Commercialisation Programme Remains On-track
Ceres Power Holdings plc
("Ceres", "Ceres Power", or "the Company")
Commercialisation Programme Remains On-track with Significant Progress on micro-CHP Durability
Ceres Power is delighted to announce that it remains on-track to commercialise its unique low cost SOFC technology platform. This update covers the significant and on-going technological advances made towards the Company's target of delivering a global cost leadership mass market micro-CHP product; both the 2014 field trial programme and the 2016 micro-CHP product launch programme remain on track.
Key Highlights
· New agreement for UK and Netherlands consumer field trials
o British Gas and Itho-Daalderop to purchase 174 micro-CHP units
o €2.4 million funding via the European Commission's 7th Framework Programme - final approval shortly to be granted
· Significant improvements in degradation rates now achieved at micro-CHP product level
o On-track to deliver the required commercial product performance requirements
o Planned technology developments set to deliver further improvements
· Flagship UK and Benelux commercial product launch programme remains on track to deliver the mass volume low cost micro-CHP for 2H 2016
· Independent review by Booz & Company and AEA Technology confirms low-cost capability of the Ceres micro-CHP product design
· Independent review of Ceres core fuel cell technology by a globally recognised SOFC expert commissioned
· Successful implementation of planned cost reduction programme delivering annualised savings of at least £3m
· £10.2m in net cash at 30th June 2012
David Pummell, Chief Executive Officer of Ceres Power, commented:
"We have made excellent technical and commercial progress over recent months and our commercialisation programme remains on-track to successfully deliver field trials in 2014 and mass volume product launch in 2016. I am delighted to announce these large scale consumer trials in the UK and Benelux and working in collaboration with our strategic partners, British Gas and Itho-Daalderop to take our low cost mass market product to our customers."
Phil Bentley, Managing Director of British Gas, commented:
"Ceres has continued to make good technical progress under the new leadership of David Pummell. We are looking forward to participating in the next phase of trials and laying the groundwork to market the product in preparation for Ceres' planned manufacturing scale-up."
Bart Romeijn, Chief Executive Officer of Itho-Daalderop, commented:
"We are also delighted with the new field-trials and the interest of the European Commission in funding this pan European trial. It is recognition of the innovative work we are doing together. We have a Benelux project group in place consisting of a social landlord and a utility company and their input in the field-trial evaluation will be very valuable and will significantly help the commercial product launch in the UK and the Benelux. The Benelux countries are a very good market for residential micro-CHP and Ceres' lightweight, wall mounted product is ideally suited for the mass market."
New Agreement to Sell CHP Units for Large Scale Consumer Trials
Ceres today announces a new agreement under which its partners British Gas and Itho-Daalderop will purchase a total of 174 micro-CHP units, for sale, installation and trialling across a range of UK and Dutch homes starting in 2014, as part of the Company's preparation for full mass volume launch in 2016.
The trial micro-CHP products will be available to members of the public for the first time, and selected customers will have the opportunity to purchase a micro-CHP unit with a full service and maintenance package provided by British Gas in the UK and by Itho-Daalderop in the Netherlands. Both British Gas and Itho-Daalderop will be launching their marketing campaigns to customers in their respective markets in due course. As a result, Ceres and its partners will capture extensive feedback to further refine the product and validate performance and operability in the field that will underpin mass volume launch in 2016. The parties are collaborating on training and procedures for product installation, in-field service & maintenance, and are working to optimize products & spares logistics to minimize costs and lead times.
British Gas will install and maintain the Ceres micro-CHP product in the UK. Itho-Daalderop will work with its network of approved engineers to provide installation and maintenance in the Dutch market. The overall objective is to provide a platform for the mass volume product launch in 2016 and grow unit sale volumes as quickly as possible thereafter.
Ceres expects to receive €2.4 million in funding to conduct the trials, via the European Commission's 7th Framework Programme, subject to formal approval being granted in the near future. The trials are part of the recently announced Ene.field project, which will provide a large-scale demonstration of the economic and environmental benefits of residential fuel cells, and will drive consumer awareness, engage channels to market and influence policy making to stimulate rapid product adoption.
Significant improvements achieved in durability
On 23rd May 2012, Ceres announced that it had made significant improvements in cell and stack durability performance, addressing the rapid degradation rates previously experienced. The Company also made clear that its primary focus in the short term was to implement and test the engineering modifications to the micro-CHP product to achieve degradation rates compatible with the performance achieved at cell stack level. In the intervening period, Ceres has made significant progress with micro-CHP testing, which has focussed on improved control of the micro-CHP system and the elimination of sources of external contamination. Ceres can now confirm operation of a micro-CHP product on natural gas with degradation rates approaching those achieved at cell stack level (1% per 1000 hours).
In addition, the Company has developed a strengthened cell anode and is continuing to make improvements in stack resistance, thermal management and fuel and water control; these are likely to result in further improvements in degradation rates at the micro-CHP product level. Ceres is confident that the micro-CHP product has the potential to meet the overall commercial performance requirements supporting mass market deployment from 2016.
Commercial product launch programme remains on track for 2H 2016
During the last six months the Company has successfully implemented its new programme management governance and organisation structure. This has refocused the Company's resources to entirely support the mass market micro-CHP launch programme. Ceres continues to meet its internal programme milestones, as defined by stage-gate reviews, ensuring plans remain realistic and planned project work is completed to agreed deadlines. This level of rigorous programme governance has enabled Ceres to reconfirm that its micro-CHP programme remains on-track to deliver product launch in 2H 2016.
