Nasdaq listed FuelCell Energy, has just posted its Q3 results for fiscal 2005.

After the closing bell Monday, FuelCell posted a loss after paying preferred dividends, of $18.6 million, or 38 cents per share. That compares with a year-ago loss of $19.2 million, or 40 cents per share. Today, the stock closed up nearly 8% to 10.30.

What makes FCE different to other fuel cell companies are that it is situating itself at the larger power end of the market, up to 2 MW and above all their patented, "Direct Fuel Cells" which produce hydrogen directly from natural gas. This circumvents the cost of producing and transporting pure industrial hydrogen into a fuel cell.

For reasons I have not been able to discover, australian listed Ceramic Fuel Cells rose 300% on Friday to close at AUD 0.60.

What's fascinating is that In terms of its business model, product range and target market, CFC is almost identical to Ceres Power - as discussed below. It is partnering with large utilities like RWE and New Zealand's Powerco, to target the Combined Heat and Power Market, with its fuel cells that run off natural gas.

The promise of domestic CHP fuel cells is to substantially reduce emissions - perhaps by half - compared to a typical hot water boiler and using electricity from the National Grid for the same amount of expended energy.

It used to be thought that it was more a question of if fuel cells would ever come into the home. Now it's looking more like when. There are though two questions that need to be answered;

at what price are consumers ready to buy fuel cells?

and will governments step in to incentivise them?

My guess is that over the next 2 to 3 years we will find out the answers. And Ceres Power and CFC will either be on the road to greatness or the dirt track to nowhere.

London Aim-listed Ceres Power, a company that plans to mass produce solid oxide fuel cells for the combined heat and power market, has just signed up a critically important partner, Centrica. Centrica, formerly known as British Gas, is the dominant player in the business of providing gas to British homes for heating and cooking.

This could be a breakthrough development. By using the fuel cell to make electricity in the household, fed by gas from the UK's gas network, the national grid is bypassed leading to much lower power costs. Typically, two-thirds of the retail price of electricity are in its distribution from the power plant to the end consumer.

On a more practical level, a boiler takes up a lot of space, but this fuel cell isn't much bigger than a pack of CD cases. If Ceres Power do become the first company to mass manufacture fuel cells for the domestic market, their target has to be to bring costs down to that of a replacement boiler.

Then the world's fuel cell market just might be their oyster.

Ceres Power closed on Friday at 122p.

For those of you new to the categorisation of fuel cell stocks, this Wall Street transcript interview with Pearce Hammond published yesterday is an excellent start.

Hammond points out that if you look at Ballard, Plug Power and Fuel Cell Energy, they are 3 completely different business models. Ballard is fuel cells for automobiles, Plug Power for the backup battery market and FCE for the stationary base load power plant. He then further discusses each company and fuel cells in some detail.

As discussed earlier in these posts, there are also mobile micro fuel cells which we are likely to see shortly from Medis Tech.

Fuel Cell stocks had a huge following in the late 90s and then crashed spectacularly - admittedly along with many others. Now though, record oil prices, better technology and renewed investor interest all point to considerable growth potential for this sector.

I always thought that fuel cell companies work in unglamorous industrial estates. Well Hoku Scientific - hoku is hawaiian for star - works out of Hawaii.

Their IPO was launched at $6 two days ago, closed down disappointingly at $5.36 but closed up yesterday at $6.40.

What makes this company unusual in the fuel cell business is that it is concentrating on the membrane components, not the whole fuel cell. It also enjoys backing from Sanyo. The target market is to provide membranes for a 1kw fuel cell for the japanese market - priced at about $5000.

There are quite a few companies looking to break into the domestic market for fuel cells. It just might happen in Japan first - where consumers already accept very high energy costs.

Millennium Cell closed up over 21% on the day to $2.22. As this article shows, MC is one of the leading companies trying to crack the problem of hydrogen storage.

"The most critical barrier to the hydrogen economy" says Steve Chalk of the Department of Energy, is creating a viable hydrogen storage platform. More specifically, weight, volume, cost and refuelling times are the limits right now. The DoE is now sponsoring research to meet these goals.

President Bush gave a speech 2 years ago claiming that any child born now should be learning to drive on a hydrogen vehicle. Right now, that's looking unlikely.

Nasdaq listed Millennium Cell has just reported a net loss for Q2 of $5.8 m. Today the stock closed up over 13% at $1.88.

Millennium Cell's corporate focus is to develop hydrogen battery technology through a patented chemical process that stores and delivers hydrogen energy to power portable devices.

The stock has clearly done well this past year, ranging from 80 cents, rising swiftly to as high as $3.15.

Now that's what I call volatility !