Intelligent Energy – Written evidence (BAT0038)

Introduction

Intelligent Energy is a world leading fuel cell engineering company based in Loughborough, Leicestershire, focused on the development, manufacture and commercialisation of its hydrogen fuel cell products, for customers in the automotive, aerospace, warehousing, telecoms and drone sectors. Our technology is ready for the here and now.

What our submission to this Committee’s inquiry wants to convey is the UK’s unique position with respect to zero emission Fuel Cell (FC) technology and the wider industry. We are of the belief that the UK is currently adequately funding Research & Development spending through BEIS initiatives, such as the Advanced Propulsion Centre (APC) and the Aerospace Technology Institute (ATI). In addition, we believe the UK Government has been successful at encouraging low-cost hydrogen production as well as investment in Carbon Capture and Storage technology (CCS).

However, there are a number of areas where the UK is currently behind on. Firstly, more should be done to accept and encourage fuel cell technology employed in electrified powertrain vehicles for passenger use. In addition, the UK Government should more readily demonstrate how much it values UK companies that have developed this technology and should support them accordingly.

Finally, we hope to convey with our response four key points:

1. Hydrogen fuel cell technology is well established, both in the UK and across the world. It is not a development technology, it is technology ready for the here and now. 2. The top-level total cost of ownership of fuel cells favours this technology over batteries, especially given the logistical challenges that battery technology faces if it were to be rolled out extensively (lithium mining and recycling, and the lack of a second National Grid to power them to name just two). 3. The impact that FC technology could have on the wider decarbonisation agenda and the goal of reaching net zero is underappreciated. If developed correctly, this could help decarbonise off-road and construction, for example. 4. The UK can be a leader in this field, and given the competition we face from North America, Germany and Asian countries in this sector, there is both a strategic as well as economic consideration to be made over the benefits of rolling out this technology here in the UK.

We are delighted to be able to submit a response to your Lordships’ inquiry and would be willing to take part in an oral evidence session to discuss these issues further if that would be of interest to the Committee. Questions

1. To what extent are battery and fuel cell technologies currently contributing to decarbonisation efforts in the UK?  What are the primary applications of battery and fuel cell technologies for decarbonisation, and at what scale have they been deployed?

The primary applications so far for Fuel Cells (FCs) have been in the transport sector (in the UK and across the world) with the main example being that of Fuel Cell Electric Vehicles (FCEVs). Fuel cells utilise hydrogen to produce electricity through a chemical process, without combustion, meaning FCVs combine the emissions-free driving of an electric vehicle with the no-compromise range, performance and convenience of a traditional internal combustion engine.

Bus programmes have been key in providing early proof of hydrogen and fuel cell technology operational capability in urban conditions. Fuel cell electric buses have conclusively proved the technology’s overall zero emission performance, as well as its safety and longevity.

However, it should be noted that the UK has been less ambitious on FC applications in the transport sector compared to Germany, Japan, South Korea and China – our other biggest direct competitors in this space. We at Intelligent Energy work with a number of clients across the world, given their interest in developing this technology. Examples include Changan Automobile, the fourth largest carmaker in China, and Teijin Engineering, a major conglomerate, in Japan.

In addition to the transport sector, there has been a large deployment in the US for warehouse indoor material handling equipment, and the onset of early displacement of diesel generators on construction sites and back-up power systems for telecom towers is occurring in the UK, US, Europe and Asia.

2. What advances have been made in battery and fuel cell technologies in recent years and what changes can we expect in the next ten years (for example, in terms of energy density, capacity, charging times, lifetimes and cost reduction)?

There have been substantive developments across all aspects of FCs covering components, materials, interfaces, design for manufacture and manufacturing processes. Consequently, costs have dropped by 50% in last five years as the transition from one generation to the next has increased performance and opened up a wider and lower cost supply chain.

In the automotive sector, FC car engine costs are expected to be in line with existing internal combustion engine vehicles before or by 2035.

We believe the trend will now be that given how reliable FCs have proved themselves to be in cars and buses, we will soon be set for adoption across heavy duty applications in trucking, rail and marine. Aviation will be the final stage of adoption. FCs will end up being the predominant zero emission propulsion technology for flight, and through ATI Intelligent Energy already developing solutions for this long-term market.  What advances are expected beyond this timeframe, but in time to have an impact upon the 2050 net-zero target? Are there any fundamental limits to these technologies that would affect their contribution to the target?

We are of the opinion that, currently, there are no known fundamental limits to FC technologies. However, we acknowledge that the downward curve on efficiency, cost and related production parameters – and the related upward curve on performance parameters – will level off in the next decade to be more incremental for automotive and rail/heavy duty applications. That said, there is more to be learnt about FC applications in the aerospace sphere. For example, we believe that the lessons of steps taken to improve power density in cars will be applicable, together with light-weighting, for aerospace. Collectively this will support the bringing about the decarbonisation of the transport sector, which will be a necessary step of the UK is to reach its ambitious net zero target by 2050.