The Company's unique metal-supported fuel cell technology, operating under 6000 C, enables the use of low-cost materials, such as stainless steel, in the manufacture of the fuel cell stack and the balance of plant components in the micro-CHP product. The Company believes that the low cost of the Ceres technology platform represents a distinctive commercial advantage, and the delivery of a cost leadership technology will be the prime differentiator that will underpin mass volume consumer uptake.
An independent review conducted by Booz & Company, in conjunction with AEA Technology, has confirmed the low-cost capability of the Ceres micro-CHP product design for launch in 2016. Based on quotations from the Company's supply chain partners and applying cost-down experience curves for similar mass volume technology products, the independent review validated the variable cost estimates of Ceres 1kW CHP product to be circa £2,500 and circa £1,750 at volumes of 20k and 100k per annum respectively (this includes the fuel cell stack of circa £380 and circa £250 for the same volumes). The Board is confident that Ceres low cost micro-CHP design can secure significant market share from conventional condensing boilers and offer consumers an attractive payback.
U.K Feed in Tariff for micro-CHP Products
Ceres Power today welcomes the announcement by U.K. Government to increase the feed in tariff ("FIT") for micro-CHP products, including the Company's own fuel cell micro-CHP product. The increase in the FIT to 12.5p per kWh generated, from the current level of 10.5p, is intended to accelerate consumer adoption of this technology. For a typical U.K. home with a Ceres micro-CHP unit1, it is predicted that the annual FIT will go up from £350 to £436, on top of the predicted annual energy cost savings of £286.
The increase in the FIT follows comments by Greg Barker, Minister of State for Climate Change earlier in the year, in which he signalled his intent to use policy measures such as the FIT to "jumpstart" micro-CHP, and indicated that he shared the ambition for 1 million micro-CHP units installed in the U.K. by 20202.
This represents a very positive development, and demonstrates the Government's constructive engagement with the micro-CHP sector and recognises the strategic importance of natural gas and micro-CHP distributed power generation in meeting the future energy requirements of the UK.
Restructuring, Cost Reduction and Financial Position
On 30th March 2012 Ceres Power announced a cost reduction and restructuring programme. The Company can now confirm that the targeted annualised savings of at least £3m on the current cost base have been achieved. This has come principally through reducing headcount. We are currently working with our supply chain partners to leverage their capability to deliver low cost, reliable components and sub-systems to de-risk the programme and minimise the costs to launch the CHP product. The Company is in positive discussions with a number of key strategic partners in Europe, Asia and North America about commercialising the Company's core technology platform and financing the micro-CHP programme.
The Company can confirm that, based on unaudited figures, it has achieved its targeted cash figure of £10.2 million in net cash at 30th June 2012.
A full commercial and technology update will be presented in September. This will also include an independent detailed assessment of Ceres core technology by an acknowledged international expert in SOFC and related technologies, which the Company anticipates will confirm Ceres low cost SOFC technology meets the performance and durability requirements of residential micro-CHP and have the potential for cost leadership, therefore underpinning the Company's strategy of global mass market deployment.
1. Baseline figures as disclosed in the presentation accompanying the Company's CHP demonstration, site visit and preliminary results for the year ended 30th June 2010, published on 29th September 2010, and available at: http://www.cerespower.com/store/files/200-Results%20Presentation%20V30%2029%209%2010%20for%20web%20FINAL.pdf
2. The House of Commons adjournment debate on micro-CHP on 1st February 2012 can be found at: http://www.parliamentlive.tv/Main/Player.aspx?meetingId=9929&st=11:00:28
For Further Information Contact:
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Ceres Power Holdings plc |
Tel. +44 (0)1403 273 463 |
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David Pummell, Chief Executive Officer |
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Rex Vevers, Finance Director |
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Investec Investment Banking |
Tel. +44 (0)20 7071 4304 |
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Chris Sim/James Ireland |
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Kreab Gavin Anderson & Company |
Tel. +44 (0)20 7074 1800 |
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Ken Cronin/Deborah Walter |
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Notes to Editors:
Ceres Power is a leading developer of clean, efficient, cost‐effective decentralised energy products that reduce operating costs, lower CO2 emissions and improve energy security. These products use the Company's mass manufacturable technology platform, the Fuel Cell Module, based on the Company's unique patented solid oxide fuel cell ('SOFC') technology and operating on mains natural gas or packaged fuels, such as LPG. The Company is listed on the AiM section of the London Stock Exchange, and has facilities in Horsham and Crawley, UK.
The Ceres Power fuel cell Combined Heat and Power ('CHP') product operates on mains natural gas and generates all of the heating and hot water and the majority of the electricity needs of a typical UK home. The wall‐mounted unit is designed to replace a conventional central heating boiler and uses the same gas, water and electricity connections. With its low heat‐to‐power ratio and unique load‐following ability, a Ceres Power CHP product can operate all year round thereby maximizing the energy savings for the household and cutting carbon emissions.
Significant market opportunities exist for the Company's residential CHP products globally including in Europe, Asia and North America. New products and market opportunities also exist in the longer term including remote industrial power and auxiliary power for transport applications.
This information is provided by RNS
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