Ballard hopes India deal sparks fuel cell demand
OTTAWA, Oct 10 (Reuters) - Ballard Power Systems Inc (BLD.TO) (BLDP.O) said on Friday that it hopes a major supply deal with telecom companies in India for back-up power systems using its fuel cells will pave the way for similar sales.
Ballard will supply 5 kilowatt natural gas fuel cells to a joint venture of Acme Group and IdaTech Plc (IDAT.L), which will manufacture and assemble systems to provide backup power for wireless base stations in India.
Ballard will provide Indian telecoms infrastructure supplier Acme and fuel cell maker IdaTech is for 1,000 units in 2009 and 9,000 units in 2010, subject to product design and specification approval, the companies said after markets on Thursday.
The deal, Ballard's biggest contract ever, represents an "interesting market opportunity" said Guy McAree, director of corporate relations.
"There's nothing definitive we can say about that, but there are other markets that have similar attributes, similar characteristics," said McAree.
"They are markets where the electrical grid is shaky and where there's real significant growth in telecom services."
India's wireless network is growing at a torrid pace, with Acme installing close to 200 base stations daily. However, service is beset by frequent outages because the power supply is unstable, he said.
"Other countries may not have as severe a problem, but they exhibit the same characteristics and that means you've got an interesting market opportunity."
Under the deal, Ballard will first supply existing fuel cell products that require a direct hydrogen feed. It is developing products for delivery in 2010 that work on a system that extracts hydrogen from natural gas.
Fuel cells produce electrical power through a chemical reaction, rather than combustion as in a diesel generator.
"If all goes well, the 10,000 units will be worth a minimum of $25 million to Ballard," BMO analyst Brian Piccioni said in a note.
"This is (potentially) the first true commercial sale of fuel cells ever, and strongly positive news for Ballard, though it is unfortunate volume sales will not materialize until late 2009 and 2010."
The deal is three times the volume of a previous Acme supply arrangement which it replaces.
Ballard shares were one of the few bright spots in Friday's market meltdown, adding nearly 19 percent on Nasdaq to end at $2.74 and gaining 4 percent on the Toronto Stock Exchange to close at C$2.73. ($1=$1.18 Canadian) (Reporting by Susan Taylor; editing by Rob Wilson)
