Voller Energy

Source: Energy Digital

Date :29/08/2007 14:09:06

The search for the ‘killer application’ takes Voller Energy beyond the green premium

Voller Energy Group is one of the first companies in the world from which fuel cell systems can be purchased. Founder and CEO Stephen Voller spoke to James Hurley about ‘Voller’s Law’ and how a niche marketing strategy has seen the company develop an initial focus on the development of power systems for yachts

Written by James Hurley & Produced by Alex Smith

A European green technology company focused on alternative, renewable and new energy technologies for a lower carbon economy, Voller Energy was founded in 2002 by Stephen Voller and Mike Clarke to produce battery chargers and mobile generators based on patented fuel cell technology. “In my previous job, I travelled around the world with Netscape, one of the first Internet companies,” says Stephen, explaining the inspiration behind the founding of Voller Energy. “I used to fly quite a lot with my laptop and the battery would go flat. I really began thinking about why that was, and whether a better battery could be made. In applications where batteries are used, they’re usually the weak link in the configuration. Everybody would like them to last longer.

“In researching the market, I got together with my good friend Mike Clarke who is a mechanical engineer. We really began thinking about a hybrid solution to the problem; rather than a better battery, a fuel cell that can charge a battery.” Stephen likens the process to that of the Toyota Prius.

Fuel cell technology works by using a chemical reaction to generate electricity. “The idea is that there are no moving parts in the system which is why there no emissions, vibrations or noise from the system. The trick is to control that reaction so that it works consistently.

“The concept was, if you had a fuel cell continually charging a battery - no matter what its application was - you could make the battery last a lot longer between charges to the point where it can stay charged indefinitely if you continue to provide fuel to the fuel cell,” he says.

Early adoption

Voller Energy’s products create electricity without producing any toxic emissions - the only output from the current system is water. While this is clearly a significant advantage in the current consumer environment, Stephen Voller doesn’t believe the company can afford to rely on this factor in isolation. “I think a lot of people in the green technology space think there is a thing called the ‘green premium’, where people will pay more to have an environmentally friendly product. We have a thing called Voller’s Law, which essentially says they won’t; they will pay the same, or ideally, less. We have that written on the lab wall for all our engineers to see. We don’t assume there is a green premium, but people will pay more for extra benefits.”

As such, Voller is initially targeting commercially attractive areas which are likely to be early adopters of the technology since the benefits of using fuels cells - such as low noise, no toxic emissions and health and safety issues - are important drivers. With the green technology industry still very much in its infancy, Stephen believes this marketing focus will be central to the company’s long term success.

“I’ve been around new technology all my working life. When you launch a new technology, the first thing you do is launch it into a niche market. If you take the mobile phone industry as an example, it’s not so long ago that people were using brick phones. The marketing brochures that came out showed executives in the back of limousines using them, and people predicted that the market would grow. But the killer application for mobile phones was teenagers using SMS to send texts. The first marketers of the product had no idea that this was going to be the killer application.

“Clearly teenagers weren’t going to carry around brick phones and make very expensive voice calls. That’s where we are with fuel cells today, where we’ve got a few niche markets where, as the Americans say, there are a few ‘points of pain’ with incumbent technologies,” he explains.

The company identified yachts as one such area. “Yachts use noisy, smelly diesel generators. If you buy one for £250,000, the idea of sitting on the deck with a gin and tonic while this noisy smelly thing vibrates away next to you is obviously ludicrous.

What people do to avoid this is sit around in the dark. A fuel cell replaces this with a generator that’s inherently quiet, has low emissions and no smells. This means that you can sit there on your expensive boat and enjoy the ambience without upsetting the neighbours,” says Stephen.

The hydrogen question

With boats using an ever increasing amount of electrical equipment, including autopilots, instrument systems, refrigeration and lighting, there is a constant drain on yachts’ power. Other equipment such as electrical winches and computers are also becoming far more common, so Voller’s product seems to have the potential to be a ‘killer application’ for yacht owners. It is developing a 'fit and forget' power unit that can supply the house power load and keep batteries charged automatically; Voller Energy's reformer technology can be easily integrated into a yachts electrical systems to work from the yachts existing diesel or liquiliquefiedd petroleum gas (LPG) or propane supplies.

