AFC Energy Regulatory News (AFC)

25 June 2012

AFC Energy plc

("AFC Energy" or "AFC")

AFC Energy and Industrial Chemicals Ltd to build UK's largest fuel cell energy facility

AFC Energy (AIM: AFC), the industrial fuel cell power company and Industrial Chemicals Limited ("ICL"), are pleased to announce their joint intent to install the UK's largest fuel cell facility to generate clean energy.

The facility, using AFC's low cost alkaline fuel cell system, will have an electrical output approaching 1MWe (one mega watt of power, enough energy to power 500 homes). It will be installed in stages at ICL's chlor-alkali plant which has recently been constructed in Essex to manufacture chlorine and caustic soda which have a range of uses including household cleaning products, detergents and water treatment.

Hydrogen, produced as a waste by-product in ICL's chlor-alkali process, will be used to generate power using AFC Energy's fuel cell system and will form part of ICL's integrated energy generation plan at the site. This is the largest fuel cell system announced for installation in the UK to date and the Directors believe it to be the largest alkaline fuel cell system announced anywhere in the world. Without this fuel cell system, waste hydrogen would typically be discharged into the atmosphere. Instead, ICL will be able to reduce dependence on the national grid for its energy needs by creating economic value from its hydrogen.

The intent is for AFC Energy to supply fuel cell systems to ICL in stages under an ESCO (Energy Supply Company) model whereby ICL will provide its hydrogen and purchase power under long-term contracts. AFC Energy will own, operate and maintain the fuel cell systems.

AFC Energy and ICL plan to start initial work on an AFC's Beta Plus System later this year and on the full-scale system after securing project finance. Jointly, both companies are actively seeking grants from UK and European funding to accelerate the demonstration of the large-scale fuel cell system.

The project is expected to create a significant number of UK jobs in the long term and the stationary fuel cell industry is forecast to create 500,000 jobs globally over the next decade.

AFC Energy and ICL expect to be able to announce further details in due course.

Commenting on the agreement Ian Williamson, Chief Executive Officer, said: "We are very pleased to be working with ICL in this ground breaking commercial-scale development, which will put British fuel cell technology and innovation on a global stage. I have previously emphasised our goal to move to a commercial demonstration phase for our technology and ICL have now provided the perfect opportunity for us to demonstrate commercial electricity supply. We now need the funding agencies to step up to the challenge and support our vision.

"The UK and Europe are lagging behind the USA and Korea in their support for base load power from fuel cell technology. This clean energy opportunity would enable a European technology to demonstrate cost effectiveness compared with other forms of power generation.AFC Energy and ICL will seek funding from the appropriate agencies and bodies to accelerate the planned installation. Globally around 1.4 million metric tonnes of hydrogen is produced by the chlor-alkali industry alone of which 15% is vented or flared when our technology could readily help the environment as well as create economic value."

Based in Essex, ICL operates five manufacturing sites in the UK and one in the US operating up to 20 chemical manufacturing plants, handling more than one million tonnes of materials and over 300,000 tonnes of finished products per year.

Darren Sharpe, Energy Projects Manager of ICL, commented: "Alongside the development of our new Chlor-alkali facility we have reviewed a number of fuel cell systems and other technologies that could be used to generate electrical power from the hydrogen that is produced as part of the Chlor-alkali process. We have been impressed with the potential of AFC Energy's alkaline fuel cell system, the suitability of the system to operate with the Chlor-alkali process, the focus on commercial economics and the sheer pace of development we have witnessed at AFC Energy to further the capabilities of their fuel cell technology. The prospect of developing a fuel cell capable of producing 1MWe of clean electrical power from hydrogen that would otherwise be waste from the Chlor-alkali process is exciting in terms of technology advancement together with commercial savings on energy cost, distribution and supplier charges. ICL looks forward to working with AFC Energy and benefiting from the potential a large scale fuel cell system offers, and we hope that between us we can secure grant funding to accelerate the commercial demonstration of this technology."

Ends

For further information, please contact:

About AFC Energy

Founded in 2006, AFC Energy plc is re-engineering proven alkaline fuel cell technology to reduce the cost of electricity. Alkaline fuel cells have been used on US and Russian manned space missions for decades to provide electrical power and drinking water. By using modern materials, design tools and manufacturing processes at scale, AFC Energy is developing fuel cells that will compete with conventional technologies such as turbines for electrical power generation. Today, AFC Energy is pursuing opportunities in several sectors where hydrogen is readily available including the chlorine, clean coal and waste-to-energy industries as well as applications for distributed/back-up power. For further information, please visit our website: www.afcenergy.com.

About Industrial Chemicals Limited

Industrial Chemicals Limited is part of a fast growing chemical manufacturing group operating plants in the UK and USA supplying products to the detergent, paper, water treatment and chemical industries on a global basis. The company is in the final stages of commissioning Europe's newest Chlor-alkali plant at one of its major manufacturing sites in Essex, this new facility will continue the company's rapid expansion in terms of new products, new markets and new customers.

ICL is a relatively large, yet privately owned, company with a track record of being able to design and implement chemical manufacturing process for its customers faster than others. Our structure gives us the flexibility and scalability to act quickly and adapt to the requirements of our consumers. Website: www.icgl.co.uk