Fuel cell developer AFC Energy (LON:AFC) reported today that it has completed the commissioning of two commercial-scale fuel cell systems at AkzoNobel’s chlor-alkali plant in Bitterfeld, Germany.

The latest success follows completion of the firm’s HAZOP study and the commissioning of its first Beta system in the UK in August.

AFC said that over the next months these Beta systems will be equipped with electrodes and used for trials using industrially-produced hydrogen.

The firm’s low-cost alkaline fuel cell systems use hydrogen to produce clean electricity as well as heat and water. The fuel cells are targeted at large-scale industrial applications, with the objective of producing the lowest possible unit cost electricity.

“The company will now be able to begin demonstrating electricity generation in the field from industrially produced hydrogen,” said Ian Balchin, AFC’s executive deputy chairman. “We are grateful for the support and expertise we have received from AkzoNobel, and look forward to continuing our close working relationship with them to advance System performance. Electricity produced from the Beta Systems will be used by AkzoNobel in its own operations offering the prospect of reduced energy costs and lower carbon emissions by avoiding carbon- based fuels.”

AFC’s shares were down 0.15 per cent at 33.95 pence each in early trading today.

Fuel cells developer AFC Energy (LON:AFC) announced today that it has successfully completed the commissioning of its first commercial-scale fuel cell system, known as the ‘Beta System’.

The news follows on from Monday’s announcement of AFC’s successful completion of its HAZOP study. The final stage of the commissioning process was a demonstration of electrical power generation.

The firm’s low-cost alkaline fuel cell systems use hydrogen to produce clean electricity as well as heat and water. The fuel cells are targeted at large-scale industrial applications, with the objective of producing the lowest possible unit cost electricity.

This first Beta System will now be used mainly for testing and development work in support of commercialisation. Meanwhile, the firm is now preparing to deploy additional Beta systems for field trials.

“This is a significant milestone for AFC Energy,” said Ian Balachin, AFC’s deputy chairman. “Commissioning of the Beta System is the culmination of five years’ work by our dedicated team and is a remarkable achievement. It puts us well on our way to delivering a low-cost, low-carbon alternative to conventional electricity generation.”

Merchant Securities said it expected the first shipment of one of AFC’s fuel cell units would occur before the end of the year. “As we suspected the completion of the HAZOP operating procedures was the precursor to the full scale system progress,” said analyst Julian Tolley. “Adoption will be driven by pure economics – waste hydrogen will be converted to electricity – delivering profits from energy previously wasted.”

Merchant has set a target price of 60 pence per share for AFC. The firm’s share price was up 10.6 per cent at 45.9 pence at 3:19pm today.

The firm said improvements highlighted by the study have been incorporated into the ‘Beta’ system, which is currently being commissioned at AFC’s premises in the UK.

None of the improvements have involved any significant redesign work and the company said that it is on track with its plans to deploy a Beta system into the field for testing.

The firm’s low-cost alkaline fuel cell systems use hydrogen to produce clean electricity as well as heat and water. The fuel cells are targeted at large-scale industrial applications, with the objective of producing the lowest possible unit cost electricity.

AFC claims its cells have high efficiency levels: using readily-available hydrogen and air as the source of oxygen electrical efficiency is up to 60 percent, which compares to approximately 30 percent for conventional electricity-generating technologies.

The cells are also able to operate at temperatures of less than 100 degrees centigrade, enabling AFC to use low-cost polymer mouldings for many parts.

In early July, AFC reported interim results that showed post-tax losses for its first half were £1.8 million (H1 2010: £1.3 million). The firm explained that the increased operating loss was attributable to a planned increase in expenditure relating to the further strengthening of its technical team, expansion of its Dunsfold facilities and the construction of its first two Beta systems.

Broker view 

Fuel cells maker AFC Energy (LON:AFC) plans to begin field testing of its ‘Beta’ fuel cell system in the second half of this year as it moves towards commercialisation of its technology.

Independent broker Merchant Securities commented: “Shipment should see AFC regain the top spot in investor’s minds seeking fuel cell exposure.”

