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Armenian Fuel Cell Makers Get Down To Business

By Emil Danielyan

Armenian researchers developing fuel cells, a cutting-edge technology to convert hydrogen and oxygen into energy, have embarked on a commercialization of their products, samples of which have already been sent to potential buyers. Their newly created company will seek to lure investors in the United States where fuel cells are increasingly viewed as the most viable alternative to fossil fuels.

Photo: An Armenian-made fuel cell powering an electrical lamp

The company called H2 ECOnomy was formally registered last week. It is owned by SolarEn International Corporation, a high-tech business incubator set up two years ago by an Armenian-American investor.

"We have developed our know-how, it's time to think about making money," H2 ECOnomy's general manager, Agassy Manoukian, told RFE/RL this week.

"We already have a pilot-scale production and are now looking for investors to put the manufacturing process on a larger scale," said Vahe Odabashian, the company's vice-president responsible for product promotion and sales.

The hunt for U.S. venture capital is now on, the two men said. H2 ECOnomy's business plan envisages to attract some $2.5 million in investments in the next five years. The figure may be modest by American standards, but finding investors willing to venture into the still underdeveloped realm of fuel cells is a daunting task. The environmentally-friendly technology, touted as "the hydrogen future" of the world, is still far from being commercialized because of its high costs and availability of cheap oil and natural gas.

But things are beginning to look up as more and more Western multinationals, mindful of the eventual depletion of the earth's hydrocarbon reserves, become interested in the subject. This is particularly true for U.S., European and Japanese car-makers. The giants like General Motors, Ford and DaimlerChrysler have massive fuel-cell development programs. Japan's Honda moved one step ahead of them this week, announcing plans to start sales of hydrogen-powered cars in the U.S. next year.

Last month the U.S. auto-makers got a big boost from the administration of President George W. Bush which pledged to subsidize research and development of such vehicles. Bush's "Freedom Car" initiative is seen as part of a broader effort to reduce America's dependence on Middle Eastern oil.

"As an investor, the time to be involved in fuel cells and hydrogen is now," Andrew Bermingham, a top executive from the U.S. venture capital firm Hydrogenica Partners, told an online technology news service last week. Hydrogenica has already funded several fuel cell startups.

These developments should be a good news for Armenia's H2 ECOnomy as well. Although its current energy devices are not designed for cars, it hopes that increased spending on the hydrogen technology will spur global demand in all fuel cell products.

"The demand is there," Manoukian said. "Many firms are getting involved in fuel cell production and will increasingly need assembly components."

Some of them have already received product samples from Armenia and are said to be interested in their continued supplies.

The technological process of the new way of power generation is quite 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 current that can be utilized before they are reunited with the hydrogen protons and oxygen. Their fusion into a molecule of water generates heat.

The system thus produces energy in the form of electricity and heat. It typically contains several fuel cells that are put together in a "stack." The only emission it creates is water.

The technology's principal disadvantage is that hydrogen is still far more expensive than the traditional energy sources. The invisible gas is mainly obtained from hydrocarbons and water - a chemical process which itself requires a lot of energy.

There already exist experimental models of fuel cell-powered vehicles, portable electronics items, vending machines and even road signs. The fuel cells can also feed a whole power plant.

The devices offered for sale by H2 ECOnomy have a 50 Watt capacity, enough to plug in a laptop computer. Manoukian, a 30-year-old graduate of the University of Toledo in Ohio, said the company is now exploring the possibility of manufacturing fuel cells tailored for scooters.

In addition to producing fuel cell stacks and their separate parts, the Armenian startup is working on other supporting devices. It has already sold 15 "DC/DC converters" in the U.S. which allow users to adjust electricity voltage from fuel cells for their portable appliances. Also, H2 ECOnomy is currently assembling, on order, a computerized "test station" used for the evaluation of fuel cells' operational parameters.

"I'm sure that once we get production going we won't have problems selling it," said Odabashian, arguing that substantially lower production costs give H2 ECOnomy a crucial advantage over its potential competitors in the West.

This will be a key argument cited by the company's American president, Serge Adamian, in his search for investors. Success of that endeavor will allow his firm, which currently employs only ten people, to hire between 30 and 40 new Armenian specialists. Based in the U.S., Adamian frequently shuttles between his Los Angeles and Yerevan offices. He also manages operations of other SolarEn divisions. They all have been financed by Gerard Cafesjian, a U.S billionaire of Armenian origin.

According to the H2 ECOnomy executives, who regularly attend specialized conferences in Europe and the U.S., Western fuel cell makers are unusually secretive about their plans, anxious not to reveal any details of their technology. "In this business it's very hard to protect your know-how against copyright violations," Manoukian explained. "This is what hampers the commercialization of this kind of products."

"Everybody is waiting for something to happen," he said.