However, while hydrogen (H2) is due to become increasingly available, and cost of H2 is also expected to reduce – we expect the cost of hydrogen to soon become around £6 (+tax) to fill a car tank for example – from a purely decarbonisation perspective, it will require an equivalent uplift in the availability of low carbon and renewable (also known as ‘green’) hydrogen.

 Are there any implications of next generation battery technologies that could make the charging infrastructure we will be installing between now and 2030 obsolete?  What are the implications on battery life of multiple charge/discharge cycles, for example when used to support storage and frequency management on the grid?

3. What are the opportunities and challenges associated with scaling up the manufacture of batteries and fuel cells, and for manufacturing batteries and fuel cells for a greater number and variety of applications? Is the UK well placed to become a leader in battery and fuel cell manufacture?

With most of the fundamental development stages of FCs now maturing or fully proven, we believe the scaling up of manufacturing to be an imperative in cost reduction terms to enable commercial uptake across the widest possible application base.

Crucially, we are of the strong belief that this can be successfully achieved in the UK, and we at IE are making the case to Government and across the industry. We believe this would not require or imply widespread deployment of manufacturing activities across the country, once the initial decision to go ahead with FC technology has been approved. Government should be looking to make strategic decisions based on volume production of FCs in sites and areas across the country that provide the greatest economies of scale once diverse applications of FC technology is agreed. One fuel cell Gigafactory would be enough to provide manufacturing capabilities for FC technology across a number of sectors. UK supply will also drive local development of sales, installation, aftermarket services and end of life services. The UK is already well placed for FC technology capabilities and IP platforms, has an expanding supply chain base and with some world leading tech companies in the sector (such as IE, Johnson Matthey, ITM Power, and Ceres). Unless the UK develops its own volume manufacturing base, imported FCs will be the only market choice in the years and decades to come.

 What supply chain considerations need to be taken into account when scaling up battery and fuel cell manufacture in the UK?

The first thing to consider is the extra cost that would be incurred if the supply chain were to be located in the UK. The cost of scaling up is 30-40% lower if undertaken in either Eastern Europe (Poland, for example), or more specifically in China. China already has a comprehensive New Energy Vehicle support framework (covering FC and H2 related technologies for transport sectors) for development and deployment of FC vehicles. This has created early FC car, bus, truck and light rail markets and is attractive for the relative convenience of local production set-up and manufacturing operations.

We would also note that the UK Government’s plans on enabling low cost H2 production are well developed. However, the same cannot be said for H2 refuelling provision. The UK Government already values research and development and H2 fuel supply, but we believe that it also needs to ensure that the value of intellectual property of FC technology to GDP and ‘UK plc’ is properly retained as manufacturing is scaled up. This would ensure the technology can be subsequently licensed to international users for further value creation.

Finally, competing Asian, European and North American countries have well supported FC tech companies that are driving for growth in transport and other sectors. If the UK Government were to invest in UK manufacturing as we hope it does, it would ensure continuing international competitiveness.

4. Is the right strategy, funding and support in place to enable the research, innovation and commercialisation of battery and fuel cell technologies in the UK?  Is the UK doing enough to accelerate new developments from low technology readiness levels right through to commercial application in the UK?  Does the UK have the workforce and skillsets required for battery and fuel cell research and manufacture? If not, what are the challenges associated with developing this expertise?

In the context of research and development, we are of the opinion that the funding through Innovate, APC and ATI is largely in place and that it is geared up to support businesses developing FC-related technologies. In addition, availability for, and access to, capital is well established here in the UK.

The biggest ‘gap’ we have identified is in the period of years from development to scale when Government support - that is to say financial, from a regulatory perspective, as well as simple recognition of the value being created – are all vital to the acceleration of the commercialisation of fuel cells. The UK is currently well placed for skills both across the engineering and scientist level, as well as for production staff. However more needs to be done to ensure this trend continues and that young people with the with the right skills are able to move into this industry.

5. Which countries are currently the leaders in battery and/or fuel cell science and technology and where, if anywhere, does the UK have a lead or other advantages?

There are a number of countries that have FC capabilities, but four stand out as leaders in the field: Germany, Japan, South Korea and China. All of these countries have specific central government targets around the growth of FCs across a number of application areas, including transport.

