U.S. To Fund Hydrogen Energy Research In Armenia

The United States government will provide a $500,000 scientific grant to a small Armenian company involved in the development of fuel cells, a forward-looking technology to transform hydrogen and oxygen into electricity.

The funding is to be allocated to the Yerevan-based firm H2 ECOnomy through a major research center of the U.S. Department of Energy (DOE) starting from September. The company executives say it will mark a milestone in their two-year efforts to commercialize hydrogen-powered engines increasingly seen as the most viable alternative to the world's shrinking hydrocarbon resources.

H2 ECOnomy was set up in 2002 as an offshoot of research on sources of renewable energy for Armenia which is sponsored by the private charity of Gerard Cafesjian, a U.S. philanthropist of Armenian descent. It currently employs about 30 people, most of them experienced scientists.

H2 ECOnomy already manufactures several types of fuel cells and auxiliary products on a small scale, selling their samples to researchers around the world. The two-year U.S. grant is aimed at improving their technical parameters and cost-effectiveness.

Officials from the U.S. National Renewable Energy Laboratory (NREL), the DOE's Colorado-based research arm, say the decision to support the Armenian start-up reflects their belief in its future.

"In terms of technology development, H2 ECOnomy has had one of the highest, if not the highest, return on investment of any fuel cell start-up," said John Turner, NREL's top scientist known as "Mr. Hydrogen Fuel Cell" in American scientific circles. "Similar fuel cell start-ups in other countries needed from $20 million to $50 million to get to this point."

The Cafesjian Foundation's investments in H2 ECOnomy have been far more modest. For the company's executive director, Agassy Manoukian, the U.S. government funding is not only an opportunity to advance research but also a recognition of its achievements. "Recognition by the Department of Energy will carry a lot of weight with potential investors," he said.

"It's one thing to hear about fuel cell business in a little known place like Armenia, and it's another thing to see that there is a local firm that has received a DOE grant for its achievements," the company's vice-president, Vahe Odabashian, agreed.

H2 ECOnomy has been looking for profit-seeking foreign investors almost from the day of its creation. Its initial business strategy envisaged the launch of large-scale manufacturing operations inside Armenia. Capital investments needed for that were estimated at $2.5 million.

The problem is that none of the dozens of fuel cell companies around the world, many of them owned by multinational car-makers, is believed to be profitable yet. They still have a long way to go before making the technology, which can power anything ranging from mobile phones to buses, affordable for mass consumption.

The technological process of the environmentally friendly power generation is remarkably simple. Hydrogen is fed into a fuel cell before two electrodes placed inside the latter cause its atoms to split into electrons and protons. The electrons create a separate electrical current that can be utilized before they are reunited with the hydrogen protons and oxygen. Their fusion into a molecule of water creates additional energy in the form of heat. The sole resulting emission is water.

But there is a catch. Extracting hydrogen from other substances such as hydrocarbons and water, is itself a very costly and power-consuming chemical process. Pressurized storage of the very light gas requires additional expenses.

Fuel cell experts believe that the search for a more cost-effective technology will intensify in the next few decades as the world gradually runs out of its oil and natural gas deposits. "The transition to a hydrogen-based energy system can occur in the 20 to 40-year time frame if governments will make a strong focused effort to bring it about," Turner told RFE/RL.

According to the H2 ECOnomy managers, a more realistic goal now is to become a big research center that would sell fuel cell know-how to foreign manufacturers. "Armenia is a logistical hell. It's hard to bring in large supplies and ship the production abroad," Odabashian explained.

Turner believes that the company is already "well positioned" to achieve that. "There are a number of markets today where H2 ECOnomy's fuel cell products can compete with current technologies," he said. "These areas include reliable back-up power or UPS systems and remote applications in the telecommunications area."

H2 ECOnomy's latest product is a fuel cell-based UPS extender with a capacity of 1 kilowatt. It can simultaneously power three personal computers.

The forthcoming U.S. grant is part of the U.S. Energy Department's ongoing Initiatives for Proliferation Prevention (IPP) program. It was launched in 1994 with a stated mission to "enhance US national security by engaging former Soviet Union weapons scientists, engineers and technicians currently or formerly involved with weapons of mass destruction in peaceful and sustainable commercial pursuits." Armenia was included in the scheme in July 2002.

In the words of Ken Touryan, a program manager at NREL, as many as 14,600 ex-Soviet scientists have already benefited from IPP. "IPP provides economic benefits to both the former Soviet and US economies by engaging partners from U.S. industry, which results in an acceleration of the commercialization of technologies in the ex-USSR," he said.

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