AFC Energy Regulatory News (AFC)

3 August 2015

AFC Energy PLC

("AFC" or the "Company")

AFC's KORE Fuel Cell System Achieves Landmark Operation in Stade, Germany

Highlights

· Successfully commissioned and commenced operation of first KORE fuel cell system in Stade, Germany

· Historic Milestone 9 achieved - Phase-1 POWER-UP programme

· AFC still on target to achieve first full commercial scale operability of KORE module (final Milestone 11) in late 2015

AFC Energy plc (AFC.L), the industrial fuel cell power company, is pleased to announce that it has successfully commissioned and commenced operation of its first KORE fuel cell system in Stade, Germany.

This milestone marks the achievement of nearly a decade's investment in the AFC fuel cell system which, when fully operational in late 2015, will be the world's largest alkaline fuel cell system operating at an industrial facility selling power into the national electricity grid.

Following a week long commissioning of the fuel cell system at Stade, AFC's team on-site were able to affirm the safety and integrity of the system and introduced hydrogen into the fuel cells on Friday, 31 July 2015, to achieve a peak output of 7.56kW from a single operational cartridges (one of 24), with this cartridge intentionally operating at less than full capacity as envisaged within the POWER-UP commissioning programme. Importantly, when the original POWER-UP milestones were devised and announced to the market on 8 December 2014, the initial output target of the KORE by the end of July 2015 was set at 7.5kW to 15kW, however this was based on a forecast of two cartridges. To achieve this target with just one cartridge is great news for the technology.

The results reflect an historic achievement on two levels: firstly, not only AFC has delivered on its commitment to deliver a minimum 7.5kW from the system at the commencement of Phase 1 of the programme; but this achievement has been delivered within a timeframe (end of July 2015) which was arguably one of the most aggressive set within the Company's history and demonstrates the ability of the Company to deliver on its commitment to its shareholders and the market in general both as to time and cost.

The announcement marks achievement of Milestone 9 (of a total 11 Milestones) of the Status Update issued by AFC on 8 December 2014 (as set out in the Attachment below) and is the initial production of power on site with the associated testing prior to increasing power output in Phase 2. This milestone has been achieved with the cartridges validated by AFC in February 2015 at the required flow and operational settings.

This landmark achievement, executed in accordance with the ambitious timeline set in December 2014, gives AFC significant confidence in the upcoming commencement of Phase 2 of power generation on site. It will be following delivery of Phase 2, which was initially envisaged as commencing in Quarter 4 2015, but which now could be further accelerated, that AFC will commence selling power into the German grid through its Power Purchase Agreement (PPA) with Stadtwerke Stade (as announced on 27 July 2015).

This achievement further validates the prospect for long-term technical and commercial viability of the Company's alkaline fuel cell technology, whilst also establishing a positive precedent, in this prototype installation, that AFC's first major industrial project is on track to achieve its future significant milestones. Operational information pertaining to the fuel cell system will now be generated over the coming months for the further validation of the system both to AFC, and its international development, manufacturing and finance partners.

Mr Adam Bond, AFC's Chief Executive Officer, said: "Today marks one of the proudest moments in AFC's history. For the first time, the Company's research and development programme of the past decade has commenced commercial operations. This is a remarkable achievement delivered in record time and in a first class collaborative effort across all involved. On a personal level, I wish to extend my sincere thanks and congratulations to all the staff at AFC who have worked tirelessly and remained focussed over the past seven months on delivering something truly significant and establishing the platform for the commercialisation of this world leading alkaline fuel cell technology."

Mr Bond added, "It would be remiss of me to not also acknowledge the tireless efforts of our host partners, namely Air Products, and our contractors and sub-contractors in establishing not only the permitting and regulatory compliance of the system in Germany, but also delivering the civils, utilities, buildings and associated infrastructure for the KORE system at a remarkable pace in the face of many challenges."

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About AFC Energy

AFC Energy plc is fast approaching commercialisation for its proven low-cost alkaline fuel cell system ("KORE"), which converts hydrogen into 'clean' electricity. AFC's key project POWER-UP will demonstrate the world's largest alkaline fuel cell system at Air Products' industrial gas plant in Stade, Germany. The date for the demonstration of the 240kW KORE system has been fast tracked to December 2015, representing the final phase of AFC's pre-commercialisation technical development programme and creating the platform for the Company's global commercial fuel cell deployment. For further information, please visit our website: www.afcenergy.com

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