Ballard Power’s 2025 Surge: How Fuel Cell Engines Are Redefining Rail Transport

Industry Adoption: Ballard Power Systems’ Fuel Cell Engines Gain Commercial Traction in Global Rail

Between 2021 and 2024, Ballard Power Systems solidified its position as a key technology enabler for the nascent hydrogen rail sector by securing foundational partnerships for high-profile, first-of-their-kind projects. The period was defined by pilot programs and initial contracts aimed at validating the technology in real-world conditions. Key agreements included supplying fuel cell modules for India’s first hydrogen trains (September 2022) and a contract with Stadler to power the first hydrogen passenger train in the United States for the San Bernardino County Transportation Authority (SBCTA) (September 2022, expanded December 2024). The collaboration with Canadian Pacific Kansas City (CPKC), which began in 2021 and grew to include a follow-on order for 20 MW of engines in late 2024, underscored the transition from testing to a long-term development partnership for heavy-haul freight. The focus was on demonstrating the viability of Proton Exchange Membrane (PEM) fuel cells in both new-build passenger trains and freight locomotive conversions.

The landscape has materially shifted in 2025, marking an inflection point from validation to early-stage commercialization and market diversification. The most significant signal is the nature of the orders: Ballard is now securing repeat business and penetrating new rail segments. The long-term supply agreement with CPKC, which has seen the successful operation of converted locomotives, demonstrates proven performance and customer confidence. A pivotal new opportunity emerged with Ballard’s 1.5 MW order from Sierra Northern Railway to convert three diesel *switching* locomotives using its FCmove®-XD engines (June 2025). This highlights a capital-efficient pathway for operators to decarbonize existing assets in a new application—yard switching—where electrification is often impractical. Furthermore, the deployment of PESA’s SM42-6Dn shunter in Sweden, powered by Ballard engines (May 2025), establishes a commercial foothold in the European shunting market. This variety of applications—spanning passenger, mainline freight, and now shunting—proves the technology’s flexibility and signals a broadening of the addressable market beyond initial flagship projects.

Table: Strategic Investments Driving the Hydrogen Rail Ecosystem

Table: Ballard Power Systems’ Key Rail Partnerships

Geography: North America and Europe Lead Ballard’s Commercial Push

Between 2021 and 2024, Ballard’s geographic focus for rail was primarily concentrated in North America, with landmark projects establishing a strong foothold. In the U.S., the partnership with Stadler for the SBCTA passenger train in California positioned Ballard at the center of the nation’s first hydrogen rail deployment. Simultaneously, the collaboration with CPKC in Canada for heavy-haul freight conversions demonstrated the technology’s application in a different, more demanding environment. This two-pronged North American strategy was complemented by a strategic entry into Asia through the Indian Railways agreement, planting a flag in a market with immense long-term potential.

In 2025, this geographic strategy has both deepened and expanded. North America remains the core growth engine, evolving from initial pilots to commercial-scale agreements. The follow-on orders and long-term supply agreement with CPKC solidify its Canadian freight business, while the new order from Sierra Northern Railway adds a new layer to its California presence, targeting the switcher locomotive market. This move suggests a regional strategy of saturating high-potential, policy-driven markets like California across multiple rail segments. Concurrently, Europe has emerged as a key region for commercial validation, specifically in the shunter category. PESA’s delivery of a Ballard-powered shunter to Sweden provides a crucial European proof point. The significant investment in Italy’s Valcamonica region, coupled with Alstom’s local manufacturing investments, signals that Europe is rapidly moving towards large-scale deployments, creating a significant future market for fuel cell suppliers like Ballard.

Technology Maturity: From Pilot Validation to Commercial Diversification for Ballard’s Fuel Cells

During the 2021–2024 period, the maturity of Ballard’s rail technology was characterized by demonstration and pilot validation. The focus was on proving the durability and performance of its heavy-duty modules, like the FCmove™-HD+ and the purpose-built FCrail™-HD+, in demanding rail environments. Projects like the Stadler FLIRT H2 train for SBCTA and the initial CPKC locomotive conversions were quintessential pilot programs designed to de-risk the technology for both passenger and freight applications. Success was measured by securing initial contracts and demonstrating operational feasibility. The technology was moving from the lab to the tracks, with the primary goal of proving it was a viable alternative to diesel.

