02 February 2009 E.ON and Ceramic Fuel Cells (CFCL) extend...

02 February 2009


E.ON and Ceramic Fuel Cells (CFCL) extend microgeneration collaboration


Funded product development
Proposed volume order for commercial products


Ceramic Fuel Cells (Europe) Limited, a subsidiary of Ceramic Fuel Cells Limited
(ASX / AIM: CFU), a global leader in fuel cell development, and E.ON, have
extended their exclusive agreement to further develop and deploy fuel cell micro
combined heat and power (mCHP) units in Great Britain .


Under the terms of the new agreement, E.ON and CFCL will collaborate on a joint
development project to commercialise mCHP units designed specifically for the
Great Britain market, based on CFCL's GENNEX fuel cell module. The
commercialisation project is currently scheduled to run from 2009 to 2012 in a
number of stages subject to performance criteria, with the Great Britain market
launch expected to follow thereafter.


Subject to CFCL's achievement of agreed price and performance targets, E.ON and
CFCL have agreed a potential future order profile, which would secure
'E.ON's exclusive distribution rights for CFCL micro CHP units within Great
Britain. A minimum order of 100,000 units over six years from 2012 would be
required for E.ON to continue to retain exclusivity.


Charles Bradshaw-Smith, Head of Innovation at E.ON, said:

"The agreement with CFCL reflects two years' hard work to achieve a unit with a
technical performance that has met all our targets. We are now pleased to commit
funding and resources, subject to the attainment of agreed milestones, to roll
out a commercial unit, building on CFCL's market-leading technology. This
technology signals that cleaner, more cost-effective energy in the UK home is
closer than ever before."


Commenting, Brendan Dow, Managing Director of Ceramic Fuel Cells, said:

"We are delighted that E.ON, one of the leading energy companies in Europe, has
chosen to extend their agreement with CFCL. This is a key endorsement and
represents significant progress. This provides us with additional funding to
develop commercial products, as well as strong support for future market launch
and development. This reinforces CFCL as the market leader in solid oxide fuel
cells with a clear path to commercialisation. CFCL continues to work with
utility partners across Europe to roll out commercial units to all their
customers."


CFCL and E.ON expect that the highly efficient new mCHP units would be able to
power a wide range of homes and help to reduce carbon emissions in Great
Britain.


This agreement follows the successful completion of the first phase of the
partners' product development, in which an 'Alpha' prototype unit, comprising a
CFCL NetGenPlus unit integrated with a supplementary boiler, was installed and
operated.


The Alpha unit successfully met all of E.ON's performance and lifetime
requirements, exporting just under 1kW of power to the local UK grid at high
efficiency and generating enough heat for an average UK home's hot water needs.
The unit was installed in June 2008 and has been continuously running (on the
same fuel cell stack) at the Blackpool facilities of CFCL's appliance partner
ever since.
BACKGROUND TO UK MARKET
The UK Government is strongly supportive of microgeneration. Energy industry
leaders and Government Ministers have agreed that CHP must play a more prominent
role in the United Kingdom's transition to a low-carbon economy. The Energy Act
2008 will introduce a Feed-in-Tariff for small-scale, low-carbon electricity
production including conventional gas-fired CHP units with an electrical
capacity of 5MW or less.
The UK has the largest boiler market in the EU with 1.6 million gas boilers sold
in the UK each year. (Source: BSRIA October 2008)


The UK renewable obligation will be GBP1 billion by 2010 and by 2016 all new UK
homes should be zero or low carbon. There are currently about 100,000
microgeneration installations in the UK, up from 82,000 in 2004. If no
additional policies are implemented, about 500,000 microgeneration units would
be installed by 2015 and 2-3 million by 2020. But, with the right incentives, up
to 9 million microgeneration systems could be installed by 2020, producing as
much energy as 5 nuclear power stations (Source: BERR Report June 2008)