Whereas 2024 saw headwinds including policy uncertainty, investor retreat, and funding constraints that delayed projects and tested industry resilience, it also had its silver linings. In this blog, Randy MacEwen reviews a challenging year where Ballard Power Systems stayed focused, secured record orders, and progressed next-gen fuel cell technology.
There can be little doubt 2024 was a difficult year for the hydrogen and fuel cell industry. Prolonged policy uncertainty, unpredictable election cycles, and serious funding challenges adversely impacted and delayed hydrogen projects across key global markets. Few hydrogen projects moved to financial investment decision (FID), while several were outright cancelled. There was a widespread acknowledgement of a multi-year push-out of hydrogen project development and the availability of low-cost, low carbon hydrogen and hydrogen refueling infrastructure, as well as the timelines for commercial adoption of proton-exchange membrane (PEM) fuel cell applications.
To compound these challenges, the equity capital markets have largely abandoned hydrogen. There has been a dramatic and decidedly negative change in investor sentiment towards ESG investing and towards pre-profitability clean energy companies with long-duration investment horizons. In the hydrogen space, this means many industry players are struggling with compressed valuations, acute liquidity tightness, and severely restricted access to fresh capital.
Given this context, an industry rationalization is underway. In 2024, many hydrogen and fuel cell players throughout the value chain took restructuring actions to reduce their corporate costs and cash burn. At Ballard, we also implemented a global corporate restructuring to moderate our investment intensity and pacing to better align with delayed market adoption.
Many players have also been actively reviewing their business and considering strategic alternatives. They are contemplating new business models and partnership approaches. They are investigating how to drive nearer-term revenue and scaling opportunities, reduce hydrogen risk, and improve capital efficiency.
Notably, several industry players failed in 2024. By my count, more than 10 companies across the industry filed for bankruptcy, insolvency or otherwise determined to wind down their operations. Certain other industry players closed distressed financings on very dilutive or otherwise onerous terms.
Of course, rationalization occurs across most industries. This is a normal – and, arguably, healthy – process, typically with a culling of the weaker players. I expect to see continued rationalization in the hydrogen and fuel cell industry in 2025. The signs are clear for a few market players.
I also expect consolidation activity to pick up in 2025, with increased M&A activity given low valuations. The over-crowded electrolyzer competitive landscape, with reports of over 150 electrolyzer manufacturers globally, is particularly ripe for rationalization and consolidation in 2025.
Overall, I expect a handful of thinly-capitalized industry players with weak competitive moats to fail or be acquired in 2025.
Long-term survivors and winners are likely to be determined in the next 12-36 months.
Notwithstanding this challenging macro industry context, and notwithstanding the online hydrogen critics who have delighted in recent industry struggles, all is not gloom. Amidst the 2024 industry challenges, there were silver linings, green shoots, and industry milestones worthy of celebrating.
There were some exciting announcements on hydrogen projects in 2024. While project announcements slowed and some projects were cancelled, there are now more than 1,500 hydrogen projects announced globally. Importantly, there are now hydrogen projects totalling 26GW of electrolyzer capacity that have passed FID, and representing $75 billion in committed capital. This is up from 12GW in October 2023. We now expect about 15 million tonnes (Mt) of probability-adjusted clean hydrogen deployment by 2030, which would be about 15% of all hydrogen production in 2030. In 2024, some noteworthy projects passed FID, including in Sweden, the Netherlands, and Germany. Saudi Arabia’s NEOM hydrogen project – the world’s largest green hydrogen plant under construction – also made important progress in 2024.
Unfortunately, short-term hydrogen production costs have increased over the past year, driven by higher financing costs (primarily due to higher interest rates), higher capex costs (primarily due to higher electrolyzer costs), and higher renewable energy costs (also adversely impacted by higher interest rates and import tariffs in certain markets). Notwithstanding this near-term headwind, the hydrogen cost trajectory is promising. We see a pathway for target hydrogen production costs of US$2.50 to US$4.00 per kg by 2030.
On the demand side, excluding China, we expect ~9 Mt of in-the-money hydrogen demand by 2030, primarily in Europe, Japan, and South Korea. Overall, we expect certain fuel cell electric vehicle (FCEV) use cases to be in-the-money in China, some EU countries, and in the US hydrogen hubs and high-value corridors by 2030.
China is still forecasted to be the largest hydrogen market and FCEV market. As examples, China now has more than 300 hydrogen refueling stations (HRS) in operation. This is more than any other country. China is forecast to have 36% of global market share for FCEVs in 2030, the highest globally. China is also forecasted to produce 56 Mt of hydrogen in 2035 (or roughly one third of the 2035 global forecast of ~180 Mt).
While hydrogen policies in the US and Europe struggled during 2024, it is important to highlight two important outcomes, albeit with some significant qualifiers.
First, from September 2024 to January 20, 2025, the US Department of Energy was extraordinarily busy with various funding awards related to the hydrogen industry, including grants, credits, and loans. In addition, in early January, the Department of Treasury and IRS released (at long last) the final rules for the section 45V Clean Hydrogen Production Tax Credit. While the industry is still assessing the final rules, they are certainly an improvement from the draft proposed in December 2023.