AFC said today that after constructing and successfully completing the first stage of commissioning of its Beta Fuel Cell at its site in Dunsfold, Surrey, and it expects shortly to have finished the necessary hazard and operability (HAZOP) study to be able to deploy a Beta unit in the field for testing.

The firm’s low-cost alkaline fuel cell systems use hydrogen to produce clean electricity as well as heat and water. The fuel cells are targeted at large-scale industrial applications, with the objective of producing the lowest possible unit cost electricity.

AFC claims its cells have high efficiency levels: using readily-available hydrogen and air as the source of oxygen electrical efficiency is up to 60 percent, which compares to approximately 30 percent for conventional electricity-generating technologies. The cells are also able to operate at temperatures of less than 100 degrees centigrade, enabling AFC to use low-cost polymer mouldings for many parts.

AFC also said it has been awarded its first patent and that it is confident it will be granted additional patents relating to its core technology. To date, the firm has filed 12 families of patents.

Reporting its interim results today, AFC said that post-tax losses during the six months to 30 were £1.8 million (H1 2010: £1.3 million). The firm explained that the increased operating loss was attributable to a planned increase in expenditure relating to the further strengthening of its technical team, expansion of its Dunsfold facilities and the construction of its first two Beta systems.

Merchant Securities said that today’s numbers were “virtually irrelevant” as the group is still approaching the first shipment of its Beta unit to its launch customer Akzo Nobel. “We believe the time taken by Akzo Nobel to write the operating procedures (HAZOP) bodes well for the scale of future adoption – not only by Akzo Nobel but other major players in the chlor-alkali industry,” added the broker.

At the end of April AFC had cash of £3.7 million on its balance sheet, compared with £2.7 million a year earlier. Since then, the firm has raised almost £4 million from a share placing on 27 May so that its current cash position is £7 million.

AFC said today that after constructing and successfully completing the first stage of commissioning of its Beta Fuel Cell at its site in Dunsfold, Surrey, and it expects shortly to have finished the necessary hazard and operability (HAZOP) study to be able to deploy a Beta unit in the field for testing.

The firm’s low-cost alkaline fuel cell systems use hydrogen to produce clean electricity as well as heat and water. The fuel cells are targeted at large-scale industrial applications, with the objective of producing the lowest possible unit cost electricity.

AFC claims its cells have high efficiency levels: using readily-available hydrogen and air as the source of oxygen electrical efficiency is up to 60 percent, which compares to approximately 30 percent for conventional electricity-generating technologies. The cells are also able to operate at temperatures of less than 100 degrees centigrade, enabling AFC to use low-cost polymer mouldings for many parts.

AFC also said it has been awarded its first patent and that it is confident it will be granted additional patents relating to its core technology. To date, the firm has filed 12 families of patents.

Reporting its interim results today, AFC said that post-tax losses during the six months to 30 were £1.8 million (H1 2010: £1.3 million). The firm explained that the increased operating loss was attributable to a planned increase in expenditure relating to the further strengthening of its technical team, expansion of its Dunsfold facilities and the construction of its first two Beta systems.

At the end of April AFC had cash of £3.7 million on its balance sheet, compared with £2.7 million a year earlier. Since then, the firm has raised almost £4 million from a share placing on 27 May so that its current cash position is £7 million.

AFC plans to use the funds to increase testing of its commercial fuel cell systems and for the firm’s working capital into 2013. In its last set of results – covering the 12 months to 31 October 2010 – the firm produced a loss of £3 million on revenues of £181,000, which it received for the delivery and testing of a system for Linc. AFC’s current cash balance is around £3.6 million.

Linc now holds 12 per cent of AFC’s shares. The Brisbane-based company is a specialist in underground coal gasification (UCG) and gas-to-liquids (GTL) technologies. The company is focusing on using these technologies to economically convert ‘stranded’ coal from deep underground into ultra-clean liquid fuels.

AFC also announced today that its managing director, Edward Wilson, had resigned due to differences in opinion regarding the strategic direction of the company. The firm is now planning to recruit a chief executive officer with international experience in the energy sector.

AFC is developing low-cost alkaline fuel cells that use hydrogen in order to produce clean electricity. These fuel cells systems are focused on large-scale industrial applications, with the objective of producing lowest-possible unit cost electricity.