Crucially, Voller's fuel cells are not dependent on the emergence of a hydrogen infrastructure, which may take many years to develop. Through its acquisition of KAT-Chem in February 2005, Voller has acquired a low cost fuel processor technology which means that it can extract the hydrogen found in fuels such as propane, LPG, diesel and the military fuel JP-8. This supply of hydrogen from commonly available fuels will help to ensure the early and widespread adoption of its products.

“Fuel cells are not new technology - they have been around for 150 years. They have not reached a commercial market because they need hydrogen, which isn’t something you can get hold of easily. That’s still true today. Instead of that, we adapted the technology so that you could use substances that were readily available. The first product, which is now being shipped, is using propane, which of course is available in thousands of outlets,” Stephen explains.

The focus on this niche market is a simple yet ingenious strategy. “Clearly, for that market, when you introduce something which is a new technology replacing a mature technology, there’s going to be a price premium, because we’re not making fuel cells in the large numbers people make conventional generators. But people are prepared to pay that premium if there’s a good reason to do it. Today, it’s still a niche, premium product but as we get the technology smaller, more powerful and less expensive the applications will broaden.”

Discreet steps

The company’s unique marketing focus is matched by a tailored and sober approach to manufacturing, going forward in what Stephen calls ‘discreet steps’ instead of rushing into low-cost, outsourced manufacturing.

“It’s a bit of a conversation stopper at cocktail parties,” he says. “When I say I run a fuel cell manufacturing business, they say ‘surely you do that in China’. We’ve created this perception in the UK that we’re no good at manufacturing. That staggers me because there are so many examples of high quality manufacturing within the UK. With high quality products the UK really is the best, and the rest of the world looks up to us. Of course, the UK has never been particularly good at mass production – there are many examples of when mass production just hasn’t worked here, but we’re a long way from that issue.”

While the company does organise regular trips to the Far East and is constantly talking to people about developing the product, Stephen says low cost solutions are fine “if you have a mature product and you can order container loads of it. But you have to be very certain about what you want as there is little flexibility. When you have manufacturing in the same building that’s not such a big issue.”

Voller Energy has a quality manufacturing process that is similar to the six sigma approach employed by numerous manufacturers. “We don’t adopt six sigma, because we’re developing new technology rather than mass producing stuff, but our strategy is very similar. The key USP that you build up within a business is the know how of how you put things together. A lot of people measure companies on their intellectual property or patents, which is one way of doing it of course, but the really important thing is being able to produce something.

If your product needs 80 key components and sub-assemblies to work and you’ve got 79, you haven’t got a product. You need to have the whole thing and deliver the fully working system and that’s what we do as a manufacturer,” he says.

“Manufacturing businesses go forward in discreet steps. Analysts like to draw a smooth curve going up but in fact it’s a ‘step’ curve. There are a number of cycles and improvements that you have to go through before moving into low cost manufacturing.”

Another challenge of operating within such a cutting edge niche is that the supply chain infrastructure hasn’t yet matured to match Voller’s own development.

Stephen illustrates this by recalling his time at IBM, when the first power supply came from a washing machine. “We’re using components in our systems at the moment that clearly aren’t designed for fuel cells – the pump we use in the system is designed for the medical industry. It works very well but it is massively over engineered for what we need. But it’s a bit of a chicken and egg situation – until pump suppliers start to see an industry developing, they won’t develop the pumps. You have to start with the ‘washing machine power supply’ and then when manufacturers see the demand they will produce something much more specific.”

If Voller Energy can deliver this increased demand, it’s likely that the company will develop a whole host of applications that will have much broader market appeal. “In 20 years time, I believe fuel cells will be everywhere. A child born today will probably have a fuel cell powered car as their first car,” says Stephen. “The fantastic thing is that our products produce the energy that we all need, and the only emission from the system is pure water. But we are not about building systems that are just environmentally friendly. Fuel cell generators are quiet and in many ways more efficient than conventional generators."