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AFC Energy closing in on launch of first commercial fuel cells

Snapshot

  • Has developed a scalable alkaline fuel cell system

  • The fuel cells use hydrogen to make clean electricity

  • To supply electric car charging and replace diesel generators

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Quick facts: AFC Energy PLC

Price: 4.6 GBX

AIM:AFC
Market: AIM
Market Cap: £20.61 m
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The number of commercial enquiries received since announcing AFC Energy's EV fuel cell charger system, CH2ARGE, earlier this year has clearly demonstrated the potential for the company to capitalise on this growing market.

Adam Bond, chief executive

How it is doing

AFC Energy PLC (LON:AFC) has concluded the majority of engineering design and signed agreements for its first commercial fuel cell systems as it closes in on bringing the product to market.

AFC's hydrogen fuel cells will have a low cost per kilowatt hour (kWh) compared to alternative generating systems, partially as a result of its ability to use lower quality and less expensive hydrogen sources.

Recently concluded trials have shown that AFC's proprietary fuel cell system can use "off the shelf" ammonia cracking technology, with little difference in performance compared to hydrogen sourced from industrial plants.

The company is also working with various leading clean-tech specialists to build on existing commercial activities and establish alternative distribution channels to accelerate future growth.

Hydrogen revolution

AFC is one of the UK market leaders in what is becoming known as the hydrogen revolution, the development of technology that can transform hydrogen into a renewable energy source.

According to the Hydrogen Council, an industry group backed by companies such as BMW and Air Liquide, the hydrogen market could be worth around US$2.5trln by 2050 as part of a push to lower carbon emissions from transport and limit global warming to safer levels.

Hydrogen is seen as a key element of the UK government's recent announcement of a new target for the country to achieve net-zero carbon emissions by 2050, which was on the back of a strongly worded report from the Committee on Climate Change (CCC).

READ: Climate report augurs well for hydrogen trailblazers

With the electricity grid often at full stretch and the CCC estimating that all new cars and vans should be electric within 16 years, “there is no way the grid can cope with that amount of extra demand”, says Adam Bond, AFC's chief executive.

“Hydrogen is the only solution to meet the demand,” Bond said, “and that is why the climate change report mentioned it on almost every page.”

Order momentum

To demonstrate the role fuel cells can play in building a truly emissions free environments, the company has installed a hydrogen fuel cell micro-grid at its Dunsfold Park site in Surrey, working in sync with the owner of a neighbouring anaerobic digestion plant.

This month (June), plans were confirmed to launch an ‘off-grid’ electric vehicle charging system in the fourth quarter of 2019, combining AFC Energy's hydrogen fuel cell technology along with charging infrastructure from Rolec Services, which is the manufacturer of Europe's largest range of EV charging points.

Such an off-grid system would displace or defer the need for significant short-to-medium term upgrades for the power grid, the companies said. 

AFC's tech will be put to a different use as part of an order for a first commercially operating fuel cell last year from Australian waste oil refiner Southern Oil, which wants to develop a plant using an AFC fuel cell system to convert surplus hydrogen from the refinery into electricity. 

Read: AFC Energy to launch electric vehicle charging system in the fourth quarter

Ahead of going live in such commercial contracts, AFC has raised a fresh £1.1mln of cash at a price of 4.8p as it established further improvements in the longevity of the technology and reductions in manufacturing and running costs of the fuel cells.

The design of AFC's new flow plate has all fuel cell components integrated within a single sub-assembly, which is expected to deliver not only material improvements in system performance but also a more streamlined and robust quality control function to help eliminate potential failure modes.

With costs cut and longevity improved, the company beleives it has a product that is "manufacturing ready", with engineers also designing a containerised solution that would enable rapid cost-effective deployment for off grid applications.

First movers

Speaking after the off-grid agreement with Rolec, Bond said: "The number of commercial enquiries received since announcing AFC Energy's EV fuel cell charger system, CH2ARGE, earlier this year has clearly demonstrated the potential for the company to capitalise on this growing market."

He said the collaboration with Rolec was a recognition of the industry's desire to explore off-grid EV charging solutions to meet a need already seen across several of Rolec's local and international clients.

"AFC Energy's EV charger is now one of our key markets for revenue generation and gives us an early mover advantage in penetrating the off-grid market."

On the back of the ammonia cracking tests, Bond said the integration of the company's fuel cell system into such upstream hydrogen streams, "is not only a unique selling point of the alkaline fuel cell but also is a logical means to the unlocking of the multi-billion dollar off-grid stationary power market".

With shares trading at around 5p as of in late June 2019, AFC carries a market cap of just under £21mln.

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