In April, the firm said it had completed design work on its beta project to optimise performance for a commercial-scale fuel cell system. AFC is currently building its beta cells for proving trials at Dunsfold in the UK and with Akzo Nobel in Germany and it confirmed today that it expects these cells to be available by the end of June. 

Earlier this month, AFC said it had struck a deal with German company N2telligence to use its fuel cells in N2telligence’s fire protection systems.

At 8.55am AFC’s shares were down 4.2 per cent at 46 pence each.

AFC’s Alpha fuel cell system will be installed at Linc’s operating UCG plant in Chinchilla, Australia for demonstration and later install the larger 50 kW (kilowatt) AFC fuel cell system following the development of Alpha. The fuel cell systems will use synthetic hydrogen produced at UCG as their feed source.

Multiple installations of AFC’s 50 kW system for full scale commercialisation are anticipated.

According to the terms of the agreement, Linc will get worldwide exclusive rights to utilise and operate AFC fuel cells in conjunction with any UCG application for a period of 24 months and purchase the first fuel cell system for £200,000 with delivery anticipated in the next five months. Linc also has the option to extend the period of exclusivity for another 24 months by investing £2.3 million in AFC Energy.

AFC will be entitled to an upfront payment calculated on the cost of delivery of fuel cell systems and a royalty based on profits from the use of its fuel cells.

Linc said that the project capital expenditure for power stations using AFC Energy’s low cost fuel cell system is forecast to be less than that of conventional coal/IGCC (integrated gasification combined cycle) power stations.

“Whilst our primary focus remains firmly on the chlor-alkali market, we now have access through B9 Coal to the rapidly emerging market for power generation from underground coal. This opportunity is by far the largest potential market for AFC Energy that we identified and is operational practically anywhere in the world where there are deep coal deposits. The implementation of this programme can create a ‘Holy Grail’ for future coal utilisation with low-cost, highly efficient conversion of coal into power and through the process of CCS it can turn the dirtiest fossil fuel into the cleanest,” said Chief Executive of AFC Ian Balchin.

As the introducer and broker of the transaction, B9 will receive 2% of the net profits from the use of AFC fuel cells.
Shares in AFC rose 7% on the news this morning.

As the non-renewable sources of energy that are fuel fossils have been depleting to put the mankind at risk along with polluting the environment, the demand for renewable solutions that would also reverse the harm done to the ecosystem, such as wind, solar, biomass and geothermal energy sources, has been at its highest.

These factors have contributed to the acceleration of the development of pollution control technologies, as well as technologies in energy efficiencies and energy storage, such as green buildings, smart grid, smart metering, light-emitting diodes, automation and control technologies and fuel cells and advanced batteries.

These areas, along with clean transportation, air pollution control, water and wastewater management, waste management and sustainable agriculture, are all targeted by the companies working in the clean technology or “cleantech” sector. PSQ opined that the drying up renewable energy sources as well as the need to “amend the atrocities committed towards the environment in the past” gives these businesses fundamentals strong enough to propel “aggressive” investment activity in the sector from both the public and private sectors with high demand being there to stay.

Cleantech currently offers opportunities with large upside for all classes of investors, including venture capitalists, private equity, institutional investors and retail investors looking for sustainable returns.

PSQ’s research report projected the sector to stand up to the challenges it faces, which include slow technology adoption, significant dependence on legislations and government incentives, and long project gestation periods in some cases, to deliver “exciting” long term returns.

While most of the historical growth of cleantech has come from the developed nations and their increasing energy demand, the developing countries such as India and China are likely to emerge as the key drivers behind its growth in the coming years.

China currently has plans to pour some US$180 billion into the sector over the next 15 years to eventually cover 20% of its total energy demand by renewable sources by 2020, while India aims to double its renewable energy generation capacity in the next four years and to quadruple the amount of biofuel mixed into gasoline and diesel by 2017.

