MoU agreed with Altaaqa Alternative Solutions

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1 April 2021

AFC Energy PLC

("AFC Energy" or the "Company")

AFC Energy Agrees MOU To Advance Exclusive Saudi Distributorship with Altaaqa Alternative Solutions

AFC Energy (AIM: AFC), a leading provider of hydrogen power generation technologies, is pleased to announce the signing of a non-binding Memorandum of Understanding ("MoU") with Altaaqa Alternative Solutions Company Limited ("Altaaqa"), a wholly owned member of the Zahid Group, with the intention of establishing an exclusive dealership for the distribution of the Company's fuel cell systems in Saudi Arabia and the Middle East & North Africa ("MENA") regions via a strategic partnership.    

Highlights

·      Altaaqa owns and operates one of the world's largest rental fleets of mobile diesel power modules, with 2GW of capacity within its portfolio.      

·      Altaaqa is aiming to complement its conventional diesel power modules offering with sustainable, zero emission alternatives for the Saudi Arabian and MENA regions.

·      AFC Energy and Altaaqa are committing to establish a strategic partnership with the aim of Altaaqa being appointed AFC Energy's exclusive fuel cell system distributor in the region. 

·      The initial focus of the partnership would be on the Kingdom of Saudi Arabia, with the potential for growth into the MENA market. 

·      Sustainable, temporary power in Saudi Arabia is expected to materially increase with national programmes promoting Saudi Arabia's sustainability commitments under the Kingdom's Vision 2030 and the recently announced Saudi Green Initiative and the Green Middle East Initiative.

·      The dealership would give AFC Energy access to the emerging Saudi power market, already forecast to be one of the world's largest producers of green hydrogen.

AFC Energy today announced that it has signed a non-binding Memorandum of Understanding (MoU) with Altaaqa Alternative Solutions - one of the world's largest rental fleet operators of mobile diesel power modules, headquartered in Jeddah, Saudi Arabia. 

The MoU is expected to advance discussions between both companies towards a long-term exclusive dealership relationship whereby Altaaqa will initially promote and distribute AFC Energy fuel cell systems across the Kingdom of Saudi Arabia, prior to the MENA regions.  

With a portfolio of over 2GWs of diesel generators and a proven 20 year track record in mobile power systems, Altaaqa is one of the region's leading suppliers of temporary and off-grid power solutions to the oil & gas, power utilities, mining, data centres, government services, military, manufacturing, and construction sectors. 

A strategic partnership with Altaaqa would be expected to drive new investment into hydrogen fuel cell technology hence promoting a changed energy mix in the region´s  power rental industry , and have the potential for expansion into local distribution, assembly and marketing of AFC Energy systems by Altaaqa.  The MoU envisages that following the progression of dealership discussions with Altaaqa, AFC Energy would expect to see a significant rise in multiple fuel cell system orders for commercial deployment over coming years.   

Reducing reliance on fossil fuel and associated power generation is a key pillar of the Kingdom's Vision 2030 strategic framework, which seeks to transition Saudi Arabia away from its incumbent dependence on oil, diversify its economy, and develop public service sectors such as health, education, infrastructure, recreation, and tourism. Crown Prince Muhammad Bin Salman recently unveiled the Saudi Green Initiative and the Green Middle East Initiative, an ambitious road map that targets a 60% reduction in the region's carbon emissions.

Subject to contract and internal Board approvals, the reaching of an exclusive dealership agreement with Altaaqa would provide AFC Energy with access to another significant off-grid power market and leverage the Company technology's ability to provide zero emission power across one of its key target markets.  A partnership would also place Altaaqa at the forefront of the mobile power rental industry's transition into green technology and consolidate AFC Energy's position as a leader in the provision of new, zero emission, off-grid temporary power systems. 

A future dealership relationship with Altaaqa is wholly consistent with AFC Energy's business model of working in partnership with world-class mobile power system rental companies and further highlights the potential scale that can be achieved through this model.  With scale comes the ability to accelerate cost reductions through manufacturing and supply chain leverage.   

Adam Bond, Chief Executive Officer at AFC Energy, said: 

"We are absolutely delighted to be commencing our strategic partnership with Altaaqa and to expand our presence in new regions such as the Saudi and MENA power markets.  Globally recognised as a partner of choice by many of the world's leading industrial and energy companies, Altaaqa has an enviable reputation in the provision of best-in-class mobile power systems and further consolidates AFC Energy's position as an emerging global provider of zero emission power systems in advancement of the international transition to a Net Zero economy." 

Majid T. Zahid, Group President - Energy at Zahid Group, added:

"Today marks the beginning of a new partnership with AFC Energy, an industry leader in delivering clean electricity. We are confident that together we will be a significant player in our Kingdom's aim of becoming the world's leading hub in the production of green hydrogen and ammonia.

Zahid Group is fully aligned with our Kingdom's strategic vision for the future and across all our Group's companies we are demonstrating our belief in it."

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About AFC Energy plc

AFC Energy plc is commercialising a scalable alkaline fuel cell system, to provide clean electricity for on and off grid applications. The technology, pioneered over the past twelve years in the UK, is now deployable in electric vehicle chargers, off-grid decentralised power systems and industrial gas plants as part of a portfolio approach to the decarbonisation of local electricity needs. (afcenergy.com)

About Altaaqa

Altaaqa Alternative Solutions Company (Altaaqa) is a leading Saudi-based total utility solutions provider, executing bespoke turnkey projects in power generation, cooling, water and renewables across Saudi Arabia through seven strategically located branches.  ​Altaaqa, a wholly owned company of the Zahid Group, was established in 2004 to address the power requirements in Saudi Arabia, and within a decade ramped up its fleet of mobile generators to over 2GW.Altaaqa serves customers no matter where their sites may be across the Kingdom. (altaaqa.com)