Unfortunately, the flurry of Executive Orders issued by President Trump during his first few days back in the White House included a temporary “pause” on IRA and IIJA funds, including the issuance of new awards and the disbursement of federal funds under all open awards. We expect a strong reaction to this pause, including legal challenges to the Executive Order. Notwithstanding, this does mean the US hydrogen and fuel cell industry will experience yet another year of protracted policy uncertainties and delays in 2025.
And, second, sizeable funding awards were also granted in Europe to a number of companies in the hydrogen and fuel cell industry to support R&D activities (including IPCEI funding) and new production capacity for electrolyzers and fuel cells.
There is another industry highlight from 2024 that is noteworthy. Notwithstanding the challenging equity capital markets for hydrogen stories in 2024, Refire (fuel cells) and Guofo (hydrogens storage tanks) successfully completed IPOs on the Hong Kong stock exchange.
The first bright spot is the growing interest from European and North American transit operators in hydrogen fuel cell buses. As a reminder, the annual demand for new transit buses (of all powertrains) in Europe and North America is approximately 15,000 and 5,000, respectively.
Over the past year, Ballard has secured orders from seven bus OEMs to supply about 1,600 fuel cell engines – totalling about 130MW – for city transit buses in Europe and North America. These orders include the largest reported fuel cell orders in history for both the European and North America bus markets.
Collectively, these orders validate the growing end-market interest in the value proposition for hydrogen-powered fuel cell buses, including long-range, rapid refueling, route flexibility, performance in all weather conditions, and zero tailpipe emissions. These orders – primarily repeat business from existing Ballard OEM customers – also validate the proven field performance of Ballard’s fuel cell engines in various bus OEM platforms under demanding real-world conditions, including our track record for safety, reliability, availability, durability, quality, and fuel efficiency.
Taken together, the volume from these new orders for fuel cell engines in Europe and North America is roughly three times our current unit volumes in the field. In 2024, we had ~530 city buses in operation in Europe and North America powered by Ballard fuel cell engines, with zero reported safety incidents and an overall fuel cell availability rate of about 99%.
Based on Ballard’s leading field experience, dominant market share for PEM fuel cell engines installed in transit buses currently operating in the field in Europe and North America, and our extraordinary share of new awards in 2024, it is clear we are winning in these markets.
Ballard had record revenue from the European and North American bus markets in 2024, with these markets contributing over 60% of Ballard’s total 2024 revenue. We expect another strong year from these markets in 2025.
Next, we highlight our 2024 progress against the compelling opportunity to decarbonize the North American freight rail market. Here we see an exciting role for fuel cells to power locomotives, including for regular switching and local freight service applications. The North American freight rail market is characterized by long, heavy, high-powered trains being operated on long-distance rail routes that are non-electrified.
In this industry, Scope 1 GHG emissions and locomotive air emissions are overwhelmingly dominated by emissions from diesel locomotives. Hydrogen fuel cells offer the possibility to replace polluting diesel engines with a low-emission powertrain solution.
In this market, Canadian Pacific Kansas City (CPKC) is leading the charge into the future of fuel cell-powered locomotives. CPKC is the first and only single-line transnational railway linking Canada, the US, and Mexico. CPKC has a strong corporate commitment to safety and sustainability. As they like to say, they are committed to the long haul (I love this pun!). As part of their innovative Hydrogen Locomotive Program, CPKC is retrofitting several diesel locomotives with hydrogen fuel cells so they can operate without directly generating emissions.
Ballard has been collaborating with CPKC since 2021. Prototype diesel freight locomotives retrofitted with Ballard fuel cell engines, hydrogen storage, and battery packs have undergone various testing at CPKC since 2022. CPKC currently has three hydrogen locomotives in operation. CPKC’s high-horsepower hydrogen locomotive completed an important phase of testing in September 2024, successfully hauling both loaded and empty bulk trains.
In November 2024, CPKC and ATCO EnPower (a division of Canadian Utilities Limited) announced construction of hydrogen production and refueling facilities in Calgary and Edmonton was completed and the facilities were fully operational. Each of the facilities includes a 1MW electrolyzer, compression, storage, and dispensing systems for locomotive refueling. In Calgary, the electrolyzer is powered in part by renewable electricity from CPKC’s existing 5MW solar power facility co-located at CPKC’s headquarters.
From 2021 to 2024, Ballard had supplied CPKC with about 10MW of fuel cell engines to support its program. In December 2024, Ballard announced the signing of a new long term supply agreement with CPKC, which includes the supply of approximately 100 fuel cell engines, totalling approximately 20MW, in 2025. We believe this order is the largest in history globally for PEM fuel cell engines to be used in freight rail locomotives.
The LTSA and order represent the next step forward in CPKC’s decarbonization vision and confidence in hydrogen fuel cells as a potential long-term replacement of diesel engines, providing the environmental benefits along with long range, fast refueling, heavy payloads, and cold weather operation. CPKC intends to use the fuel cell engines to support the expansion of their Hydrogen Locomotive Program, as well as hydrogen conversion kits that CPKC will offer to transition other train operators to low-carbon locomotives, including through the CPKC-CSX joint venture.