The UK, on the other hand, has what can be described as ‘pockets of expertise’ in FC technology but lacks specific Government targets. We are of the opinion that the UK has the base technology on shore already present in order to become a world leader. This is especially true in the aerospace sector where the UK has the FC technology capability that can displace traditional aero combustion engines and auxiliary power units (APUs) in commuter and regional jets first and leading on to short haul jet engines in the future which may equally displace traditional aero sector firms.

6. In what sectors could battery and fuel cell technologies play a significant role?  What are the engineering and commercial challenges associated with using these technologies, or deploying them to a greater extent, in these sectors?  What will be the likely balance between battery and hydrogen fuel cell technologies (and other options) in a fully decarbonised land transport sector (e.g., heavy and light vehicle transport)?

FCs can be used wherever either batteries or ICEs are currently incumbent. We believe the advantage of fuel cells to be fundamentally around duty cycles and productivity. Against batteries, the FC range is typically 3 times greater (whether it be with an equivalent battery powered truck or flying an equivalent battery powered drone). A report authored by the consultancy McKinsey estimates that 25% of all cars, trucks and buses will have FC propulsion by 2050. For zero emission (ZE) aviation, FCs are the only viable solution to ZE flight (producing no CO2 or NOx). Their advantage over batteries in this instance is their weight. Burning Hydrogen or biofuels produces NOx.

7. How should battery and fuel cell technologies be integrated into the wider UK energy system, and what are the challenges associated with integration (e.g., infrastructure, deployment, system operation, regulatory frameworks)?  To what extent can batteries (including vehicle batteries) be used for energy storage and frequency management on the grid, and what needs to happen to enable this?  Into which other parts of the UK’s energy system could batteries or fuel cells be integrated, and what would be the challenges and opportunities associated with these uses?

FCs, if rolled out at scale, can support local grid networks. With sufficient FC fleet deployment and H2 fuelling network then FC vehicles can relieve the pressure on the electricity supply for car charging. Hydrogen hubs should be developed first where the electricity network is weak, or there is plentiful curtailed wind generation (offshore or onshore) or excess hydrogen from chemical plants.

8. What are the life cycle environmental impacts associated with batteries and fuel cells (e.g., in resource extraction, product manufacture, operation, reuse and recycling), and how can these be managed as production and usage increase?  Please give examples of successful battery reuse or recycling, including the intentional design of second life applications.  Given a potential global vehicle fleet approaching 2 billion vehicles by 2050, will all of the materials needed for battery and fuel cell production be available for manufacturing based in the UK?

FCs have a positive environmental impact in operations and a neutral-to-low end of life impact due to high material recovery rates (mostly of metals and a thrifted amount of Platinum used in the FC catalyst). It is expected that FC production will have a strong security of supply in terms of materials required and will not rely on rare earth or unique constituent minerals for continued UK production and volume manufacture into 2050 to meet expected market requirements.

9. What are the costs and benefits of using battery and fuel cell technologies in their various applications, including when integrated into the wider energy system?  To what extent are costs and benefits of the technologies affected by the levels of deployment or their regulatory treatment?  Are there alternatives that should be considered for particular sectors?

From an economic standpoint, we believe there is a market failure in the continued reliance on ICE power production in both the automotive sector and other applications where the air quality and health impacts of CO2, other emissions and particulate matter, are not captured and properly costed or accounted for. The cut-off point for the phase-out of ICEs in the car and light duty van sector needs be extended across all transport and motive power sectors, including Non-Road Mobile Machinery (NRMM), construction equipment, and the aviation sector. Equally, support measures that favour diesel vehicle operation (such as the Bus Service Operators Grant and Red Diesel rebates) should be halted.

We are of the opinion that there is support for H2 production currently envisaged in the Government’s plans to reach net zero, but this is not currently translated into support for a suitable network of H2 refuelling provision. The cost of upgrading the electricity grid network and capacity enhancement to meet electrification of car and van fleets is understood to be in the order of £16bn, according to research conducted by the Society of Motor Manufacturers and Traders (SMMT). The cost of providing H2 fuelling facilities and fuel to cater for the entire UK heavy duty truck fleet to 2060 would be £7.7bn according to global strategic engineering and environmental consultancy Ricardo. There is an essential difference in Government policy and the support provision made toward e-charging compared to H2-fuelling. An equalisation basis reflecting economic societal impacts under net zero is necessary and needs action and focus.

About Intelligent Energy Intelligent Energy is a company at the forefront of the hydrogen economy – manufacturing and selling zero-emission hydrogen tech for cars, buses, planes, and trains. We have been based in Loughborough since 2001 and currently employ 200 highly skilled people. We are currently developing plans for a Hydrogen Fuel Cell Gigafactory that will treble our workforce, make the East Midlands the centre of the Green Economy, and attract overseas companies to invest in the region as part of the supply chain.

31 March 2021