to handle them—will just have to wait a few years. Eventually, fuel cells are expected to be smaller, lighter, and up to 10 times more powerful than existing batteries; they can be recharged instantly by refueling, or by replacing fuel cartridges.

But “nobody is there yet,” says Sara Bradford, research manager of the power systems group at research firm Frost & Sullivan. She isn’t surprised by the delays. “This is usually how it is with emerging technologies…. Ultimately, I think there are still challenges to be met before mass-scale commercialization.”

Fuel cell makers have good reason to forge ahead. Frost & Sullivan expects to see 126 million units of fuel cell products on the market worldwide by 2010, with the bulk of that growth occurring in 2007 and 2008. Market research firm Clean Edge says the fuel cell market will grow from less than $1 billion today—mostly for testing and research—to $15.1 billion in 2014.

Until that tantalizing mass consumer market opens up, some companies are finding sales in niche markets. Consider MTI Micro Fuel Cells. The Albany, New York-based company shipped 50 demonstration fuel cells for RFID readers in December. Shortly after, CEO William Acker said the company wasn’t going to mass produce fuel cells for RFID readers because the profit potential simply didn’t exist. Instead, the company will concentrate on selling to military markets.

Niche doesn’t just refer to the military. From German mobile homes to the residence of the Japanese Prime Minister, fuel cells seem to be appearing everywhere except in laptops, cell phones, and portable media players.

Limited Successes

Red Herring 100 company Smart Fuel Cell of Brunnthal, Germany, launched the A25, its first direct methanol fuel cell for recreational vehicles and industrial equipment, as early as 2003. Its second product, the A50, launched last year, and in September became standard equipment on the Hymermobil S-Class luxury motor home. But the clean-power technology is being used to run televisions, lighting, and other onboard devices—not to propel the land yacht (see “A Motor Home with a Fuel Cell”).

In April, Jadoo Power Systems of Folsom, California, unveiled the second version of its hydrogen fuel cell system for professional video cameras. The same month, Nuvera Fuel Cells began taking orders for its 5-kilowatt PowerFlow hydrogen fuel cell system for industrial applications such as material handling, ground support equipment, construction, mining, forestry, and utility vehicles. And Tokyo Gas, Matsushita Electric Industrial, and Ebara, all of Japan, introduced in March what they claim are the world’s first commercial fuel cell power generation units for a home—the home of Prime Minister Junichiro Koizumi.

Why go niche? Companies in niche industrial markets have become early fuel cell adopters because many of those technologies are themselves experimental, says Farah Saeed, program manager for backup power solutions at Frost & Sullivan. They’re more willing to try something new because they have much less to lose than laptop and cell phone manufacturers, which are in highly competitive markets, she says. And the cost of fuel cells just isn’t low enough for laptops and cell phones, at least not yet. “Fuel cells can’t compete in that environment,” she says. “It’s an obvious cost issue.”

It’s a technology issue as well. Fuel cells produce power by mixing fuel with air and water between a thin, reactive film membrane in an electrochemical reaction. Most micro fuel cell technologies—small fuel cells for portable electronics such as laptops and cell phones—use methanol as the fuel, and often utilize platinum as the catalyst to create the reaction. But some companies also use hydrogen, sodium borohydride, and other fuels.

In consumer electronics, size matters. Because they don’t produce enough energy per square inch, most fuel cells are still too large to fit into laptops, much less cell phones. Also, these micro fuel cells still require batteries to start devices and run them at peak power levels, which reduces the available space. And most fuel cells require humidity to operate and generate heat and water as byproducts. Systems are needed to manage the excess water, to keep the cell’s internal environment humid, and to keep the heat safely under control so that the casing is cool enough to touch. Companies now have the technology to do those things, but the systems add to fuel cells’ complexity and take up space.

