6 November 2013
AFC Energy PLC
("AFC Energy" or "AFC" or "the Company")
Air Products joins Power Up project
Trading and Operational Update
AFC Energy (AIM: AFC), the fuel cell energy developer for industry, is pleased to announce that Air Products PLC ("Air Products") has agreed to become a key strategic partner within the Power Up programme, the Company's leading project to generate and supply electricity by using surplus hydrogen produced at a major chemical plant.
Air Products, one of the world's top industrial gases groups, replaces Industrial Chemicals Limited, the Essex-based chemicals manufacturer, which had planned to participate in the €6.1 million EU-backed project, as announced by AFC Energy in June 2012. The project will install one of the world's largest alkaline fuel cell power systems.
As a result of the partnership with Air Products, the project will now be sited in Stade, northern Germany, where Air Products operates a major industrial gas processing plant that sources hydrogen from an adjoining major chemicals complex operated by Dow Chemicals.
The Company commenced its work on the Power Up project in April 2013 and remains on track to install the first KORE system in Germany during 2014 with it expected to become operational in the second half subject to local permitting. AFC will initially install two fuel cell systems in stages with a total 500kW electrical output.
This first system will be capable of running with 24 cartridges, expected to generate approaching 250kW when it reaches full power.
Ian Williamson, Chief Executive of AFC Energy, said: "The decision to move the project to Air Products provides us with the best possible opportunity to install and operate our KORE-branded fuel cell plant at a world-class industrial chemical/gases complex. It will also provide us with access and visibility to a significant quantity of clean hydrogen in a fully commercial setting. With our existing long term project with AkzoNobel continuing at Bitterfeld, Germany, we will soon have two installations in one of the world's most exciting and strongly government-supported markets for fuel cell energy."
Trading Update
AFC has continued to make strong technical progress although income in the financial year to 31 October 2013 will be lower than market expectations, whilst still ahead of last year. This is primarily due to the slower ramp up of the Power Up project and the desire of the South Korean market to have data from scaled-up systems, to facilitate larger opportunities more rapidly. Nevertheless, AFC has seen licence revenues improve and its existing grants delivered as expected. Despite bringing forward some spending in relation to the planned production of larger systems, AFC has maintained a tight control on the cost base. Net cash balances at the financial year end amounted to £6.9million (2012: £10.9million).
Ramp up of volume manufacturing
The Power Up project alone will - over time - necessitate the assembly of many thousands of fuel cells. Until now, AFC Energy's fuel cells have been hand-crafted but this is being translated to an automated process as the Company begins larger-scale, demonstration and commercial projects like Power Up. As a result, the planned investment in the scaling-up of manufacturing is being brought forward by approximately five months to introduce a more automated process.
AFC Energy will work with UK automation specialists, GB Innomech, who are developing automated stack assembly and stack disassembly systems. The result of this approach will be to enable manufacturing/maintenance facilities to be rolled out quickly and inexpensively.
To help facilitate this automated process AFC Energy has expanded its space at Dunsfold, by leasing an additional 4500 sq ft.
Markets / partners
In addition to Air Products, AFC Energy continues to work with several other partners to develop markets for the deployment of its fuel cells.
It is clear that there is a customer base in South Korea, and elsewhere, ready to take KORE systems on commercially attractive terms. AFC continues to actively pursue a number of possible strategic partners in South Korea and the local region.
AFC Energy took a further step towards establishing itself in the waste to energy sector with a £1.2 million licence agreement announced last week with the Thai subsidiary of Waste2tricity Ltd ("W2T"). The agreement will extend AFC's reach into the fast growing emerging markets of South East Asia, beginning with Thailand. AFC has also granted W2T a right of first refusal for the remainder of the ASEAN market where W2T intends to become active. This follows AFC's first licence deal of £1 million with W2T in respect of the UK market, announced in April 2012.
Ian Williamson commented: "We have an array of very credible development partners and many market opportunities. Our technical progress has been strong in the past year and we are cautiously and methodically putting all the building blocks in place to ensure successful commercialisation of our low-cost fuel cells for industrial energy."
For further information please contact:
AFC Energy plc Ian Williamson, Chief Executive Jane Dumeresque, Finance Director & Company Secretary |
+44 (0)1483 276726 |
Luther Pendragon - Public Relations Adviser Neil Thapar Alexis Gore James Foster |
+44 (0)20 7618 9100 |
Peat & Co. - Corporate Broker
Charlie Peat |
+44 (0)20 7104 2334 |
Allenby Capital Limited - AIM Nominated Adviser Jeremy Porter
James Reeve |
+44 (0)20 3328 5656 |
About AFC Energy
Founded in 2006, AFC Energy plc is re-engineering proven alkaline fuel cell technology to reduce the cost of electricity. Alkaline fuel cells have been used on US and Russian manned space missions for decades to provide electrical power and drinking water. By using platinum free, advanced materials, design tools and manufacturing processes at scale, AFC Energy is developing fuel cells that will compete with conventional technologies such as turbines for electrical power generation. Today, AFC Energy is pursuing opportunities in several sectors where hydrogen is readily available including the chlorine, clean coal and waste-to-energy industries as well as applications for distributed/back-up power. For further information, please visit our website: www.afcenergy.com.
