AFC Energy Regulatory News (AFC)

RNS Announcement 04 October 2010

Letter of intent to deploy fuel cell power stations

AFC Energy PLC

('AFC Energy', 'AFC' or the 'Company')

AFC Energy Plc (AIM: AFC), a world leading developer of low cost alkaline fuel cell technology, is pleased to announce that it has signed a binding letter of intent (LOI) with Powerfuel Power Ltd ("Powerfuel") and B9 Coal Ltd ("B9 Coal") concerning high efficiency fuel cell power stations in the UK fuelled with hydrogen derived from surface coal gasification and/or natural gas. These power stations will include low-cost carbon capture and storage (CCS) with the first demonstration power station expected to be located at the Hatfield Colliery site near Doncaster, South Yorkshire.

The LOI provides for B9 Coal to be responsible for financing the building and operation of the demonstration fuel cell power station which would be built in stages up to 300 megawatts ("MW") at the Hatfield site adjacent to Powerfuel's planned integrated gasification combined cycle ("IGCC") power station, which is currently at an advanced stage of planning and awaiting project financing. The Board of AFC anticipate that a successful demonstration at the Hatfield site is likely to lead to a joint venture between Powerfuel and B9 Coal to roll-out turnkey power stations based on the demonstration power station. The Board expects that, should this prove to be the case, then the new power stations will continue to use the Hatfield model and will combine AFC's fuel cell system with fuel processing and CCS technologies via Powerfuel. The LOI provides an option for Powerfuel to acquire exclusive rights to incorporate AFC's fuel cell systems into power stations of 50MW and greater in other territories upon payment of significant upfront fees to B9 Coal. B9 Coal is then obliged to pass a large proportion of these fees to AFC.

Powerfuel's Hatfield project is a large scale, near zero emissions power station with carbon capture capability, initially comprising an 800 MW (gross) combined cycle gas turbine ("CCGT) facility which has been specifically designed for optimisation and performance on syngas. The Board of AFC understands that Powerfuel plans to convert the CCGT plant into a 900 MW IGCC power station fuelled by its extensive coal resources at Hatfield colliery. The syngas used in the plant can also be passed through a commercial process to produce hydrogen as a feedstock for AFC Energy's low cost alkaline fuel cells. AFC Energy's technology converts hydrogen to emissions-free electricity at up to 60% electrical efficiency.

Ian Balchin, CEO of AFC Energy, said: "This important agreement with Powerfuel and B9 Coal provides further market validation of the prospect of using our low cost, low carbon fuel cell technology in large scale power generation projects. Following our clean coal project announced in conjunction with B9 Coal and Rio Tinto Alcan in August and our work with Linc Energy, this latest collaboration demonstrates that our alkaline fuel cell solution is the potential keystone to Integrated Gasification Fuel Cell ("IGFC") electricity generation with the potential for significant worldwide application. By joining forces with Powerfuel at this stage AFC is looking to secure an important additional future market, where fuel cell systems could act as a pull-through technology for the widespread adoption of CCS. We believe that our technology is gaining considerable momentum across a variety of industries and applications, including the chlor-alkali sector, waste-to-energy, clean coal and natural gas."

Grant Budge, Chief Operating Officer, Powerfuel Power Limited, added: "This venture with B9 Coal and AFC Energy supports Powerfuel's aspiration of leading the drive for low cost clean energy from fossil fuels. In our IGCC project, the lowest cost carbon capture technology commercially available today will be demonstrated, but through this agreement and others like it, Powerfuel are looking forward at how the cost can be reduced further. Delivering competitive clean power, at a price affordable to the consumer, has to be the aspiration of every responsible generator."

Alisa Murphy, Director B9 Coal commented: "This business venture with Powerfuel is a wonderful opportunity for low cost fuel cell technology on both a local and global scale. Together we believe that we can offer a technically advanced solution to the problem of rising carbon emissions, as well as a practical and commercial template for clean energy generation. In the pursuit of a low carbon future, we believe that innovative ventures such as these will lie at the heart of a sustainable energy mix."

The Hatfield deployment will mark the second clean coal project in the UK wishing to adopt AFC Energy's technology. In August AFC Energy announced that it was being included by B9 Coal Ltd as part of a major consortium bid they were making for the Department of Energy and Climate Change CCS demonstration competition for a project proposed at Rio Tinto Alcan's Lynemouth Smelter in Northumberland. That project proposes to combine AFC Energy's fuel cell technology with Linc Energy's underground coal gasification ("UCG"), a process which could give potential access to billions of additional tonnes of coal in the UK.

ENDS

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AFC Energy

AFC Energy is a world leading developer of low cost alkaline fuel cell technology. AFC Energy's technology is focused on large-scale industrial applications and the objective of producing the lowest possible unit cost electricity. www.afcenergy.com

B9 Coal

B9 Coal was established in 2009 with the objective of developing projects combining coal gasification with Carbon Capture and Storage (CCS) and alkaline fuel cell technology. B9 Coal brings together major corporations to develop pioneering clean energy and carbon capture projects across the world. 

Website: www.b9coal.com

Powerfuel Power Limited 

Powerfuel Power Limited is part of the Powerfuel plc Group of Companies and is an independent power generation company formed to develop a power station adjacent to Hatfield Colliery at Stainforth (South Yorkshire) in the United Kingdom.

Website: http://www.powerfuel.plc.uk/index.html