PSQ concluded that this would make cleantech one of the few sectors that will engine the recovery in the global economy. To read the full report click here

Among the companies working in the sector and covered by PSQ are:

AFC Energy plc (AIM: AFC) is engaged in the design and development of alkaline fuel cell systems. The company's objective is to develop an  alkaline fuel system at a significantly lower cost than any other fuel  cell system while also achieving high efficiency. Its approach is to  take proven technology and re-engineer it to produce a lower cost
solution by exploiting characteristics such as low operating  temperature and pressure, and to use less expensive materials that  lend themselves to volume manufacturing.

The company's strategy for commercialization is to take the fuel cell  system to the hydrogen thereby avoiding issues of hydrogen transport. It has identified Chlor Alkali producers as the first target market. Initially it expects to sell fuel cell systems to customers but plans  to adopt an Energy Supply Company model for future revenues.

AFC has partnered with Akzo Nobel, a major international chemicals  giant, and the fourth-largest chlor-alkali producer in Europe. It has  delivered, installed and tested its first system for AkzoNobel.
Click here to read AFC Energy report


Romag Holdings plc (AIM: ROM) is a producer of specialty transparent composites to the renewable energy, security, architectural and transportation market. Included within the company’s laminate products are laminated solar panels that generate renewable energy from embedded photovoltaic cells. These laminates combine float and tempered glass, modern plastics technology and specialist inter-layers. The company is a leading participant in the Building Integrated Photovoltaic (BIPV) market, the fastest-growing segment of the PV market, via its PowerGlaz technology. PowerGlaz offers standard modules producing up to 235Wp per module.
Click here to read Romag Holdings report


Oxford Instruments plc (MM: OXIG) is a worldwide business, supplying high-technology tools and systems for the analysis and manipulation of matter at the smallest scale.  Its diverse markets include industrial analysis, research, education, space and energy. The company’s worldwide business supplies commercially successful, high-tech tools and systems into diverse markets (which include industry, energy, the environment, health and research).

The company’s expertise includes the creation of low-temperature and high-magnetic field environments; X-ray, electron and optical-based metrology; and nuclear magnetic resonance and advanced semiconductor processing technologies. Its products support those customers addressing the global issues of protecting the environment and conserving energy, health and safety.
Click here to read Oxford Instruments report


Energetix Group Plc (AIM: EGX) develops alternative energy solutions targeted at homeowners, the small commercial sector and the UPS market.
Click here to read Energetix Group report

Renewable Energy Holdings Plc (AIM: REH) develops, generates and commercialises clean energy across wind, wave, methane capture, solar and hydro power generation projects in North America, Europe, Australasia.
Click here to read Renewable Energy Holdings report


PowerFilm Inc (AIM: PLFM) is engaged in the development and manufacture of thin flexible solar panels using low cost proprietary production process.
Click here to read PowerFilm Inc report


Helesi (AIM: HLS) is a leading global manufacturer and supplier of waste containers for use in waste management industry and also engages in providing waste management services.
Click here to read Helesi report


Modern Water Plc (AIM: MWG) develops water technologies that help to address the global problems of fresh water availability and the treatment and disposal of wastewater.
Click here to read Modern Water report


Acta S.p.A. (AIM: ACTA) provides hydro generation products and associated fuel cell applications, besides undertaking research and development of innovative catalysts for renewable energy, carbon-free motoring, battery and industrial waste applications.
Click here to read Acta S.p.A. report


Helius Energy plc (AIM: HEGY) develops large (>60MW) and small (5-8MW) biomass plants in UK and sells these to operators while retaining a minor equity stake in them. It joined the AIM market in January 2007. The company has announced the three projects: – Project Alpha (65MW), Project Gamma (100MW) and 7.2MW plant located at Combined Rothes Distillers site. The company aims to develop more than 300MW of biomass plants by 2012.
Click here to read Helius Energy report


Hydro International plc (AIM: HYD) offers a wide range of products and services for control and treatment of stormwater and wastewater through the application of advanced vortex and complementary technologies.
Click here to read Hydro International report


Straight plc (AIM: STT) is a UK based supplier of container solutions for source separated waste. It was founded by Jonathan Straight in 1993.  The company is UK’s leading supplier of kerbside recycling boxes, compost bins, and water butts. The company’s primary market is the UK. The company primarily operates in the two business segments –Trade business and Retail business.
Click here to read Straight plc report


