26 May 2010 ENERGY ASSOCIATIONS SAY DISTRIBUTED GENERATION OF...

26 May 2010


ENERGY ASSOCIATIONS SAY DISTRIBUTED GENERATION OF ELECTRICITY A "GREAT
OPPORTUNITY" FOR IMPROVED ENERGY DELIVERY


Ceramic Fuel Cells Limited (AIM/ASX: CFU) - a leading developer of high
efficiency and low emission electricity generation units for homes and other
buildings - today announced that several responses to Prime Minister's Task
Group's Energy Efficiency Issues Paper have highlighted the benefits of
distributed generation of electricity using fuel cells.

Distributed electricity generation is the production of electricity at the point
of use. Currently, only about 25% of electricity produced at centralised
coal-fired power stations ends up being used. The balance - 75% - is lost as
heat at the plant or in transmission and distribution.

In its response to the Energy Efficiency Issues Paper, The Energy Networks
Association (ENA) - the peak national body for Australia's gas and electricity
network providers - says:

"Australia's energy use is growing, and total demand for energy is projected to
continue to increase with growth in Australia's economy and population, growing
by more than 25 per cent over the next decade. This growth will require
substantial investment to maintain and update Australia's electricity
infrastructure. This investment is already having an impact on electricity
prices and will continue to do so.

"ENA recognises the scale and impact of line losses as electricity is
transported by way of existing transmission and distribution networks, and the
benefits which can be delivered over the long term by a move to more
distributed, local generation.

"In the future, a typical active customer could potentially transform their
energy profile by purchasing a 3kW combined heat and power (CHP) fuel cell, a
1.5kW solar PV system, a 5 kWh battery and a Home Area Network (HAN). They could
reduce their reliance on the grid - which features 90% coal-fired generation,
60% combustion and line losses and around 10% renewable generation - and move
towards a more environmentally sustainable profile based on natural gas-fired
generation, 15% energy conversion losses and 30% renewable generation.

"Active customers are also likely to be net exporters of electricity. This
example highlights the fact that greater deployment of distributed generation
has the potential to significantly improve the energy efficiency of individual
businesses and households, which may have consequences for energy prices and the
overall efficiency of the total energy delivery chain."

Similarly, the Gas Industry Alliance (GIA) states in its submission:

"The GIA has identified two key areas of great opportunity to drive a stepwise
change in energy delivery and use throughout Australia. Firstly small to medium
sized distributed generation including co/tri-generation and fuel cell
technologies have the potential to deliver significant low cost emission
intensity reductions in the stationary energy use sector. The second key
opportunity is the increased use of gaseous fuels (LPG, CNG and LNG) in the
transport sector."

Jemena, a large gas and electricity distribution business, says in its
submission:

"Jemena considers stimulating small to medium-scale cogeneration fuel cell units
in the residential sector as key low hanging fruit for delivering a national
energy efficiency 'step change' outcome, given the low [greenhouse gas]
emissions intensity and cost effectiveness of these systems."

The City of Sydney says in its submission:

"Removing the regulatory barriers to decentralised energy (cogeneration,
trigeneration, fuel cells and renewable energy) will stimulate the decentralised
energy market and make a significant contribution to energy production
efficiency and reductions in CO2 emissions."

Origin Energy states its submission:

"Small scale co-generation, or Combined Heat & Power (CHP), can deliver
significant energy efficiency gains, and represents an opportunity that has
slipped through the gaps of existing government policy. Origin recommends that
CHP can impact both energy and peak demand with high levels of both fuel &
carbon efficiency."

Origin Energy states that key opportunities for Australia to drive a step change
improvement in energy production efficiency and derive greater energy from its
existing stock of natural resources include: fuel switching; distributed
generation; and co-benefit utilisation (ie the use of heat in combined heat and
power (CHP) units enables a production efficiency of up to 80%).

The Task Group's Issues Paper itself says:

"Energy efficiency measures and cost-effective distributed generation (such as
solar roof panels, wind turbines, co-generation and tri-generation) can help
delay the need for new electricity infrastructure investment.

"Energy efficiency and distributed generation may play a role in increasing the
security, stability and cost-effectiveness of energy markets. Distributed or
embedded generation can result in lower transmission line losses because the
generator is located close to the load. Distributed generators are also capable
of higher overall energy efficiency if using co-generation or tri-generation,
because waste heat can be used for heating and cooling. Distributed generation
can help delay the need for new electricity infrastructure investment."

The Task Group will make its final recommendations to the Minister for Climate
Change, Water and Energy Efficiency and the Minister for Resources and Energy by
the middle of this year.

Submissions are available at:
http://www.climatechange.gov.au/government/submissions/pm-task-group/paper.aspx