“It’s almost impossible to do a good fuel cell without platinum as a catalyst,” Vlatko Vlatkovic, chief engineering officer of GE’s Power Conversion division, said in an interview in London. “Very little goes in, but if you scale it up, there’s not enough platinum in the world.”

GE’s comments reveal constraints that may keep fuel cells from penetrating the energy market as a mainstream technology. Fuel cells use hydrogen or natural gas to generate power through a chemical reaction, and the most common technology needs the scarce element as a catalyst.

Shares of U.S. fuel cell companies such as Plug Power Inc. and FuelCell Energy Inc. have surged in the past two months as rising sales convince investors the technology may become a viable alternative to burning fossil fuels to produce electricity.

The most common fuel-cell design uses proton-exchange technology, which requires platinum or palladium, some of the earth’s rarest elements. Platinum currently sells for about $1,400 an ounce. Palladium goes for about $760, data compiled by Bloomberg show.

That means Plug Power and its competitors have a “viable niche,” but one that would be very hard to scale-up massively, Vlatkovic said.

Scale is important to GE, and fuel cells don’t offer the potential to become an important product for a company that had revenue of $146 billion last year.

Plug Power

Plug had sales of $26.6 million in 2014. Chief Executive Officer Andy Marsh does not see the use of platinum as a deterrent to growth. The Latham, New York-based company makes fuel-cell systems for forklifts used in warehouses and factories.

Platinum’s high cost has encouraged manufacturers to find ways to use less of the metal, and the cost of the material is now a small fraction of the total price of fuel cell systems, Marsh said in an interview.

“We can reclaim about 90 percent of that after its useful life,” Marsh said March 25. “I don’t see it as a deterrent to growth.”

GE Power Conversion spent time investigating fuel cell technology and concluded it’s “very challenging,” its head engineer said. The unit is researching an alternative — solid oxide fuel cells — that don’t need noble metals. An actual product is “very far off,” he said.

Bloom Energy Corp., based in Sunnyvale,California, already sells solid oxide fuel cells. That company also has a “small” niche application, according to Vlatkovic.

GE Power Conversion develops technology for renewable energy as well as oil and gas infrastructure.

Copyright 2014 Bloomberg

Lead image: Platinum bars via Shutterstock