Sabien Technology Group Plc (AIM: SNT) is engaged in designing and installation of control systems to reduce energy use in private and public organisations.
Click here to read Sabien Technology Group report


Renewable Energy Generation Ltd (AIM: RWE) develops, owns and operates small wind energy plants and is also engaged in power generation from refined used cooking oil (UCO). REG operates through two main subsidiaries: The Cornwall Light & Power Co. Ltd and REG Bio-Power UK Ltd. The company recently sold its Canadian wind power business
Click here to read Renewable Energy Generation report

Hydrodec Group plc (AIM: HYR) is a UK-based company is engaged in re-refining, marketing and distribution of premium transformer oil by acquiring used transformer oil and re-refining it using a patented technology. The company sells its re-refined oil under the trademark name of SUPERfineTM oil.
Click here to read Hydrodec Group report

AFC Energy develops low alkaline fuel cells, targeting industries that produce large amounts of hydrogen as a waste or by-product which can be used for fuel cells. Edison said the company was the only business attempting to address the demand for electricity in the chlor-alkali market, which could be a buyer of the electricity as well as a supplier of hydrogen and where hydrogen by-products could produce electricity worth EUR275 million annually.

There are currently 78 chlorine plants with an annual production capacity of 13 million tonnes in 23 countries throughout Europe, but Edison pointed out that AFC had global potential, noting that current global chlorine production amounted to 55 million tonnes, which could be used by AFC to produce EUR882 million of electricity per year based on the average prices in 2007-2008.

AFC’s current market cap of £16 million was one of the smallest in the sector and “a fraction of the potential market size” for its products, according to Edison’s analysts. While seeing potential for early sales of 3.5kW and 50kW fuel cell systems, the research firm said it expected “significant sales revenue” in 2011-2012, while profits were not expected to realise sooner than in full year 2012. There was potential for the stock to rally prior to this as projects in the chlor-alkali and waste-to-energy industries are announced, Edison said in its note.

AFC has a licensing and supply agreement with waste-to-energy company Waste2Tricity, which will pay it £1 million after securing an initial funding of £2 million, having already made a proposal to the London Waste and Recycling Board. AFC had £3.6 million in cash after raising £4.4 million through a share issue and £500,000 tangible assets at the end of 2008. With the current cash reserves and the rate of cash burn, the company is funded to mid-fiscal 2010.

Possible sources of income for the company could include sales, license agreements as well as the equity market, which, however, will be kept to a minimum until monetization of its fuel technology, said Edison.

The company has already delivered, installed and tested its first 3.5kW system for chemical giant AkzoNobel and plans the development of a larger system of 50kW capacity, which is expected to trial in Q1 2011.

AFC’s share price has increased dramatically over the past 6 months, going from 2 pence to the current 13 pence.

The two companies will develop a solution to produce electricity from surplus hydrogen arising out of the chlorine manufacturing process to reduce the plant’s reliance on fossil fuels.

The project will be commissioned as a part of INEOS’ ongoing strategy to expand its portfolio with alternative energy generation methods.

'This is significant step for AFC Energy, having successfully demonstrated an AFC Fuel Cell system using industrially produced hydrogen, we are able to work with new partners. We look forward to working closely with INEOS ChlorVinyls,” said Managing Director of AFC Energy Ian Balchin.

The companies did not disclose the financial details of the agreement.

The news helped AFC Energy to a 4% rise on the London Stock Exchange today.

AFC Energy’s commercial strategy rests on the plan to become an Energy Supply Company (ESCO) whereby a customer supplies AFC Energy with hydrogen and AFC Energy sells electricity back to the customer or to the grid.

It plans to initiate commercial discussions with interested parties for the joint development of ESCO models within the chlor-alkali industry where favourable subsidies in Europe and rising electricity prices are enabling the construction of business models with the potential for rapid payback of capital.

AFC managing director Ian Balchin said: “This is a major milestone in the progress of the company. We have commenced work on producing a larger 25kW+ system and broadening commercial relations in the chlor-alkali industry.”