Industrial applications, however, tend to be larger and more costly, and also more critical. Thus, the fuel cells can be larger and more expensive. For the same reasons, military applications are attractive to fuel cell companies. When it comes to the military, power is often “mission critical,” as lives could be on the line, and military organizations are willing to pay much more for reliable, long-lasting fuel cells than the average cell phone user would. Because of its high standards for reliability and durability, the U.S. Department of Defense also often acts as a testing ground for new technologies.

Smart Fuel Cell, UltraCell of Livermore, California, and MTI Micro Fuel Cells are among a number of fuel cell companies that have received U.S. military awards, grants, or development contracts. Smart Fuel Cell has also received such contracts from the German military. Others, including UTC Fuel Cells, Avista Labs, Protonex Technology, and Millenium Cell, have had products in testing for the U.S. military.

The Pentagon also operates the world’s largest fleet of vehicles. In April, General Motors handed U.S. Army researchers the keys to a fuel cell-equipped Chevrolet Silverado truck for testing, and Hydrogenics in December delivered a fuel cell to the Pentagon for testing in an aircraft tow tractor.

Fuel cell-powered vehicles are even further out in the future than fuel cell-powered laptops. With a fuel cell and battery hybrid power train, hydrogen could eventually replace gasoline and diesel fuel, significantly reducing emissions. These cars were originally expected to launch as early as 2004, but are still years away. While General Motors says it will launch a commercial fuel cell vehicle by 2010, Volkswagen estimates commercially viable fuel cells are at least 20 years away. DaimlerChrylser won’t even hazard a guess. “Any date we give will be wrong,” jokes Christian Mohrdieck, a research director at DaimlerChrysler.

Fixing the Problems

Despite the niche focus so far, fuel cell developers haven’t given up on breaking into the mainstream consumer electronics market. Portable power is a potentially huge prize, and Cleveland-based research firm Freedonia Group expects the market in the United States alone to grow 6.1 percent annually, reaching $10.3 billion in 2008. “Laptops are still a primary market for micro fuel cells,” says Ms. Saeed.

Some companies say they are coming closer to solving the industry’s major problems. Toshiba, for example, unveiled a prototype in September that integrated a gum-packet-sized, 100-milliwatt methanol-based fuel cell into a mobile audio player. Small batteries help start the MP3 player, which runs off of the fuel cell once the batteries are fully charged. The topped-up fuel cell lasts 20 hours, and users refill it by squirting methanol from a spill-proof cartridge into the MP3 player’s internal tank, says Fumio Ueno, a Toshiba technology executive.

The simple refilling method is innovative, but it also underlines another major issue in the micro fuel cell industry: a lack of standardization. Most fuel cell developers use cartridges, which users would replace to instantly refuel the cells. Brian Barnett, managing director at product development and consulting firm TIAX, says size standardizing isn’t essential—after all, different manufacturers’ lithium-ion batteries aren’t exchangeable. At the Portable Power Conference & Expo in San Francisco in September, for instance, arguments erupted as companies advocated different fuel cell technologies. Fuels, packaging, shapes, and even the basic configuration of fuel cells are all up for grabs, and that will make commercialization more difficult.

Retailers have only so much room on their shelves, and supply and distribution chains will have to be set up to get fuel cells and cartridges to those shelves. If fuel cells used only one of two types of cartridges, they could be sold in many locations—consumer electronics stores, department stores, grocery stores, and gas stations, says Frost & Sullivan’s Ms. Bradford. Until then, retailers might not want to commit to selling fuel cells that would require them to stock many different types of cartridges.

Users also will have to get used to the concept of refueling their cells, and analysts say it will have to be as easy as replacing batteries. “Ultimately, you want something simple for the consumer to use,” says Ms. Bradford. “For the average consumer, you want it to be invisible. Batteries, you just plug it into the wall—how simple is that?”

For obvious reasons, air safety agencies worldwide want fuel cell refueling to be simple and safe. Regulations by the International Civil Aviation Organization, the United Nations, the International Air Transport Association, and others currently prohibit users from bringing fuels like hydrogen and methanol onto airplanes. That’s bad news for the many companies aiming at laptops for their first consumer-targeted fuel cells. Such restrictions would cancel out one of the major incentives from the consumers’ point of view: using fuel cell-powered laptops on airplanes without having to worry about battery life, says Midori Suzuki, a spokesperson for Toshiba.

