AFC Energy Regulatory News (AFC)

AFC Energy PLC

('AFC Energy' or the 'Company')

Independent technology review highlights

AFC Energy's strong progress in commercialising its fuel cell systems

AFC Energy PLC, the developer of low cost alkaline fuel cells, is pleased to announce that it has received a positive independent interim review of the technical activity that has taken place in the Company from Dr Jon Helliwell, Project Manager, Fuel Cell Applications at the Centre for Process Innovation ("CPI").

AFC Energy provided Dr Helliwell with complete, unrestricted access to staff and technologyfor the purposes of the assessment. CPI previously published a full review of AFC Energy's technology in October 2009.

In summary, the CPI interim review says:

·; there have been significant developments in all areas of the AFC Energy business over the last five months. A number of arrangements have been put in place with key partner organisations such as Linc Energy, Centrica, Air Products and WSP Group that will give the Company routes to market and underpin the demonstration of its technology;

·; the Company has built upon the learning it has gained with its 3.5 kW alpha-system to increase the volumetric density of its fuel cell modules, whilst reducing the complexity, component count and cost;

·; AFC Energy has used the learning that it has gained on the use of a monolithic manifold to create a simplified manifold concept. This allows these modules to be combined in either vertical or horizontal configurations, giving the technology true practical scalability, that will be capable of delivering the planned multi-megawatt projects being developed with the Company's partners. It has also developed intellectual property associated with both the new fuel cell cartridge arrangements and the balance of plant required to service these multimodule units;

·; the Company has purchased a number of items of equipment that have significantly improved its capabilities in materials characterisation, electrode development and pilot manufacture. Indeed, it has leased an additional unit which is being converted to provide pilot manufacture and controlled goods inwards capabilities. This reflects a strong link between the Company's development activities and its drive to ensure the manufacturability of its technology;

·; AFC Energy has consolidated and strengthened its technical team, increasing its focus on the technology development plan. This is evidenced by the significant progress that has been made in the relatively short period since the last review;

·; the Company has consolidated the learning that it has gained from its alpha-system to design a truly scalable alkaline fuel cell power system that will be capable of providing the power requirements its partners expect. The technology employed in the new design represents a logical extension of technology that the Company already understands;

·; the work carried out on these concepts since the last review indicates that the proposed 50 kW system will be achievable. The CPI believe that the technical development plan prepared by the Company to underpin this work will deliver the required working system;

·; there will undoubtedly be great market interest in this larger scale system. This will inevitably drive a market demand for performance and cost data on the new system. The planned system durability test work will therefore need to deliver real data on cost, performance and durability, even though the AFC Energy business model is less subject to durability considerations; and

·; the Company has achieved a significant level of progress in a relatively short time: the author firmly believes that it now has a system capable of manufacture at low cost that will deliver the power and scalability required by its clients.

Dr Jon Helliwell, Project Manager, Fuel Cell Applications, CPI said:

'It is my firm opinion, based on a number of reviews of the progress of the Company that it has consolidated the learning that it has gained from its early system development to design a truly scalable alkaline fuel cell power system that will satisfy its clients requirements. Although there is further development work to complete, in my view, given the progress I have observed to date, there is no obvious reason why the Company should not be successful in commercialising the system within the two year timeframe it is predicting.'

Ian Balchin, AFC Energy's Chief Executive said:

"It is extremely encouraging for AFC Energy to see such a level of positive progress reflected in the CPI's latest independent review. The CPI review recognises the substantial strides we have made over the last 5 months, the significant headway achieved in commercialising our system and delivering on our partner's expectations."

For further information and a copy of the interim report by CPI visit www.afcenergy.com or contact:

About CPI www.uk-cpi.com

The Centre for Process Innovation was established by the Regional Development Agency, One North East, in 2004 to act as a Centre of Excellence for the Process Industry. One of its first projects was the Fuel Cell Application Facility which allowed it to evaluate the technology and determine what was required in order to realise commercialisation. It has established a number of practical fuel cell demonstrations in the North East of England (including the world's first fuel cell powered lighthouse) which have given it insight into what constitutes a realistic fuel cell technology with the potential for commercial success.