Posted by Scott Dwyer on Friday, 13 March 2015in Public Blogs News a setback for the market but is there light at the end of the tunnel?
So another high profile developer of micro-CHP technology has announced it will be entering administration, with board members announcing it was insolvent or was at least soon to be.
Ceramic Fuel Cells Ltd – the fuel cell technology developer with its roots in Australia but manufacturing capacity and market reach in Europe – seemed like they were on a good run following the disastrous collapse of the deal with its planned Estonian distribution partner in late 2013. This news is another setback for the European micro-CHP market in which CFCL was lining itself up to be a major player.
Recent positive announcements not enough to stimulate sales
Positive announcements flowed with news of leaps forward in terms of stack lifetime and thermal cycling, the forming of exciting new partnerships, costs coming down and the emergence of generous subsidies that CFCL customers could claim. However, none of these it seemed was enough to drive the surge in sales needed to keep the company afloat.
A road well-trodden
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0
COMPANY
WHAT HAPPENED?
OUTCOME
1
Disenco (UK)
Entered administration in February 2010.
The technology rights were purchased and transferred to Inspirit Energy, who are currently field testing their system with a number of UK partners.
2
Ceres Power (UK)
On October 2012, made an announcement in to the stock market that it may close the business after being unsuccessful in raising sufficient funding to continue its development. This followed announcements to the stock market that development plans had slipped again.
Following refinancing, re-structuring and a change in strategy, Ceres Power decided to focus on selling its stack to OEMs rather than try and develop the entire micro-CHP appliance itself. Now working on partnerships with some big name companies, including Cummins and KD Navien.
3
EHE (Spain)
An announcement in December 2012 that the company was entering receivership shortly after its major deal with E.ON to commercialise its 1kWe product in the UK collapsed.
No further developments have been publically announced.
4
Infinia Corporation (US)
In September 2013 the company filed for Chapter 11 after saying it could no longer fund the business.
Infinia Corp announced in November 2013 that Qnergy (Israel) had acquired its assets. Qnergy is working on several partnerships to commercialise its Stirling engine CHP appliance, focussing on its 7.5kW model first.
5
ClearEdge Power (US)
Announced in January 2014 that it was filing for Chapter 11 (in the US this gives protection from creditors for a limited time to allow for re-structuring). This followed the collapse of a significant order that lead to a sudden shortfall in cash flow.
Doosan (South Korea) announced a takeover of ClearEdge Power in July 2014 after the fuel cell developer filed for Chapter 11. Forming a US subsidiary to take the technology forward, it’s appeared to more actively pursue the larger output products rather than the 5kW.
6
Ceramic Fuel Cells Ltd (Australia)
Australian business announced in February 2015 that it was insolvent (or was soon to be). This followed a number of fund raising activities.
No further announcements have been made.
As we see from the examples of the other companies listed above, there are several recurring themes that show that CFCL was treading a road well-trodden.
Creating your own market is a long, lonely task: In Europe, CFCL has been a trailblazer for fuel cell but only 500+ units have been sold since the BlueGen launched in 2012. In Japan, where more than 100,000 fuel cell systems have been sold, a market was created through throwing many hundreds-of-millions of euros in Government support at it, combined with the full backing of major utilities. In Europe, without a similar level of Government support and with heating industry or utility partners being traditionally conservative and slow moving, CFCL was required to create a market almost all by themselves. This is not easy and resulted in the company trying many different channel strategies and types of partnership – not all of which survived as long as CFCL did. CFCL was undoubtedly one of the most battle hardened and experienced company at trying to create a market for micro-CHP in Europe – like others before them it seemed an almost impossible task.
Developing a robust, long life, proven micro-CHP takes time and requires deep pockets:CFCL was always very open about the lifetime of its stack and the need to get this lifetime closer to the ‘holy grail’ of 10 years. Getting a robust, long life, proven micro-CHP (i.e. heating) product takes a long time, isn’t easy, and requires deep pockets. The technology developer had to continually raise money on the markets and investors were patient, but only to a degree. Other companies developing small-scale fuel cell products, like Vaillant, Toshiba, Panasonic, have been lucky enough to have big R&D budgets to fall back on. EHE found this a major challenge and one it wasn’t able to overcome. Ceres Power encountered this issue, falling back on a refinancing deal and restructuring to survive. CFCL proved that even getting a standalone, potentially “simpler” product (like the BlueGEN rather than an integrated micro-CHP appliance) to market is tough in terms of durability.
Strong channel partners are needed who are able to follow through with a compelling business model and customer proposition
CFCL have worked with various utilities since we started following their progress in 2001. Nuon, Eon, and EWE were all channel partners while many others utilities were more than happy to work with the technology given its fantastic electrical efficiency. At the same time, CFCL worked on other channel/product development partnerships with the likes of Bruns, Ideal and De Dietrich (part of BDR Thermea group). That none of these partnerships were able to bear fruits must be hugely frustrating for the fuel cell company.
An industry in tatters or part of the birthing process?
Another high profile micro-CHP developer going bankrupt is obviously not a good news story for the industry. However, there is a good precedent for these companies making a comeback after the administrators are called. ClearEdge Power was snapped up by the formidable Doosan of South Korea; Ceres Power made a smart decision to evolve from system developer to OEM supplier making huge progress and forming some great new partnerships; Infinia and Disenco both survived brushes with bankruptcy and are both a whisker away from commercialisation - with the IP surviving under the names Qnergy and Inspirit Energy.
So all is not lost - but it will require someone with a shrewd plan, strong nerve, and deep pockets to come in to finish the job of commercialising an extremely promising technology.
CFU Price at posting:
0.4¢ Sentiment: Hold Disclosure: Held
