Expert Insight: Thinking Outside the Box
By David Schneider
Date: February 11, 2010

Logistics Comment: Alternative Forklift Power Sources

There are Several Options, but Right Now ROI for Fuel Cell Equipment is a Challenge

With all of the different pushes for “green” energy in the past few years, efforts to make warehousing and distribution have not been overlooked.  One area of focus is the industrial lift truck market.  Fuel cell technology started to appear into the market about 5 years ago, first with hydrogen powered cells followed by methanol-based technology.

Everything in management and engineering has positive and negative aspects.  While much of the industry information, and most of the coverage in the press, focuses on the positives, there has been little focus on the negative aspects that could give a potential buyer pause in the decision.

I believe that to make an informed and effective decision you need the facts – both positive and negative – and then weigh the issues.  In what follows I am taking a look at the practical issues that a distribution leader would have to face with addressing any power system, conventional battery charging or fuel cell technology.  

Fuel Cell Technology vs. Conventional Battery Charging

Both fuel cell technologies have inherent life safety issues and images and code enforcement regulation that require negotiation for the project to be a success. Images of the Hindenburg disaster come to mind to most people when you start talking about hydrogen in a warehouse. Methanol is an inherently dangerous fuel that requires special storage and handling to meet fire codes. So the storage and fueling operations for either technology will come under a greater level of scrutiny by local fire code enforcement officers and the insurance carriers for the warehouse facilities than the more traditional industrial battery charging systems used in most warehouses today.  Since they are both new and somewhat untested expect more educational effort to “teach” the fire or insurance inspectors about the technology.

Fuel cell technology in warehouse operations faces a substantial economic headwind compared to existing traditional industrial battery technology. A well-designed industrial battery charging area does require some space, typical space needed for dedicated battery charging and changing area in a modern warehouse is +/- 5,000 square feet. In most modern operations these charging areas no longer need a dedicated room with walls and special ventilation. Considering the size of modern distribution centers being 500,000  to 1,000,000 square feet, a 5,000 square foot charging area is only .5% to 1% of the total building area, equivalent to the space dedicated for rest rooms support for the employees in the building. While there is capital expense needed for the purchase of equipment and electrical circuit infrastructure, the costs are less than or equal to the infrastructure requirements for the fueling systems needed to support the fuel cell technology.

A hydrogen-based technology requires a substantial fuel tank that is typically required to be kept outside of the warehouse building. In modern distribution operations the lift trucks seldom exit the building, so the fueling needed to be in the building interior. To support interior fueling piping is needed to carry the hydrogen fuel from the storage tank.  Life / Safety codes require the internal fuel facility to provide exhaust ventilation of any escaped hydrogen gas out of the building. Local officials could require explosive proof electrical fixtures in the area of the fueling operation. While the fueling operation for the lift trucks could be outside, a substantial capital investment would be required to provide protection from the outdoor weather elements for industrial trucks that are designed to be operated inside a building.

A methanol-based technology is available in the market today. The methanol system operates as a "topping off" of the charge of an existing lead acid industrial battery. The lead acid battery still requires an initial base charge and weekly equalization charges from a traditional charger. A higher level of maintenance management is required to manage the effort. Methanol as a fuel is a volatile and highly flammable fuel and the fire codes could require a substantial expense to support methanol storage inside of a warehouse operation. While a solution with an external tank similar to the hydrogen could be used, many of the same fire code interpretation issues will emerge with methanol technology.

Converting an existing warehouse facility from traditional industrial battery technology to fuel cell-based technology meets a substantial ROI challenge in today's economy. An existing facility has a substantial investment in the current technology, and would have to take a significant asset write-down to convert, adding to the cost in an ROI calculation.  If fuel cell technology was more cost-efficient we would see a substantial demand for conversion of existing systems, but there is little evidence TODAY that fuel cell technology provides a lower operating cost than traditional systems.  This could change as fuel cell technology becomes more mature and robust, or as economic conditions change further.

Where fuel cell technology could be an economic winner is in a new operation where a substantial investment in traditional technology has not been made. The facilities can be designed to support the storage and fueling operations and in construction all of the requirements of the local code enforcement officers can be met more economically than in a retrofit.

In the current economic environment fuel cell technology is attractive today only if there is a high pressure to be "green" in image. If the technology was truly economically superior there would be a much greater demand for the fuel cells and the supporting infrastructure. Just like any other emerging technology there are companies that are willing to be on the "bleeding edge" and become early adopters. The early adopters are either motivated by the publicity benefit of the adoption of the "green" technology and or are motivated by the need to research on their own what is needed to embrace the new technology and to understand its economic impact.

Final Thoughts

As with every other new technology, as more is understood about the use of fuel cells in an industrial truck application many of the barriers that exist today will fall as knowledge is built. Those barriers create the economic friction that retards demand for fuel cell technology in this application. The barriers, and the friction, will dissolve and at some point the economics for fuel cell technology will become more competitive. What is not known is how competitive fuel cell technology will be when compared to other emerging energy technologies, such as wind and solar and how those technologies could be utilized to support the existing traditional industrial truck battery technology.

Agree or disgree with Schneider's perspective? What would you add? Let us know your thoughts for publication in the SCDigest newsletter Feedback section, and on the website. Upon request, comments will be posted with the respondent's name or company withheld.

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About the Author
David Schneider is founder and president of David K. Schneider & Company, a supply chain and logistics consulting firm. Prior to that, he was Director of Logistics for Pep Boys Auto and a consultant at Keough.

Schneider Says:

To make an informed and effective decision you need the facts – both positive and negative – and then weigh the issues.

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Logistics Comment: Alternative Forklift Power Sources

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