MTI Micro is due to demonstrate prototypes of handheld systems that enjoy three to 10 times more "on" time than conventional lithium-ion solutions using its Mobion DMFC technology. "Vast developments have been made over the past year in terms of slimming down fuel cell sizes to attach directly on the portable device, but it has been an ongoing challenge to develop a fully integrated power solution," said Sara Bradford, an analyst with Frost & Sullivan. Indeed, many fuel cells "clip" onto the device they power from the back or side, or else reside in a separate unit that plugs into it, she said.

Smart Fuel Cell AG and Medion AG have demonstrated a notebook PC docking station powered by a fuel cell, she added, but MTI Micro is the first to introduce an integrated micro fuel cell solution.

Its DMFC design structure is based on materials that permit a direct feed of methanol, bypassing the need for miniature pumps or bulky storage tanks. That makes it possible to build a smaller, lighter fuel cell that is easier to manufacture, while maintaining a higher concentration of methanol, according to the company.

"We think we cracked the code on the problems that for years have prevented fuel cells from becoming the hot portable-energy source of the future," said William Acker, the president and chief executive officer of MTI Micro (Albany, N.Y.).

Issues related to "the size and reliability of the system" have been a barrier to the development of fuel cells for portable electronic systems, said Bradford. "Initial DMFC designs suffer from methanol crossover, which reduces the energy density able to be excreted from the methanol mix," she said. A fuel cell generates power by converting chemical energy into usable electrical energy, using an electrochemical reaction that, unlike a battery, does not store the energy with chemicals internally. Instead, fuel cells use a continuous supply of fuel (such as methanol) from an external storage tank to supply energy on demand. A typical DMFC takes in methanol and water on one side and air on the other side of a fuel cell bisected by a membrane. Hydrogen ions diffuse through the membrane, causing electrons to flow.

Water is first collected from the cathode (air) side, and pumped back to the anode (fuel) side with an external pump. Conventional DMFCs "require an intricate mix of feed pumps, recirculation pumps, electronics, etc., to move the methanol from one side of the fuel cell to the other," said Bradford. "This has made it a challenge to develop DMFCs small enough to become integrated with a [portable] device."

Some companies have tried so-called passive DFMC systems that carry water and methanol in the same tank, avoiding the need for collecting and pumping water from the cathode back to the anode.

"Carrying water with the fuel, however, severely reduces the system's energy density, since water has no energy content," said Shimshon Gottesfeld, vice president and chief technology officer at MTI Micro. Though simpler than the alternative, he said, such a system would not necessarily be small enough for portable use.

Instead, engineers at MTI Micro came up with a new structure in which 100 percent"or "neat""methanol can be directly fed into the anode side of the DMFC, thereby eliminating the need to carry water in the system or to integrate pumps and a micro plumbing subsystem. The breakthrough was made possible by patented new materials that can properly control the supply of 100 percent methanol with uniform distribution across the cell.

Further, according to the company, the new architecture minimizes the loss of methanol.

"The key is to maintain a higher energy content in the DMFC," said Gottesfeld, so that the micro fuel cell can be made small enough enough to compete against advanced Li-ion batteries.

MTI Micro's DMFC can prolong the run-time of a portable device typically by three to 10 times, said CEO Acker. "If you have a cell phone whose battery runs out in three days, our micro fuel cells can let the cell phone run for 15 days before it requires fuel cell refills," he said. Competitors developing fuel cells for portable systems include Casio, Fujitsu, Hitachi, Medis Technologies, NEC, Samsung and Toshiba. "But many companies are still not controlling the micro plumbing issue," said Gottesfeld.

MTI Micro plans to enter the industrial and military sectors first. Its first commercial Mobion power packs, slated for the industrial market, are due out at the end of this year. Intermec Technologies Corp. will integrate one in its RFID tag readers. On the military side, MTI Micro has scored sales of its prototypes to Harris RF Communications and the Army Research Laboratory. CEO Acker noted that soldiers in special-forces units today carry up to 165 pounds of gear, of which 35 pounds is battery.

Micro fuel cells for the consumer market won't take off until 2007, Acker predicted, although some selected applica- tions may emerge in 2006. The consumer market first needs to put in place a broader fuel-refill distribution network and to bring down prices so that fuel cells will become cost-competitive. "Cost is still a barrier to entry for this alternative energy source," analyst Bradford said.

To tackle the fuel-refill problem, Gillett/Duracell, under a strategic alliance with MTI Micro, will develop, manufacture and distribute fuel refills through retail outlets. Flextronics is MTI Micro's contract-manufacturing partner for DMFC products.

Another remaining hurdle is regulatory: Transportation regulations currently in place state that systems must contain no more than a 24 percent concentration of methanol, which is flammable, to be allowed in aircraft passenger cabins. But exemptions are being pursued, Acker said.

MTI Micro, founded in 2001 as a subsidiary of 40-year-old Mechanical Technology Inc., has filed for 66 direct- methanol patents and so far has been granted eight. The startup employs more than 60 people.

— R. Colin Johnson contributed to this story.