Robert Wichert, a power engineer and technical director at the U.S. Fuel Cell Council, says the council has submitted a proposal to the International Civil Aviation Organization to change the regulations to allow passengers to bring fuel cells and three replacement cartridges onto airplanes. The council expects the proposal to be adopted by January 1, 2007, and is working with the U.N. committee on the transport of dangerous goods, among others, he says.

Toshiba plans to launch its micro fuel cells for laptops and MP3 players in 2007, once the regulations have been ironed out. But as with any regulation, approval and timelines are uncertain.

Unpredictable Timeline

All the challenges cloud predictions of when fuel cells will actually launch. “These were issues five years ago, and they’re still issues today,” says Dan Benjamin, a senior analyst at ABI Research. “I still think it’s just a matter of time, but I think we need to stop guessing on the timeline and wait until we see a shipping product.” It’s not just a matter of putting finishing touches on a product, he adds—a great deal of development still has to be done. The industry is waiting for scientific breakthroughs to make fuel cells viable, and it’s difficult to predict when those will happen.

But progress has been made, and that’s why many analysts still think fuel cells will become a reality. Working groups are cropping up, and they could bring the consensus and consolidation needed to get fuel cells and cartridges into retail, says Ms. Bradford. “Each year you see them become more compact, and also you see more efficiency from the actual fuel—efficiency rates have been improving,” she says. “Those are definitely steps in the right direction. The more power the fuel cell can provide to your device, and the longer it’ll run, and the less the waste on the fuel efficiency, the better the outlook for fuel cells.”

Medis expects to launch its first commercial fuel cell, the disposable cell phone charger based on sodium borohydride, next year. In July, the company announced a $50-million order from distributor ASE International, marking the first commercial purchase of fuel cells intended for consumers. The company says it will have a production line in place by the end of this year, making 10,000 fuel cells per month and ramping up to 1.5 million units a month by the end of 2006.

Technical improvements have also been announced. In August, for example, PurdueUniversity engineers said they had developed a new way to produce hydrogen for fuel cells that is cheaper, requires no catalyst, and results in more energy in smaller amounts of fuel. And in March, Detroit-based automaker General Motors said it has found a way to make materials that hold more hydrogen, again raising energy density. The materials also release the hydrogen at much lower temperatures, saving the energy that would otherwise be used to heat the materials.

In the field of micro fuel cells, Smart Fuel Cell announced a new membrane in March that would use half of the platinum catalyst, significantly reducing cost. In April, Hitachi Maxell reported a new catalyst using one-third of the platinum, again reducing costs while increasing power density. The same month, PolyFuel of Mountain View, California, released a new version of its membrane that the company claims is easier and cheaper to manufacture than its previous version.

Such advances suggest that fuel cells are inching closer to the marketplace. But despite all this progress, the rampant delays have turned even some of fuel cells’ formerly faithful flock into atheists, or at least agnostics. It makes sense to explore other approaches, such as reducing energy consumption in consumer electronics, developing better power management, and continuing to develop better batteries. And when even fuel cell companies themselves point to their competitors’ delays as signs that their technology isn’t viable, placing bets on a specific date is a fool’s gamble.

“There are definitely some positive signs, but like many emerging markets, it’s slow,” says Ms. Bradford. “From all the work that’s been done to date and all the work expected to be done, I think it’s definitely going to hit the market at some point because there needs to be more power. The idea of a fuel cell for mobile or portable applications is a good strategy.”

Many in the industry still believe that fuel cells will come, and urge others to keep the faith. After all, nobody disputes that the market need is there. Large manufacturers and small startups alike are invested in the technology, and the science is advancing, slowly but surely. While the technology might still be shaky, its promise is certainly large enough to be worth pursuing, even if early adopters have to endure a few moments of shaking, tapping, and cursing.