About Ceres Power

Ceres is a world-leading developer of electrochemical technologies: fuel cells for power generation, electrolysis for the creation of green hydrogen and energy storage. Its asset-light, licensing model has seen it establish partnerships with some of the world's largest engineering and technology companies, such as Weichai in China, Bosch in Germany, Miura in Japan, and Doosan in Korea, to develop systems and products that address climate change for power generation, transportation, industry, data centres and everyday living.  Ceres is listed on the AIM market of the London Stock Exchange ("LSE") (AIM: CWR) and is classified by the LSE Green Economy Mark, which recognises listed companies that derive more than 50% of their activity from the green economy.

Chief Executive's Statement

We have yet again delivered strong growth; with a 44% increase in revenue and other income compared with the 12 months ended 31 December 2020, a £179m fundraising completed to support an expanded strategy for green hydrogen, and a step-change in the ambition of our partners to scale our technology for mass production. 

It is the urgency of the climate change agenda that requires us to act now and to deploy clean technologies at scale and pace - and Ceres is achieving that through collaboration with some of the world's most progressive companies.   

Collaboration with global partners

Having worked in the industry for almost 20 years, I can see the demand for hydrogen and fuel cell technologies has never been as great. This is down to a combination of three factors: the need for corporates to transition from existing technologies such as combustion engines towards a net zero future, government policies aligned with a low-carbon future and a shift in investing, providing unprecedented levels of capital for companies with strong ESG credentials. It is not a coincidence that Ceres' first commercial partnerships have been in locations with more progressive targets around climate action and ambitious plans for deployment of fuel cell and hydrogen technologies.

Ceres aims to achieve scale through partnerships and the ecosystem is growing, with Bosch targeting 200MW of production capacity in Germany, Doosan installing 50MW as a first step of capacity in South Korea, and now a planned collaboration with Bosch and Weichai scaling up in China. Ceres has deep expertise in hydrogen and fuel cell technology, but to realise our ambition for our technology to impact the climate challenge, we must work with partners who know how to industrialise products for mass production on a global scale.

Weichai, Bosch and Ceres form strategic collaboration for the Chinese market

In February 2022, we were pleased to share our progress on the formation of a three-way collaboration with Weichai and Bosch to access the substantial opportunities that exist for fuel cell technologies in the Chinese market. We believe it could be the largest market for our technology as China addresses its goals towards a low-carbon future.

History tells us that companies in China know how to scale, how to mass produce and how to drive down cost curves. Whilst China accounts for 30% of global emissions, it also represents a key part of how we achieve net zero.

Following the period end, we signed non-binding Heads of Terms setting out plans for two separate joint ventures in Shandong Province, China.  It is intended that a three-way system Joint Venture ("System JV") will be set up for the development and manufacture of SOFC system products, with Weichai as the majority shareholder and Bosch and Ceres as minority shareholders. Ceres will invest around £20 million over time and hold a maximum 10% share with Board representation.

Separately, a stack manufacturing JV ("Stack JV") will be jointly established between Bosch and Weichai, with Bosch as the majority shareholder. Ceres will not be a shareholder but will receive royalties from this JV on the sale of stacks. The Stack JV would be the second manufacturing facility for Bosch and is planned to follow its initial 200MW facility in Germany, where start of production is anticipated for 2024. 

We have every confidence in our collaboration with Weichai and, with the addition of Bosch's expertise in industrialisation and manufacturing, we have the potential to establish one of the strongest partnerships in the fuel cell industry globally.

Market Opportunities

Ceres has a proprietary technology that is truly reversible. Running in one direction it can use multiple fuels to generate power highly efficiently when and where you need it. Run in reverse, it generates green hydrogen at high efficiencies and low cost.  

We have established a leading technology position in fuel cells that is being demonstrated in multiple applications and geographies with established global partners. Now, we have the potential to address an even greater market for electrolysis through a highly efficient, low-cost production method for hydrogen in a market where the requirement for hydrogen is predicted to double each decade between 2030 and 2050.

Across our energy systems, there is a need to reinforce power grids that are coming under increasing demand from electrification. Stationary fuel cell systems, such as those developed by Miura, Doosan and Bosch using Ceres' SOFC technology provides highly efficient, scalable, fuel-flexible and environmentally friendly power generation systems for use in many applications.  As an example, Bosch's product achieves electrical efficiency of over 60% and provides useful temperatures for heating and hot water, delivering a total efficiency greater than 85%.  The Bosch system is scalable providing flexible, decentralised power for cities, data centres, electrical charging infrastructure or in industrial or commercial settings. Bosch is aiming for production capacity of about 200 megawatts output per year from 2024, enough to supply around 400,000 people with household electricity.

In transportation, batteries are a good fit for lighter vehicles in an urban environment. As you require more power density for heavier vehicles a hybrid battery and fuel cell system, such as the 30kW range extender for buses and commercial vehicles we are developing with Weichai Power for the Chinese market, is ideal. Especially for high-utilisation, long-distance applications, or vehicles with heavy payloads.

