Energy firms in area are hoping to clean up

Ten years ago the information superhighway cut a large swath through Boston's northwest suburbs, followed closely by booms in biotechnology and telecommunications. In another decade the region could be at the center of an emerging sector powered by hydrogen and other clean-fuel technologies.

Out of the 100-plus companies around the world pursuing fuel-cell and hydrogen-related technologies, more than half have operations in the state, according to a report prepared by the Massachusetts Fuel Cell Partnership and presented to state lawmakers this month. Nearly two dozen of those ventures are concentrated within a short distance of Route 128 and Interstate 93 north of Boston, creating an industrial cluster that already is among the largest of its kind in the country.

"There's a huge amount of talent in this area, with some really smart people working on different energy solutions," said Ken Lazarus, chief executive officer at Lilliputian Systems Inc. in Wilmington. "With a little luck, it could be the catalyst for a lot of new jobs and economic growth around here in the future."

Lilliputian Systems, building on research by microsystem engineers at the Massachusetts Institute of Technology, is working on tiny, butane-burning fuel cells that can be embedded on silicon chips and used to power portable electronic devices such as cellular telephones and hand-held computers.

It's an enticing and potentially lucrative technology, although Lazarus is careful not to divulge too much about the four-year-old firm -- in part to keep overheated expectations from swamping reality.

There's good reason for being cautious. Hydrogen -- by far the most abundant element on earth -- has long been touted as an alternative to oil for the world's energy needs. Few practical products, however, have reached the market. But momentum has been building in recent years, and many experts believe that fuel-cell technology is finally ready to yield real-world results.

Area companies also are beginning to attract serious investment dollars. Lilliputian late last year closed on $30 million in new funding from two local venture-capital firms, Atlas Venture and RockPort Capital Partners, as well as Kleiner Perkins Caufield & Byers of Menlo Park, Calif. In fact, Kleiner Perkins, which previously bankrolled winners such as Netscape, Amazon, and Google, is so high on the sector that it created a fund dedicated solely for new-energy investments.

Other recent venture recipients include Woburn-based Nova Analytics Corp., an expansion-minded manufacturer of electrochemical equipment that has acquired three foreign rivals over the past 12 months. In all, Massachusetts alternative energy companies have pulled down about $98.7 million in funding through the first nine months of 2006, according to data compiled by the National Venture Capital Association.

The influx of venture capital reflects how the industry has shifted from "the tree-huggers to people being practical," said Robert Crowley, president of the Massachusetts Technology Development Corp., a state-sponsored but self-supporting organization providing early-stage funding to Massachusetts firms.

The federal government also continues to direct funding into hydrogen research. For example, Nuvera Fuel Cells Inc. -- which will relocate to Billerica next summer from Cambridge -- in October received a $4.9 million federal contract to operate a hydrogen-powered bus and refueling station at Logan International Airport. The company also recently got a $5 million four-year grant from the US Department of Energy to study how to better manage the flow of water through fuel cells.

In a way, the fuel cells being developed at Nuvera and several other companies reverse the junior high chemistry experiment of separating water into hydrogen and oxygen with an electric current. Instead, hydrogen gas is broken down inside a fuel cell into its electrons and protons, with the positive ions (protons) getting pulled to a terminal, where they combine with oxygen to form water vapor.

The hydrogen electrons (which have a negative charge), meanwhile, travel through an external circuit to create electricity that is then used to turn the wheels of a car or bus.

Nuvera is also working on fuel processors to convert gasoline, natural gas, and just about any other type of hydrocarbon fuel into hydrogen, addressing the current lack of hydrogen fueling stations.

But the need for electricity to convert a fuel into hydrogen that then is turned back into electricity remains a significant challenge, limiting the commercial viability of many hydrogen technologies. Fuel cells also are expensive, with the electrochemical process typically requiring a catalyst such as platinum to work.

Because of those technological and economic challenges, even optimists say it is unlikely that hydrogen-powered passenger vehicles will be on the road in any great numbers within the next decade.

A few automakers, including DaimlerChrysler AG and Honda Motor Co. , plan to debut demonstration models during the next year or so, with Honda announcing this month that it would begin leasing hydrogen fuel-cell cars in this country starting in 2008.

Skeptics contend there will not be much of a market for hydrogen-powered vehicles until there is an adequate refueling system in place -- another pricey proposition, easily costing billions of dollars to replicate the current network of gasoline and diesel refiners, transporters, and filling stations. Moreover, it is unlikely that many private businesses would step forward to shoulder that expense until more hydrogen-powered cars are on the road, creating demand for the fuel.

One local company, however, is stepping up without waiting for an answer to that "chicken or the egg" riddle.

Woburn-based Ztek Corp. this summer was contracted by the Navy to collaborate on a hydrogen fueling station at Camp Pendleton in California. Hydrogen for the station, scheduled to open early next year, will be supplied from a Ztek stationary power plant being installed at the Marine Corps base to supplement its electrical needs.

Both the Navy and the company expect to sell excess hydrogen from the facility to the general public at as many as four stations in the Los Angeles-San Diego corridor.

According to Ztek's CEO, Michael Hsu, the company's natural gas-burning hydrogen reformers have several advantages over other technologies, starting with their relatively small size.

A 10-foot-square by 10-foot-high reformer can produce about 4,000 cubic feet of hydrogen gas per hour while generating about 75 kilowatts of electricity.

That would make the devices attractive to existing gas station owners, who could decide themselves how much hydrogen to make depending on customer demand.

Ztek also has a hydrogen reformer installed as part of a demonstration project at Dinosaur State Park near Rocky Hill, Conn., although Hsu said it is no coincidence that California drivers will be among the first to regularly top off their tanks with hydrogen.

"Directly and indirectly, they're the ones who are influencing this business," said Hsu, who added that he hopes to collaborate with Nuvera to supply hydrogen directly to the Logan bus demonstration, establishing the first refueling station in the state.