It’s rare, but sometimes technology develops at a faster pace than the market it was created to serve.
This certainly seems to have happened with hydrogen fuel cells.
Only now are we seeing companies that have toiled for years on their advances crossing the commercial Rubicon.
Listed on AIM
AIM-listed Proton Power Systems (LON:PPS) fits into that bracket. The company, which is based near Munich, has developed a fuel cell stack that is more efficient and has a longer life span than the competition.
A big tie-up with the German giant Deutsche Bahn has provided third party seal of approval, while Proton has demonstrated the set-up can be used to power buses, lorries, vans and forklift trucks.
Its hybrid HyRange system even holds an endurance record, having helped power a 7.5 tonne commercial vehicle on the 600km between Munich and Berlin.
The new breed of battery-driven run-abouts are great in cities where there are charging points, but don’t really pass the motorway test. Oh, and they require around four hours to juice back up.
So, Proton provides real a solution to the problem of range.
Proton’s last results revealed it is making some headway, with the order book up and cash burn receding (but not to the point that the company generated net cash flow or a profit).
Three units
The business is organised into three units – stationary, mobile and maritime.
If it’s not a contradiction, the stationary arm appears to be making the most progress. This particular operation supplies fuel cell units that can be used in temporary generators in telecoms, data centres and eco-houses.
It has a seven-year, £13mln deal with its biggest customer, Deutsche Bahn, to replace old diesel back-up generators used to power track signals when there’s disruption to the main power supply.
The benefits for the end user are that these new units require less maintenance than the old smoky generators that were prone to algae build-up.
It is also possible to monitor the Proton system remotely by mobile, which again saves time and manpower.
The mobile applications of the Proton technology will be seen in the public transport and logistics arena.
The maritime deployment of hybrid propulsion systems and onboard power is a little less well commercially advanced than the stationary and mobile uses of Proton’s hydrogen fuel cell platform.
At the last results – for the half-year, published last September – investors were starting to see the demand for Proton’s products coming through.
Orders of £1.9mln
There were orders of £1.9mln that were expected to be delivered by the end of 2016 and it had landed its biggest emergency power contract.
There was also the Orkney’s Surf and Turf project where its systems will be integral to generating power wind and tidal energy.
According to chairman Ian Peden the company is actively looking to bring in an investors with either manufacturing experience or market reach, or both.
The idea is the new shareholder would be able to help Proton with the scale-up required as the contracts continue to roll in.
Offloading a stake would also help dilute the current cornerstone investor, Roundstone Properties, a company owned by the family of chief executive Faiz Francois Nahab, who has been instrumental in keeping Proton trading and progressing.
Industrial partners
Not only does he own 92.7% of the company, he has provided a significant loan facility that has bankrolled Proton’s development to this point.
“What we need to take the business to the next level is further investment,” said Peden.
Proton has appointed a financial advisor - BHF Bank Frankfurt - to seek additional international industrial investors for the company.
“We are talking to many different corporations and something should firm up in the next six to nine months.”