AFC Energy Regulatory News (AFC)

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3 April 2017

AFC Energy PLC

("AFC Energy" or the "Company")

Industrie De Nora S.p.A Joint Development Agreement - Update

AFC Energy (AIM: AFC), the industrial fuel cell power company, is pleased to provide an update to the market on the status of the Company's Joint Development Agreement ("JDA") with Industrie De Nora S.p.A. ("De Nora").

Highlights

· Extensive programme of 145 variant fuel cell tests conducted by AFC Energy under the JDA with De Nora

· Material improvements in fuel cell longevity and degradation rates achieved vs the successful Gen2 baseline data

· Growing confidence at AFC Energy that commercial life expectancy of fuel cell stack may exceed initial target of twelve months within the targeted cost levels

· Improvements in fuel cell longevity has potential to materially reduce operating costs and improve the profitability of projects for AFC Energy due to improved operating cost levels

· Lower cost of fuel cell operation further increases size of AFC Energy's market opportunity

· All testing at AFC Energy now conducted with lower industrial grade (and therefore lower cost) hydrogen without affecting the expected lifetime of the fuel cell system - increases further potential economic market size for the Company's fuel cells

De Nora, a multinational leader in sustainable technologies, and the largest producer of commercial electrodes for all major industrial electrochemical applications internationally, has been a key technology partner to AFC Energy since the second half of 2016. The JDA collaboration, announced to the market in August 2016, was intended to target accelerated technological enhancements to AFC Energy's fuel cell system, lower their cost of production and operation, and further progress the commercialisation of AFC Energy's fuel cell technology platform.

AFC Energy has now performed more than 145 tests with De Nora using several configurations and different system specifications at our Dunsfold facilities, targeting specific variations to aspects of the fuel cell system design, utilising De Nora's experience in the water electrolysis and chlor-alkali industry. An expert team from De Nora, including recognised experts in electro-chemistry from Japan and Europe, have collaborated with AFC Energy's team to deliver a number of material improvements to the AFC Energy fuel cell system.

As a result of these extensive tests, the Company is increasingly confident that it is possible for AFC Energy fuel cells to exceed the Company's commercial lifetime target of 12 months. Several iterations of the fuel cells have shown a robust performance over extended period of time with a materially lower rate of degradation than previously experienced relative to the Gen2 system.

Importantly, based on the results obtained under the JDA, AFC Energy is now targeting a commercial life expectancy well in excess of 12 months and at a lower cost of delivery than earlier generations of its fuel cell. This increase in longevity is expected to materially reduce the cost of power produced and consequently, increase the potential market size of the AFC Energy fuel cell.

The improvements in longevity seen in the JDA tests are being integrated into the Company's current fuel cell stack design and AFC Energy plans to execute further longevity trials confirming the enhancements shortly. These latest design modifications, revised stack engineering and the ability of AFC Energy's fuel cells to use a lower grade hydrogen demonstrates the commercial progression of the AFC Energy fuel cell system with which the Company will be able to penetrate its target markets. The Board believe that a material improvement in longevity, and associated reduction in cost of power will materially support a very competitive "total ownership cost" to AFC Energy's partners and projects

Adam Bond, AFC Energy's Chief Executive Officer, said:

"I've been delighted with the progress both companies have made in progressing the respective work packages under the JDA. The collaboration has been first class and with the direction of travel we are now pursuing and advances made, particularly in the area of cell longevity, I'm confident that the results we are seeing will materially support our conversations with commercial project partners during the coming 12 months."

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About AFC Energy

AFC Energy plc has developed and successfully demonstrated an alkaline fuel cell system, which converts hydrogen into "clean" electricity. 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 in January 2016. 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: ww.afcenergy.com

About De Nora

De Nora is an Italian multinational leader in sustainable technologies that offers energy saving products and water treatment solutions. Globally De Nora is a pioneer of electrodes for electrochemical processes (Chlorine & Caustic, Electronics & Surface Finishing, Pool Electrochlorination, water electrolysis, fuel cells and specialties) and is among the leaders in technologies and processes for the filtration and disinfection of water (industrial use, municipal water and wastewater, marine and offshore oil and gas). The Company has grown organically by continuous innovation and externally through major acquisitions in the USA, Japan, the United Kingdom and Italy. It serves clients in 119 countries and has a physical presence in 11 countries worldwide with 29 offices, including 13 manufacturing facilities, and three research & development centers in Italy, the USA and Japan. The Group intellectual property portfolio currently contains 356 patent families with more than 2,000 territorial extensions.

More information at www.denora.com.