London — UK solid oxide fuel cell manufacturer Ceres Power is riding a wave of investment enthusiasm for all things hydrogen, its share price tripling since lockdown in March.
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On Oct. 19 it announced an agreement with Doosan to build a 50-MW facility for the manufacture of fuel cell stacks in South Korea.
In Germany, Bosch is gearing up for volume production of Ceres fuel cell stacks, while in China and Japan the company has promising licensing deals with Weichai and Miura, respectively.
S&P Global Platts interviewed Ceres Power Chief Executive Phil Caldwell and Chief Technology Officer Mark Selby in October as the company turned 20 years old.
S&P Global Platts: Which fuel cell applications are you focused on?
Phil Caldwell: There are two main types of fuel cell in the market -- solid oxide fuel cells, which we develop, and polymer electrolyte membrane-based fuel cells (PEM), which the likes of Ballard, Toyota and Hyundai have developed. Simply put, PEM systems need pure hydrogen, they're strong on power density and are mainly for transportation, notably commercial vehicles – buses, trucks, vessels. Our solid oxide technology is fuel flexible or fuel agnostic – these stacks can run on conventional fossil fuels or on blends of gas and hydrogen. As such they're very attractive for the stationary power market.
Platts: What markets are you targeting?
Caldwell: We're seeing stationary applications increasing in Japan, where there's a progressive energy policy. We have commercial combined heat and power (CHP) products on sale with Miura, the country's largest industrial boiler company. Last year, we signed a first agreement with Doosan the leading fuel cell company in South Korea, which is in turn the world's most advanced market for green energy. Doosan has a $40 million fuel cell business using an older technology and South Korea has a 16 GW fuel cell goal by 2040. They've just put in a 50-MW fuel cell plant using byproduct hydrogen. We're starting to see large-scale deployment of decentralized stationary power fuel cells because, at 60% efficiency and with no network losses, they're more efficient than a central CCGT plant.
Platts: What are the implications of switching from natural gas to hydrogen?
Mark Selby: Today you can install a natural gas CHP fuel cell system in your home and it would be 50%-55% efficient. You could switch to hydrogen without any disruption, and the efficiency would be the same. The stacks are fuel agnostic. One of the key advantages of solid oxide is that the technology can deal with a higher level of impurities. So if you want to blend 10%, 20% hydrogen into the gas grid, it's no problem with this technology, whereas PEM technology tends to need green hydrogen of 99.99% purity. It comes back to solid oxide being well suited to stationary power applications.
Platts: You've gone for a licensing business model. Why is that?
Caldwell: Look at solar and batteries, those technologies really hit the market once mass manufacturing was available. Our technology is already viable. We're at the point where the battery industry was 10 or 15 years ago. Now we need scale. If we really want this technology to become the industry standard we have to partner with those who can bring industrial manufacturing expertise and market presence. We tend to collaborate with the number one or two players in their sector, with a balance sheet to put in the capacities we need. The UK is home to a number of world-leading electrochemical technology businesses. What we're less good at is industrialization and commercialization.
The business scales because we're able to do multiple licenses for multiple applications in multiple geographies. Weichai, for instance, asked if we could put our technology into the CNG buses they produce in China [the fuel cells acting as range extenders], something we'd never considered. We set up a joint development team, which charges like an engineering consultancy. So not only are we co-developing products with them that embed our technology into their future products, we give them rights to use our technology. That is quite lucrative because we get an upfront license fee for the technology transfer, and then we get a royalty per kilowatt sold in the market.
Platts: Are you still looking for partners?
Caldwell: We've got world-class licensees now and a number in the pipeline, but we're looking to expand and accelerate the customer acquisition side. We want more and more people to use this technology so it becomes the standard. We've displaced most of the big name Japanese manufacturers, but we need to go faster and further. That's why we are lining up a collaboration with an engineering consultancy partner to accelerate our technologies into new markets. There are whole regions and sectors we haven't touched - everybody has the same problem moving to electrification.
Platts: How do you see hydrogen transportation developing?
Selby: I think in developed economies - most of Western Europe, the US and some Asian countries, you're going to see investment in hydrogen networks and pipes. That's the cheapest long-term solution. When you start to look at countries like Japan, they are inherently resource poor. How are you going to get renewable energy from the Middle East or North Africa to Asia? I think that is probably going to be done through ammonia as a vector. We already see Saudi Aramco talking about shipping green ammonia to Japan to be burned in gas turbines directly or converted back to hydrogen for other vehicle applications.
Platts: Why is Ceres looking at hydrogen electrolysis?
Caldwell: The attributes that give us an advantage in the fuel cell market - high efficiency, robustness, low-cost materials – also give us an advantage when run in reverse to create hydrogen. That is important because, if two thirds of the cost of green hydrogen is the electricity cost, you want the highest efficiency conversion you can get on the electrolysis side.
Selby: We've been asked if a GBP5 million investment [in hydrogen electrolysis] over 18 months is enough. Well, we've already spent GBP120 million developing fuel cell technology over the last 10 years, so this is about re-validating an existing technology for a new application. Our first move will focus on producing low-cost hydrogen. I can imagine very quickly, however, an engineering partner coming along and saying we'd like to license this technology for reversible applications where the same stacks are used as both electrolysis and fuel cells stacks.
Platts: What do you expect from policymakers?
Caldwell: I do get frustrated that UK energy policy focuses on heat pumps. They work in places like Scandinavia, where you've got modern housing stock, but not nearly so well in the UK. It's how these technologies perform in the real world that counts and fuel cells and heat pumps can be complementary. However, while we're still waiting for an energy white paper in the UK, we're encouraged to see the firepower going into this sector internationally. South Korea has announced a $62 billion stimulus package post-COVID and has a target of 16 GW of fuel cells by 2040. Germany has come out with $9 billion for hydrogen. Spain has just committed $10 billion to hydrogen. But we're only at the start. The people with the balance sheets to do this tend to be incumbents – those with strong positions in engine technology, in oil and gas -- they are all going to have to electrify.
Selby: People tend to overestimate what's achievable in two years and underestimate what's going to happen in 10 years. I've been talking about the post-combustion era for 10 years, and it feels like we're right on the cusp of that era. The new era is going to be the age of electrochemical technologies.