Alternate Energy Company (AEC) is a small, new company that has gone through a number of changes and contortions over the past couple of years as it works on perfecting and then commercializing a  proprietary approach to hydrogen production.

AEC’s technology reportedly generates hydrogen gas from proprietary alloys (the company just filed patents related to these metals) immersed in an aqueous solution. The promised result is pure, fuel-cell grade hydrogen (99.9%) at low-cost, on-demand, without any known harmful or toxic by-products. (It sounds a bit like the sodium borohydride approach driven by Millenium Cell and being demonstrated by DaimlerChrysler and Samsung—earlier post.)

AEC has two main challenges. The first is the technology, but let’s assume they get that squared away. (If they don’t, then it’s game over, anyway.) The second is figuring out how to stay alive in the market—i.e., how to commercialize it, which business segments to target, and so on. This isn’t a trivial question for any business, but especially not for a newcomer.

In a recent filing with the SEC (an SB2 prospectus for a securities offering—AEC is public, although a penny stock), the company published its marketing grid that evaluates the prospects for the AEC product by criteria and market.

I reproduced the grid below. On AEC’s scale, a 1=most favorable to the company; a 5=least favorable. I color-coded the different rankings to see the patterns better. (Click to enlarge.)

The transportation market, while the extremely attractive in market size and availability of grant money, racks up the most “least favorable” rankings of any of the possible markets for this startup. It’s too hard to break in, the operating and support requirements would be extremely exacting—and that’s probably a sound business assessment on AEC’s part. AEC now seems to be targeting segments of the  stationary power generation market: stationary industrial, micro-technology, stationary back-up and emergency power applications and residential primary.

Still, transportation is a very tempting market, especially if the AEC technology can actually produce the hydrogen in sufficient volume. In June, AEC announced that it, in partnership with Feel Good Cars (another startup), would produced a serial hybrid version of Feel Good’s electric neighborhood car using a hydrogen-fueled internal combustion engine as the generator with an on-board AEC system providing the hydrogen.

The original Feel Good ZENN (Zero Emissions No Noise) is a certified  low-speed vehicle (LSV) designed just for neighborhood use. Running out to the store, for example.

The ZENN uses a rechargeable valve regulated lead acid battery, and has a maximum speed of 25 mph, with a range of 30-34 miles. It does use a regenerative braking system as well.

At the time of announcement, the companies indicated that they could have a working prototype by the end of this year.

I hope they are able to do it. For the market’s sake, we need to be able to have scrappy, innovative startups be able to bring their technologies into the mix.