On this front, notably, in 2024, CSX Transportation (an American Class I freight railroad company) unveiled its first hydrogen fuel cell locomotive, marking a significant milestone in sustainable freight transportation in the US. The CSX locomotive was converted from an existing diesel-electric locomotive using a hydrogen conversion kit developed by CPKC and incorporating Ballard fuel cell engines. CSX has been conducting field testing to provide critical data on the locomotive’s performance in real-world conditions, which will be essential for determining the scalability of hydrogen fuel cell technology for broader use across CSX’s operations.
We look forward to continued progress in the North American freight rail market in 2025.
We had an impressive growth year in producing and delivering our fuel cell engines. We increased our total number of modules delivered from 517 in 2023 to 669 in 2024, representing a growth rate of 29%. We saw nearly 30% YOY growth in modules delivered and a 10% increase in MW shipped compared to 2023.
2024 was also a record year for Ballard in terms of total new order intake for our Power Products. We also set a new record for total new order intake in a quarter. Our total new order intake was an extraordinary outcome given the challenging industry dynamics. Ballard was front and center for most major commercial order announcements for PEM fuel cells in 2024.
In 2024, we made clear progress against our current product portfolio, our technology and product roadmap, and execution of high-impact development programs.
First, we highlight the launch of our ninth generation high-performance fuel cell engine – named FCmove®-XD – at the Advanced Clean Transportation (ACT) Expo in May 2024 and the “twin engine” 240kW configuration at IAA 2024 in Hannover, Germany in September. With the unveiling of this engine, we continued to reset the industry standard for PEM fuel cell engine performance for heavy-duty mobility. FCmove®-XD delivers significant improvements in reliability, durability, efficiency, power density, scalability, serviceability, and total cost of ownership (TCO).
• 120 kW of net power output from our latest high-performance single cell row stack
• 33% reduction in total parts count, significantly improving reliability and reducing costs
• Ultra-high peak system efficiency at >60%, enabling improved fuel consumption and efficient heat rejection
• Wide operating temperature range, up to 95°C and down to -30°C
• Integrated power controller incorporates DC/DC converter, air compressor inverter, and a power distribution unit, along with proprietary software controls, enables improved engine operation and efficiency
• Rapid up and down transient times, with an innovative hot stand-by mode enabling rapid power increase
• Improved manufacturability with >50% assembly time reduction
• Easier access to parts for faster and lower-cost field maintenance
• Compliance with applicable safety codes and standards
One of the compelling features of our new FCmove®-XD is scalability based on modularity. The scalable 120kW fuel cell engine integrates DC/DC regulated output, enabling up to three modules to operate as one system with a single interface, capable of delivering a combined 360kW or zero-emission power output, dependent on truck class, use case, and duty cycle.
But we did not rest on our laurels in 2024. In fact, we made important progress on our next generation of fuel cell stacks and modules, with a heavily weighted focus on product cost reduction.
For our fuel cell stacks, we realized important milestones on membrane electrode assemblies (MEAs), bipolar plates (BPPs), and related stack compression hardware. We are driving down the cost of next-generation modules through simplifying system design, reducing part count, and joint supplier component development.
We also pushed forward in 2024 on early development work for our next-generation small engine, where we are targeting further improvements in TCO, power density, simplified integration, and ISO26262 compliance for safety and cybersecurity. We forecast this new engine will achieve significant cost reduction and an impressive volumetric reduction.
In summary, 2024 was a banner year at Ballard for product innovation, including our ongoing programs on product cost reduction. Product cost reduction is critically important to enable broader market adoption, while also enabling gross margin expansion. Improvements in our margins are essential to our financial model and our path to profitability.
As we look to our long-term strategic plan and cascading capital allocation, we continue to have high conviction on hydrogen and PEM fuel cells playing an important role in decarbonizing select heavy mobility and stationary power applications. We see compelling use cases where customers are attracted to the differentiated PEM fuel cell value proposition of long range, fast refueling, heavy payload, and zero emissions.
As an industry, we must continue to push for strong, clear, and stable policy support that enables investments and early adoption. We must ensure policies are targeted at both supply and demand.
At Ballard, for 2025, we will continue to focus on our customers and our controllables, including the development of next-generation, low-cost fuel cell products, while effectively and efficiently managing our operations, working hard to realize every point of margin, and maintaining disciplined spending and balance sheet strength for long-term competitiveness, profitability, and sustainability.
As I recently discussed with a colleague, our industry is difficult. A comprehensive energy transition, supported by both green electrons and green molecules, is profoundly challenging. We are also working to disrupt and compete with deeply entrenched incumbent technologies in heavy mobility powertrains. Yeah, this is difficult. But almost everything worth fighting for is difficult.
So sure, we don’t do easy at Ballard. But our entire team gets fired up every morning by this very challenge. We have more work to do in 2025 on our journey to deliver fuel cell power for a sustainable planet.
Randy