AFC Energy, The Fuel Cell Developer Backed By Abramovich, Hails 12 Months Of Continuous Power Output In Key Test Of Commercial Readiness
By Amy McLellan
AIM-quoted fuel cell developer AFC Energy passed a key milestone last month as it delivered 12 months of continuous electrical power from its breakthrough low-cost alkaline fuel cell electrode. The electrode, housed in the company's labs in Surrey, has now been operational for more than 8,760 hours, underscoring its robustness and readiness for commercialisation. The next step – and as anyone following these clean tech companies is only too aware, it's a big step - is to replicate this longevity outside the lab in real world conditions
Longevity is important because all fuel cells - devices which convert oxygen (from the air) and hydrogen (from a supply) into electrical energy and heat with water as the only waste product - eventually deteriorate and need to be replaced. The longer a fuel cell lasts, the fewer will be required over the life time of a project, ensuring the end power can be sold at a competitive price. AFC's chief executive Ian Williamson says he is confident the company will be able to translate this 12 month milestone into future commercial contracts.
Alkaline fuel cells are not a new technology – they have been used in the US and Russian space programmes over many decades - but it is only in recent years that companies have been able to lower the costs and improve power output to make them a viable power source and a credible alternative to other renewable energies like wind turbines. One of the key ways the AFC solution beats its fuel cell competitors - and this is a sector littered with corporate losses and disasters – is because it is a low temperature solution.
An alkaline fuel cell operates at low temperatures (70 degrees centigrade) which means the company can use plastic and non specialist materials rather than using expensive platinum. This keeps costs down, as does a substantially reduced number of components in the simplified design, ensuring long life and easy maintenance. The company has also worked hard to adapt proven volume manufacturing processes to further reduce costs, another key marker of commercial readiness.
The electrode, the component that enables the electrochemical reactions between hydrogen and oxygen in the air to generate electricity, heat and water, has already been validated for volume manufacturing as part of AFC's first 250 kW commercial-grade fuel cell system. And, importantly, the power output of the unit is rising, up by 60 per cent over the past year. The company's technical director Gene Lewis now says he believes AFC has developed “a disruptive low cost technology that can shake up the entire fuel cell industry in the next few years."
So how do you get from a lab proven electrode to first commercial contract? It helps that AFC has some key partnerships in place. Its technology has been undergoing trials with chemicals giant Azko Noble and it also has global contractor Foster Wheeler on board to peer review the designs and concepts for the large scale 250kW systems. The hope is this partnership will develop into a preferred partner relationship where Foster Wheeler will design and install full-scale fuel systems, based on AFC Energy technology, in a wide range of industrial and utility-scale applications.
Also helpful is the fact that fuel cells attract grants and fiscal support from governments and organisations looking for a transitional clean energy technology until such time as renewables are ready to carry the load. The company is participating in a UK-based commercial scale demonstration project, Power Up, backed by a four-year €6.1 million EU grant to build the world's largest alkaline fuel cell system in the UK. In February 2013 AFC delivered the first fuel cell electricity generating system to chemicals giant ICL's chlor-alkali plant in Essex.
The fuel system will supply small quantities of power to the chemicals works, using waste hydrogen, produced as a by-product at the chemicals works, as fuel to generate clean energy. The project will ramp up in phases to eventually provide up to 1MW of clean, efficient electricity generation at point of consumption, reducing reliance on grid-supplied electricity by up to 20 per cent.
A further €1.96 million EU grant is helping with the Alkammonia project designed to develop ammonia-fed alkaline fuel cells (ammonia is a rich source of readily available hydrogen). This came on the back of the December 2012 acquisition of Diverse Energy, a company with a proven track record in delivering ammonia fed fuel cell systems into markets such as the mobile phone mast power market. The use of different feedstocks, like ammonia, will also be studied in a recent link-up with Lancaster University.
In the meantime the company is in talks with a number of potential customers about its first commercial order. South Korea is seen as a key market not only because of the generous incentives under the country's Renewable Portfolio Standard but also because it has a surplus of hydrogen production, although the longer term goal is to deliver a fuel cell that's economic without any support.
The AIM-quoted company's income over the first half of 2013 came from its EU grants and also from its agreement with Waste2Tricity: in April 2012, W2T agreed a phased £1 million payment in return for an exclusive UK licence for AFC’s fuel cell technology for use in gasification WtE projects and right of first refusal for the supply of fuel cells to Europe, North America and Thailand for use in projects where hydrogen is derived from the gasification of municipal solid waste. AFC recorded a post-tac loss of £2.34 million for the first six months of 2013, deeper than the £1.9 million for the prior year period as costs rose to reflect increased activity and strengthening of its inhouse capabilities and developing the Korean market.
While new technology companies also face the funding equivalent of the “valley of death” until they land first commercial orders, AFC has been through the worst and in the past year has attracted some heavyweight strategic investors, among them Roman Abramovich's Ervington Investments, which injected £8.67 million in November 2012 and now holds 11.13 per cent of the shares. Eugene Shvidler, another Russian oil billionaire and Abramovich's partner at Sibneft, holds a 5.4 per cent stake. Shares in AFC are trading at 41.5 pence, up 73 per cent on year ago levels. |
