AFC Energy Regulatory News (AFC)

7 November 2012

AFC Energy plc

("AFC Energy")

Up to Euro 6 million grant award for 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 that they have received notification that they have been awarded a European Union grant of up to Euro 6 million (£4.9 million) for the installation of the world's largest alkaline fuel cell energy generation system at ICL's chlor-alkaline chemical plant in Essex, UK. 

The award is being funded by the Fuel Cells and Hydrogen Joint Undertaking (FCH-JU), through the EU's Seventh Framework Programme (FP7). It will provide AFC Energy and ICL and their European project partners with more than four years' financial support for the project, which was first announced on 25 June 2012. The grant is subject to final negotiation and, subject to agreement, is expected to be in place to enable the project to commence during Spring 2013. If concluded satisfactorily, AFC Energy will coordinate the project and expects its direct share of the project funding to be up to Euro 3 million (£2.45 million) with the balance to be received by the other project partners.

AFC Energy's low cost alkaline fuel cell system will be installed in stages at the ICL owned and operated chemical facility and is eventually expected to generate approximately 1MWe (one mega watt of power, enough energy to power 500 homes). The chlor-alkali plant will manufacture chlorine and caustic soda that have a range of uses including in 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. The project is part of ICL's integrated energy generation plan and is the largest fuel cell system announced for installation in the UK to date and is believed 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.

AFC Energy intends to supply fuel cell systems to ICL in stages during the grant funded project. The longer term intent is for AFC Energy to provide electrical power to ICL 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.

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.

The project also includes work on automating the assembly of electrode stacks and the recovery and reuse of catalyst materials. Funding is also provided to publicise the project.

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 delighted that European funding has been identified to support this important project. I believe that this will help put European 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 cost effectiveness compared with other forms of power generation. 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.

"The intended fuel cell installation at ICL will act as a showcase for the economic and environmental benefits of AFC Energy's alkaline fuel cell."

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: "The relationship we have with AFC Energy goes from strength to strength. Our chlor-alkali plant is the first in the world designed to operate with alkaline fuel cell systems. Eventually we will generate up to 1MWe of clean electrical power from hydrogen that would otherwise be waste from the chlor-alkali process. This is exciting in terms of commercial savings on energy cost, distribution and supplier charges and being independent of the main electricity grid. ICL looks forward to working with AFC Energy and benefiting from the potential a large scale fuel cell system offers."

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. ICL's structure gives it the flexibility and scalability to act quickly and adapt to the requirements of consumers. For more information, please visit: www.icgl.co.uk.

About the Grant

The European Fuel Cell and Hydrogen Joint Undertaking (FCH-JU) was established by Council Regulation on 30 May 2008 as a public-private partnership between the European Commission, European industry and research organisations to accelerate the development and deployment of fuel cell and hydrogen technologies. AFC Energy is an active member of the Industry Grouping of the FCH-JU and participates in a range of activities designed to advance the interests of the fuel cell sector at a European level.

The Seventh Framework Programme (FP7) was created by the European Union in order to support and encourage research in Europe. It brings together all the EU's research-funding schemes and plays a crucial role in securing European growth, competitiveness and employment.