CP Rail to ‘significantly expand’ hydrogen train project

Canadian Pacific Railway (CP.TO)(CP) has increased its order of fuel cells to “significantly expand” its hydrogen locomotive program, according to Ballard Power (BLDP.TO)(BLDP), the railway’s partner on the zero-emissions project.

Vancouver-based Ballard and CP announced a partnership last March to convert diesel locomotives to hydrogen power using fuel cells and batteries to power electric traction motors. Ballard said on Wednesday that CP has requested eight additional 200 kW fuel cell modules, bringing its total to 14, in order to expand production from one to three locomotives expected to be delivered this year.

"In expanding this groundbreaking project, CP is demonstrating its commitment to combating climate change through transformative technology," CP CEO Keith Creel stated in a news release.

CP plans to refine the conversion of diesel-electric powertrains to hydrogen-electric powertrains across three categories of locomotives, which collectively represent the majority of those used in North America.

The Calgary-based railway has made improving the fuel efficiency of its trains a key tenet of its commitment to fight climate change. Creel said on CP's most recent quarterly conference call that the company has improved its fuel efficiency by 20 per cent over the last decade.

Currently, the vast majority of North American railway operators run on diesel power. Ballard estimates that by 2030 the total addressable market for hydrogen-electric trains will reach $4 billion. The company has already used its hydrogen power modules in the UK’s first full-sized train refurbished with hydrogen power. It has also partnered with companies, including German industrial conglomerate Siemens (SIEGY), on hydrogen rail projects in Europe and Asia.

"The expansion of CP's Hydrogen Locomotive Program is illustrative of the confidence in Ballard's fuel cell technology and the important role hydrogen fuel cells will play in decarbonizing heavy-duty motive applications, such as freight locomotives," Ballard CEO Randy MacEwen added in the release.

Ballard said the project’s expansion is partially supported by $15 million in funding from Emissions Reduction Alberta (ERA) as part of its Shovel-Ready Challenge announced late last year.

Toronto-listed Ballard shares fell 0.45 per cent to $13.32 at 10:32 a.m. ET.

With files from Alicja Siekierska

Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.

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