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updated 12/31/2012 11:46:51 AM ET 2012-12-31T16:46:51

Editor's Note: This series takes a close-up look at the SBA's economic "clusters" designed to aid regional businesses.

Japan and Korea are global leaders in the use of fuel cells, an alternative low-emission clean energy source. In the U.S., the Small Business Administration is betting that entrepreneurs in the Northeast can help elevate this country's position in the fuel-cell industry.

Since 2010, as part of its pilot regional cluster program, the SBA has invested more than $1.5 million into a massive coalition of clean-energy businesses known as the Northeast Electrochemical Energy Storage Cluster. And the funds don't stop there: The agency has indicated that the cluster may receive four additional years of grants.

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Fuel cells produce hydrogen, store it and then convert it into electricity. Not only are fuel cells an eco-friendly option because they release almost no emissions, but they are also a self-contained, efficient and reliable source of energy, independent of the electric grid. They are a popular backup option for schools, shelters, hospitals, sewage treatment plants and other mission-critical facilities in the case of a storm or natural disaster.

The majority of the fuel-cell industry is rooted in the Northeast, but fuel-cell businesses there have only been cooperating for the past decade or so, says Joel M. Rinebold, director of energy initiatives at the Connecticut Center for Advanced Technology, the East Hartford, Conn.-based organization that oversees the cluster. Managing the cluster is no small feat, either: It stretches across Connecticut, New York, Massachusetts, Maine, Vermont, New Hampshire and Rhode Island.

Founded in 2007, the cluster includes approximately 1,200 entities, ranging from large companies that develop finished products for sale (original equipment manufacturers, or OEMs) to academic research institutions. The vast majority of the members of the cluster, however, are small businesses in the fuel-cell industry, including suppliers that make pieces of a final product.

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Going forward, fuel-cell technology is expected to become increasingly prevalent in automobiles as oil, gasoline and diesel prices trend higher. “A number of the OEM auto companies are now looking to have fuel-cell vehicles deployed by the year 2015," says Rinebold. Some large auto manufacturers, including Toyota and Hyundai, are planning electric-drive vehicles that are powered by on-board hydrogen. While fuel-cell vehicles are available on the market currently, they aren’t used commonly right now because it is complicated to recharge the hydrogen fuel cells, says Rinebold.

With the money from the SBA, the cluster has worked to increase the awareness and adoption of fuel-cell technology, Rinebold says. Over the past three years, businesses in the cluster participated in approximately 125 conferences and industry events. The cluster partially funded events like the Regional Hydrogen Fuel Cell Forum and the Hydrogen and Fuel Cell Technology OEM Summit. The cluster also worked to inform legislators about the fuel-cell industry’s potential to create jobs, create revenue and keep the environment clean, he says.

The efforts have paid off, if growth within the cluster is an indicator. Total revenue of cluster members grew to $1.2 billion in 2011, up 17 percent from the previous year. The cluster’s businesses also employed 5,770 people in 2011, up 6.1 percent from the previous year.

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On a one-to-one basis, the cluster estimates that it helped member businesses at least 300 times in the last three years. For example, Red Ox, a member small business in New Haven, received mentoring and introductions to potential funding sources, according to Alexander Barton, a cluster coordinator.

Red Ox  is working on an electrochemical desalination cell, a device that is designed to clean wastewater and in the process create useful byproducts. Typically, wastewater has to be either processed in an expensive evaporator or crystalizer or trucked away long distances. Red Ox has won numerous contests and prizes, and networked with hundreds of possible partners and clients, including two treatment plants interested in having its device on site, according to Barton.

Copyright © 2013 Entrepreneur.com, Inc.

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