AFC Energy Regulatory News (AFC)

7 November 2019

AFC Energy PLC

("AFC Energy" or the "Company")

HydroX-Cell(S)TM High Power Density Alkaline Fuel Cell Update

AFC Energy (AIM: AFC), a leading provider of hydrogen power generation technologies, is pleased to provide a status update on the Company's development of a market leading high-current density alkaline fuel cell, branded HydroX-Cell(S)TM.

Highlights

·; Excellent high current density of >1A/cm2 achieved on single cell operation, performance akin to that of Proton Exchange Membrane (PEM) fuel cell technology.

·; Potential for HydroX-Cell(S)TM to compete favourably with PEM fuel cell technologies applied in transportation (train, heavy duty industrial), marine, defence, and stationary applications.

·; HydroX-Cell(S)TM capable of accepting low grade (and low cost) Hydrogen streams, unlike PEM, which requires high cost 99.999% grade Hydrogen.

·; Proprietary Anion Exchange Membrane (AEM) technology, branded AlkaMemTM developed in-house by AFC Energy, is the key to high power density performance.

·; Power density achieved on single cell HydroX-Cell(S)TM fuel cell facilitates excellent power output per m3 of space and offers potential for 1MW-2MW nameplate generation capacity within 40' ISO shipping container.

·; AFC Energy to commence publishing results of HydroX-Cell(S)TM in scientific and technical journals.

In April 2019, AFC Energy announced initial details of a new High-Power Density Alkaline Fuel Cell which, at the time, had been under development for 18 months. Since this time, further developments have been achieved with great success.

Paramount to the business case in support of this truly disruptive HydroX-Cell(S)TM fuel cell technology was a desire by AFC Energy to realise the real benefits that can be gained and demonstrated by an alkaline membrane based fuel cell, complementing the Company's current HydroX-Cell(L)TM technology.

Three features of AFC Energy's HydroX-Cell(S)TM fuel cell technology which allows it to compete favourably with alternative high-power density fuel cells, are:

1. HydroX-Cell(S)TM's ability to achieve excellent current density (high power) comparable to or better than market leading PEM fuel cell technologies used in many mobility and transportation applications;

2. The significant cost benefits AFC Energy's AlkaMemTM membrane technology used in its HydroX-Cell(S)TM fuel cell, compared to high cost fuel cell membranes developed for PEM;

3. HydroX-Cell(S)TM's ability to accept lower grade hydrogen relative to PEM technologies e.g. hydrogen derived from cracked ammonia, without further processing and clean-up, offering very beneficial operating cost outcomes.

A unique selling point of the alkaline fuel cell, whether developed around a liquid electrolyte (AFC Energy's original technology platform), or a solid membrane-based system as in the HydroX-Cell(S)TM, is the ability for ammonia to present a viable, low cost fuel compared to 99.999% hydrogen grades. This is important not only for base fuel commodity costs, but also in transportation and logistics costs which, in off grid or transportation applications, will drive to a large degree the underlying levelised cost of power from the fuel cell system.

In a recent study completed by the National Marine Research Institute examining ship design, it was stated that "for commercial freight operators assessing carbon-free fuels, the fact that ammonia has almost twice the energy density of hydrogen is crucial; any increase in fuel volume means a decrease in cargo capacity, which cuts away profit margins in an already highly competitive industry". This consideration of utilising ammonia in transportation applications fits perfectly with the high power per m3 of space needed by the HydroX-Cell(S)TM fuel cell.

The report clearly confirms the importance of defining a fuel strategy closely aligned with the commercial objectives and incentives of the customer - which in the majority of instances, will highlight the relative affordability of ammonia as a fuel versus 99.999% hydrogen.

To this end, building on knowhow derived from AFC Energy's existing liquid alkaline fuel cell technology (HydroX-Cell(L)TM) to define a smaller, complementary, higher power density fuel cell system for transportation and associated applications makes enormous sense.

AFC Energy is working to demonstrate a pre-commercial prototype HydroX-Cell(S)TM module during 2020 which it can collaborate with partners and prospective licensors on to integrate, under license, the HydroX-Cell(S)TM fuel cell module, with new innovative commercial applications.

In parallel to the ongoing HydroX-Cell(S)TM progress, AFC Energy is diligently working to deliver the Company's current agenda to bring the HydroX-Cell(L)TM technology to market within the EV recharger application which remains on track for Quarter 4 2019 demonstration.

Adam Bond, Chief Executive Officer at AFC Energy, said "We are continuing to see a growing interest in a decarbonisation of the mobility and stationary power sectors through high power density generation sources. Delivery of a high performing alkaline membrane-based fuel cell has been described by many leaders in the field as the "Holy Grail" of fuel cell technologies and we are very pleased to be at the forefront of this emerging disruptive technology. We do however remain focussed on short term commercialisation of our HydroX-Cell(L)TM fuel cell system and welcome the progress made by our technology development team towards a complimentary product supporting a new and growing segment of the hydrogen economy."

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About AFC Energy

AFC Energy plc is commercialising a scalable alkaline fuel cell system, to provide clean electricity for on and off grid applications. The technology, pioneered over the past twelve years in the UK, is in the process of being deployed in industrial gas plants for grid generation, as an alternative to diesel generators for localised power, in energy storage systems and as the power source for local electricity needs.