In 2025, the data indicates a clear shift towards early commercialization and product diversification. The technology’s maturity is now validated not by initial contracts, but by repeat business and expansion into new applications. The ~20 MW follow-on order from CPKC is the strongest possible validation signal, indicating that the initial 10 MW pilot deployment met or exceeded performance expectations, justifying a larger-scale rollout. This moves the technology from pilot to a scaling phase with a key anchor customer. Furthermore, the introduction of the FCmove®-XD engine for the Sierra Northern Railway project demonstrates technological maturation through diversification. Ballard is now offering tailored solutions for different rail segments—in this case, switcher locomotives, which have unique duty cycles compared to mainline freight. The successful certification and deployment of the PESA shunter in Europe is another commercial milestone, proving the technology is ready for niche but scalable market segments. The narrative has shifted from “Can it work?” to “Where can we deploy it next?”.

Table: SWOT Analysis of Ballard Power Systems in the Rail Sector

Forward-Looking Insights and Summary

The data from 2025 signals that Ballard Power Systems has successfully navigated the pilot phase and is now entering a period of early commercial growth in the rail sector. The year ahead will be defined by execution and scalability. The most critical signal to watch is the deployment for Sierra Northern Railway. A successful conversion of these switcher locomotives will provide a powerful case study for the broader North American market, potentially unlocking a wave of similar retrofit projects for the thousands of diesel switchers currently in operation. This capital-efficient model is a key growth vector.

Simultaneously, the execution of the large-scale, long-term supply agreement with CPKC will be a bellwether for the entire hydrogen freight industry. Consistent and reliable operation of a growing fleet of Ballard-powered locomotives in demanding North American freight service will be the ultimate validation of the technology’s commercial readiness. Investors and strategists should also monitor the European shunter market, where the PESA deployment serves as a beachhead for a potentially significant and replicable business line.

However, the primary headwind remains the broader ecosystem. The fuel cell shortage that crippled Germany’s hydrogen train line is a stark warning. The key question for Ballard is whether it can scale its own manufacturing capacity to meet the demand it is successfully creating. Any future announcements regarding capacity expansion or supply chain fortification will be just as important as new customer orders. In summary, while Ballard has proven its technology, its future success now hinges on its ability to manufacture at scale and the maturation of the hydrogen infrastructure and supply chain around it.

Frequently Asked Questions

What is the most significant change for Ballard in the rail sector in 2025 compared to previous years?
In 2025, Ballard transitioned from pilot programs aimed at validating its technology to an early commercialization phase. This is marked by securing repeat business and large follow-on orders from established partners like Canadian Pacific Kansas City (CPKC), and penetrating new, commercially-viable market segments like retrofitting switching locomotives (Sierra Northern Railway) and European shunters (PESA).

What types of trains are using Ballard’s fuel cell engines?
Ballard’s technology is being applied across three distinct rail segments: 1) Passenger Rail, powering new trains like the Stadler-built train for the SBCTA in California; 2) Heavy-Haul Freight, through the conversion of diesel locomotives in a long-term partnership with CPKC; and 3) Shunting/Switching, a new application involving the conversion of yard locomotives, demonstrated by projects with Sierra Northern Railway in the U.S. and PESA in Sweden.

Why is the Sierra Northern Railway project considered a pivotal new opportunity?
The Sierra Northern Railway project is pivotal because it demonstrates a capital-efficient path for rail operators to decarbonize. Instead of buying expensive new locomotives, operators can retrofit their existing diesel fleets. This project opens up the large market for yard switching locomotives, where full electrification is often impractical, providing a faster, lower-cost route to adoption for Ballard’s technology.

What is the biggest risk or challenge facing Ballard’s growth in the rail sector?
According to the analysis, the biggest challenge has shifted from proving the technology to external market and supply chain dependencies. The primary headwind is the risk of supply chain bottlenecks and Ballard’s own ability to scale manufacturing to meet growing demand. The fuel cell shortage that impacted Germany’s hydrogen train line is cited as a key example of this systemic risk.

How is government investment helping Ballard and the hydrogen rail market?
Government investment is a major driver of the hydrogen rail ecosystem. For example, the U.S. Department of Transportation’s grants directly stimulate the Californian market where Ballard’s partners operate. Similarly, large-scale public funding in Italy for the Valcamonica project and India’s initiative to develop 35 hydrogen trains create significant demand and de-risk the market for fuel cell suppliers like Ballard.