Similarly, in decarbonising heavier transportation such as shipping we are seeing strong interest in our fuel flexible technology as a route to decarbonisation. Ceres is working with two maritime consortia in the UK to carry out separate feasibility studies on the use of SOFC technology in ship architecture.  South Korea is one of the biggest shipbuilding nations in the world; here our partner Doosan has signed a letter of intent with Shell and the shipping division of Hyundai Heavy Industries, looking to apply Ceres' fuel cell technology to auxiliary and even prime propulsion in ships, with international shipping accounting for around 2% of global energy-related CO2 emissions according to the International Energy Agency. 

Expanding our strategy

Globally, industry accounts for 24% of carbon dioxide emissions and electrification is not a credible route to decarbonise many processes. For steel (accounting for 7% of global carbon emissions), ammonia and cement (2% each), hydrogen provides an economic solution to address parts of the energy system that cannot be directly electrified, where we rely on fossil fuels today.  We need to start working on these hard-to-abate areas now as they are significant problems with major infrastructure challenges. 

In early 2021, we took the decision to broaden the addressable market of the Company, moving into the production of green hydrogen using Ceres' technology through electrolysis. To do that we are committing £100 million to develop megawatt-scale, high-efficiency Ceres electrolysers.  Importantly, solid oxide electrolysers such as Ceres' aim to produce hydrogen at efficiencies around 20% greater than other technologies, in the range from mid-80s to 90% efficiency, where it is possible to make use of waste heat in industrial processes to drive this high efficiency.  We believe we have a pathway to produce green hydrogen at $1.5/kg, which is  the point at which electrolysis becomes competitive with blue and grey hydrogen produced using fossil fuels, at a price point that is key to making green hydrogen commercially viable.

Estimates suggest hydrogen could eventually account for 18% of primary energy. That is a big opportunity - according to McKinsey it is a $2.5 trillion opportunity. In March last year, we raised £179m in the public markets to support our growth. I am seeing a change in the capital markets, certainly from when I took over as Chief Executive of Ceres in 2013, with recognition that greater investment is needed to scale companies like Ceres, and others, to meet the climate challenge.  I believe we have a very strong investment case. 

Our licensing business model differentiates us from a pure play fuel cell or electrolyser manufacturing company. As a licensing business, committed to delivering clean energy for a net zero future, it is imperative that alongside delivering our fuel cell and hydrogen electrolysis businesses, we continue to drive innovation to create future value, both through investment in further progressing our own technology and partnering in new areas, which are aligned with our purpose.  That is why we have now formed Ceres Radar, which is seeking to capitalise on the deep experience our team has built in identifying technologies aligned with our purpose where we can employ our expertise in technology development and licensing to accelerate these towards commercialisation.

Our first investment, announced in November, is in long-duration energy storage with RFC Power, an early-stage company that has a strategy to develop the world's lowest-cost flow battery - a hybrid between a fuel cell and a battery that decouples power from energy.  Long-duration energy storage technologies, such as hydrogen and flow batteries, have an important role to play in decarbonising the energy system. Before we decide to increase our ownership, we are going to work with RFC for up to a year giving us time to get to know the Company and the technology and to understand the commercial opportunity. 

In meeting the challenge of the scale and pace required to meet a net zero future, not everything we do at Ceres will be organic. We now have considerable capability we can deploy into new areas in developing unique and often difficult and IP-rich technologies, and scaling through our licensing partnerships model.

In March 2022, we announced a multi-million pound investment to establish a state-of-the-art fuel cell and electrolysis test facility in partnership with global engineering and testing consultancy, Horiba Mira. The agreement expands Ceres' test stand capacity and includes development of next-generation testing infrastructure to support Ceres' core technology and systems to be delivered at scale and pace with global partners.  The partnership combines best-in-class UK expertise and our commitment to grow jobs and value for the UK economy through delivering clean energy technology to global markets.

Our people

The war in Ukraine has put many things into perspective and at Ceres I feel so proud to be a high-growth UK company with such a talented, multi-cultural workforce, including team members from Ukraine. We went into lockdown in 2020 with around 200 people and have emerged this year with over 500 passionate scientists and engineers operating across two sites in the UK and many now remotely, both in the UK and internationally.  At Ceres we have a strong culture and we were proud to be the recipient of a Queen's Awards for Enterprise in 2021 recognising our people's commitment to excellence in International Trade.   

To support the Company's growth, we also developed and launched a new Ceres Academy platform designed and tailored around our core purpose, strategy and values. It sits at the heart of nurturing and developing our people through onboarding, general e-learning and tailored high-potential programmes.  We also strengthened our management - with the arrival of Eric Lakin as Chief Financial Officer, Caroline Hargrove as Chief Technology Officer and Deborah Grimason as General Counsel and Company Secretary - who bring fresh perspective to our existing, talented team. 

I would like to take the opportunity to thank all the Ceres employees for their hard work during the year and add my personal thanks to Richard Preston, who became CFO as I joined the Company in 2013 and has made a major contribution to the success of the business over the last nine years.

The UK is a science and technology powerhouse: as a nation we have invented some of the world's best technology that we still deploy widely around us today.  I believe the same thing can be true of hydrogen and fuel cell technology.  At Ceres we are world leaders in this technology, and through our global partners we can scale at pace to deliver clean energy for society and for all our benefit.

Phillip Caldwell

Chief Executive Officer