Ceres Power’s electrolysis agreement with Shell is a significant milestone for the company, according to broker Berenberg (read more).
A 1MW solid-oxide demonstrator will be delivered to Shell in 2023 through the partnership.
“Given that Ceres will only launch the demonstrator in the second half of this year underlines the current appetite from energy majors to consider solid oxide within the technology mix for hydrogen production”, said Berenberg.
Ceres’s technology could be c20% more efficient than existing ones (eg alkaline) in this type of application given its ability to utilise high-temperature waste heat, note the broker.
Berenberg points out that the potential for Ceres in the electrolyser market is hardly reflected in its market value.
The broker believes the electrolysis opportunity could be worth £150mln-200mln pa in high-margin royalty revenues to Ceres by 2035, while it can leverage 20 years of fuel cell stack development including the same IP portfolio, the same supply chain and the same manufacturing processes.
Shell also adds to Ceres’s already impressive list of blue-chip collaborations (eg Bosch, and Weichai) and, crucially, also suggests overall growth in interest for solid oxide electrolysis technology.
"Thus far, the industry has been dominated by alkaline and, more recently, proton exchange membrane technology – indeed Shell is collaborating with Thyssenkrupp and ITM Power to this extent.
“But there is increasing evidence that solid oxide is now also being considered to help deliver net-zero targets with Ceres’s peers Haldor Topsoe and Sunfire also making steady progress.
“It is worth noting that both Doosan and Bosch (Ceres’s fuel cell partners) have announced intentions to develop electrolyser businesses.”
Berenberg has a target of 1,560p against a market price of 589p, up 2.8% today.