from trials to commercialisation

October 25, 2011
Poweralternatives: Ceramic Fuel Cells Moves From Trials To Commercialisation With Its Gas-To- Power Micro Generation Products
By Stewart Dalby
http://oilbarrel.com/news/poweralternatives-ceramic-fuel-cells-moves-from-trials-to-commercialisation-with-its-gas-to-power-micro-generation-products

James Lovelock, the erstwhile “Green” guru, always reckoned it took around 40 years for an innovative technology, whether it be Morse Code, television or wind power, to get to market and for its price to become reasonable. I say erstwhile guru because he has become less popular with “Greens” since he changed tack from his original beliefs and more recently embraced nuclear power as a key element in the fight against climate change
He has said in his books, that the first modern day wind farms were built in California in 1975 and were prohibitively expensive. They are less expensive today, even though, in Britain at least, they are subject to massive subsidy from the public. When writing about Wasabi Energy which is involved in waste heat to power recently, we said it took ten years of research and a spend of US$100 million to get its proprietary Kalina Cycle technology accepted.
Late last year we reported on Marine Current Turbines which at that point had the UK’s only tidal turbine, in Strangford Lough in Northern Ireland, which was connected to the National Grid. It took eight years of trial and error to build. It cost £11m to construct and produced, in November 2010 a little over a 1 MW of power, enough for just 1,500 homes, using less than 20 kWh a day.
Ceres Power was founded as a company in 2001. Like a lot of renewable energy concerns it was a spin-off from a university research department; in this case, Imperial College in London. The company listed on London’s Alternative Investment Market (AIM) in London in 2004 and raised funds to produce its fuel cell based combined heat and power micro generators, which it says, can easily fit into the kitchen of an average sized UK home and can substantially lower fuel bills and reduce carbon emissions. Ceres has received backing from British Gas and Calor Gas who both see potential mass markets here, if Ceres can set what is seen as a fair price for its products. But ten years after being founded, and after a wildly gyrating share price which has now descended from its heights, Ceres is still testing its so-called revolutionary product in five homes in Horsham in Sussex in the south of England.
Ceramic Fuel Cells is an Australian group listed on Australia’s ASX and London’s AIM. It too grew into a public company from a research group. It was founded in 1992 by Australia’s CSIRO (Commonwealth Science and Industry and Research Organisation). It has been called Ceres Power’s rival since it too is fuel cell based. But it has a different business model, insofar as, although it wants to use fuel cells to power the home, it also wants to put fuel cells in boilers in order to generate electricity that can be used and resold by utilities.
Fuel cells have been around a long time, since 1837, in fact. Sir William Grove knew that water could be split into hydrogen and oxygen by sending an electric current through it (a process called electrolysis). He thought that if you could reverse the process you could produce electricity (and water as a by product) and he went on to prove as much.
Over the years there has been a lot of hype but also a lot of scepticism about fuels cells since they are perceived not to have lived up to the promises made for them. They are thought, on the one hand, to be a super efficient alternative to fossil fuels for heat and power and on the other hand, unduly expensive and unreliable.
A fuel cell today, CFC Limited believes, is a device that generates electricity from hydrogen rich fuels (i.e. natural gas amongst other fuels) through a clean electrochemical rather than dirty combustion reaction. It is similar to a battery in that it provides continuous DC electricity from a chemical reaction. Like a battery it has an anode, a cathode and an electrolyte. Unlike batteries, fuel cells cannot store electrical energy, do not run ‘flat’ or require electricity to charge them again. Fuel cells can continuously generate activity as long as they have a supply of fuel and air.
As we say unlike internal combustion engines or coal/gas powered turbines, fuel cells do not burn fuel. This means there are no noisy high-pressure rotors or loud exhaust noise and vibration. Fuel cells produce electricity through a silent electrochemical reaction, generating it 2-3 times more efficiently than other more traditional methods. They also convert the chemical energy in the fuel directly into electricity, heat and water.
And, because fuel cells don’t burn the fuel through combustion, they don’t produce large quantities of greenhouse gases such as carbon dioxide (CO2) methane (CH4) and nitrogen oxide (NOx), fuel cell emissions amount to water in the form of steam and low levels of carbon dioxide ( or no C02 at all, if the cell uses pure hydrogen as a fuel.
The management at CFC, and a lot of other climate change worrier, believe the kind of micro generation its boilers can provide is infinitely preferable to conventional coal fired power stations which generate electricity through traditional networks. In producing electricity from these there can be a 65 to 70 per cent energy loss as heat. There is a further 5 to 8 per cent energy lost in transmissions and distribution. Only 22 to 30 per cent of the original fuel energy reaches the point of use.
CFC says using its solid oxide fuel cell (SOFC) based BlueGenR (2kW) product (which is the size of a washing machine) to produce power means electricity can be generated at up to 60 per cent electrical efficiency. When the thermal energy from BlueGen is recovered the total efficiency can increase to 85 per cent.
CFC has had its share of nasty cost surprises in developing its products, its BlueGen and its sister Gennex fuel cell module, over the years. There have also, in the past year, been a number of factors which according to broker Nomura represent the growing pains of a trailblazing company with an innovative product. This led CFC to fall behind expectations, Nomura says. These factors include production restraints due to a cell supplier issue, bureaucratic accreditation procedures in the UK and slow moving large customers.
As CFC is considered a trailblazing concern the MCS (Microgeneration Certification Scheme) process required a staggering amount of paper work and man hours to come to fruition. While CFC says that its BlueGen product does not need subsidy, it does qualify for the Feed In tariff programme.
Despite all these hassles and snafus, CFC is clearly now moving away from field trials to commercialisation. In four main markets Germany, the UK, The Netherlands and Australia it has established a broad range of distributors and outsourced manufacturers for the sale, installation and service of BlueGen units. In the preliminary results for the 12 months ended June 30 2011, which was released in August ,the company said there were orders for 206 six BlueGen units and up to 200 orders for mCHP ( Gennex) units. There were 16 energy utility customers, plus commercial sales channels in four markets. There was an81 per cent increase in revenuesfrom last year, to A$ 3.6 million in FY11.

In a more recent statement, the quarterly cash flow report released this week (October 24) the company said the group had now received orders for over 500 units. Receipts from customers were up 130 per cent compared to Q1 FY11. Using earlier figures Nomura said it expected negative EBITDA of £9.7 million in 2011 on revenues of £22 million but estimated positive EBITDA of 0.3 million on revenues of £21.6 million in 2012 and EBITDA of £18.6 million on revenues of £63.8 million in 2013. Nomura has set a target price of 21p against 8.38p recently.
There is perhaps one blot on the landscape in that there are concerns about the unit price for a BlueGen unit. This currently is around £20,000 or more, beyond the reach of most households if not factories. But a spokesman said there is no reason while households need own the units. There are five utilities in the UK and they could lease the units to domestic users. Now there’s an interesting business idea. Watch this space.