10kW Fuel Cell System Update

6 July 2016

AFC Energy PLC

("AFC Energy" or the "Company")

10kW Fuel Cell System Engineering and HAZOP Completed

AFC Energy (AIM: AFC), the industrial fuel cell power company, is pleased to announce that design and basic engineering of the Company's new 10kW fuel cell system, including accompanying balance of plant, has been completed, accomplishing Milestone 4 of the Company's published 2016 Strategic Milestones ahead of schedule.

Completion of AFC Energy's 10kW system design and basic engineering included the conduct of a thorough examination of all safety aspects and functions of the system using the Hazard Operability ("HAZOP") methodology for process hazard assessment. The HAZOP was conducted at the Company's Dunsfold offices in the last week of June, with participants from AFC Energy, plantIng GmbH and independent fuel cell and hydrogen expert consultancy Efficientics, which chaired the proceedings.

Detailed engineering & procurement will now commence, ensuring the system will be deployable within 2016 as articulated in Milestone 4 of the Company's Strategic Milestones. Project management, process engineering, procurement, design and construction management are all within the remit of plantIng's engineering team, closely supported by AFC Energy's staff in accordance with the two companies' strategic partnership agreement.

The Company also wishes to update the market on progress relating to Milestone 5, AFC Energy's larger 1MW scale system. This work is progressing to schedule with the initial conceptual design phase completed by plantIng in the last week of June and now subject to AFC Energy's internal review.

The concept engineering phase will help establish the design and operating principles of AFC Energy's new large-scale system and is a necessary pre-requisite for the system's basic design and engineering. The product, which could be sized up to 1.2MWe across a containerised and modular system, is designed to be scalable dependent on customer specifications and is suitable for multi-megawatt installations. The design of this system builds upon the extensive experience accrued by both AFC Energy and plantIng during project POWER-UP and AFC Energy's previous systems earlier this year, as well as from the BETA and KORE modules.

Adam Bond, AFC's Chief Executive Officer, said: "We continue to hold discussions with commercial parties interested in the whole range of fuel cell systems currently being developed by AFC Energy, including this 10kW system. Delivery of the small-scale system's basic engineering in such a tight timeframe is further validation of the decision to collaborate with our strategic partner plantIng and moves the Company further along the path towards commercialisation."

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About AFC Energy

AFC Energy plc is developing an alkaline fuel cell system ("KORE"), which converts hydrogen into "clean" electricity. In January 2016, AFC Energy's key project POWER-UP demonstrated the world's largest operational alkaline fuel cell system at Air Products' industrial gas plant in Stade, Germany. The Company is now looking to build upon an already established pipeline of commercial opportunities and drive the findings from the development phase of the technology into a technically optimised and commercially relevant fuel cell system. For further information, please visit our website: www.afcenergy.com