AFC Energy Signs Landmark Agreement for Stationary Fuel Cell Systems in South Korea
Breakthrough deal, supported by a leading Korean investment bank, is expected to be worth $3.75m, increasing up to $15m upon satisfactory completion of the first phase
SURREY, United Kingdom--(BUSINESS WIRE)--AFC Energy plc, (“AFC Energy”, “AFC” or “the Company”), the industrial fuel cell power company, is pleased to announce that it has entered into a Heads of Agreement with Daniel Inc., a fuel cell focused power plant owner and development company in South Korea, for an initial 1MW fuel cell system with a follow-on option for a further 3MW project making a total potential sales value of approximately $15 million.
The Company believes this agreement, once ratified with a formal contract, will represent the largest sale in revenue terms by any British fuel cell manufacturer in South Korea for a stationary system in an industrial setting. It will also represent the biggest deal won by AFC Energy since its inception in 2006.
The initial 1MW alkaline fuel cell system will be deployed in stages and will include a long term maintenance agreement. Under the terms, a deposit of $1.25 million will become payable to AFC Energy upon signing of the formal contract and supply agreement, before deployment of the system commences. The formal contract will also include the opportunity for a follow-on order for a 3MW system at a second site, depending on performance.
The first system will use a mixture of liquefied natural gas (LNG) and biomass gas as its primary energy source to generate electricity. AFC Energy will install, operate and maintain its low cost fuel cell systems at Daniel Inc’s. site and the project will benefit from South Korea’s clean energy incentive program that focuses on the aggressive deployment of fuel cells by large electricity producers and users.
This project has been facilitated with the assistance of KDB Daewoo Securities (“Daewoo”), South Korea’s leading investment banking firm, acting as introducer for AFC Energy. Daewoo have indicated that going forward they will continue to support the Company in a referral function for other client companies and will receive appropriate compensation.
This agreement is the second major advance made by AFC Energy in South Korea and follows a Memorandum of Understanding announced earlier this week with Chang Shin Chemical Co., for the supply of multiple fuel cell systems with a total potential generating capacity of up to 5MW. In addition, the Company is already executing a Euro 6.1 million EU-backed flagship project, Power-Up, with Air Products at a major chemicals complex in northern Germany. It also has an ongoing strategic project with AkzoNobel at their site in Bitterfeld, Germany.
Ian Williamson, Chief Executive of AFC Energy PLC, said: “This initial agreement represents a tremendous opportunity for AFC Energy and, together with our other commercial-scale projects, is expected to establish a strong foundation to build a truly world class British fuel cell company focusing on industrial, chemical and utility sectors. South Korea is one of the world’s fastest growing fuel cell markets where US companies have traditionally made early inroads due to their long history. After entering this market less than two years ago, we have now established a significant bridgehead with strong partners and believe that this is the first of many more orders to come from this country.”
Nathan Dohyoung Kang, Infra Private Equity team leader at KDB Daewoo Securities, said: “We see huge potential in AFC Energy’s technology and are delighted to help initiate this order in Korea. In the fuel cell space, AFC’s system is the perfect antidote to South Korea’s renewable energy plan. There will be a meaningful impact not only for the government to achieve its non-photovoltaic renewable energy incentive plan but also for all the participants in the project. Many of our other clients have already demonstrated a clear interest in AFC Energy’s fuel cell systems and we look forward to making further introductions of the technology to the region. Our focus to also invest in and develop renewable energy sources will be further strengthened based on our firm relationship with AFC Energy.”
South Korea is one of the Company’s key target markets, where fuel cells are being adopted rapidly by industry and utilities to reduce reliance on imported fossil fuels. According to Kepco, the state-owed Korean electricity utility, the total installed capacity for stationary fuel cell systems is estimated to increase from 306MW at present to approximately 780MW in 2015 and almost double again by 2020. Whereas the country is poor in natural resources, it has an abundance of available hydrogen and syngas that is produced as a byproduct by its large chemicals industry.
Su Hoon Park, CEO of Daniel Inc., said: “AFC Energy will be an important partner for us as we aim to proliferate the fuel cell system in Korea. Upon successful implementation of the 1 and 3MW phase projects, there will be follow up ventures which will be the main ones in our planned portfolio and we are confident to say that AFC’s role would grow along with our expansion.”
About AFC Energy
Founded in 2006, AFC Energy plc is re-engineering proven alkaline fuel cell technology to reduce the cost of electricity. Alkaline fuel cells have been used on US and Russian manned space missions for decades to provide electrical power and drinking water. By using platinum free, advanced materials, design tools and manufacturing processes at scale, AFC Energy is developing fuel cells that will compete with conventional technologies such as turbines for electrical power generation. Today, AFC Energy is pursuing opportunities in several sectors where hydrogen is readily available including the chlorine, clean coal and waste-to-energy industries as well as applications for distributed/back-up power. For further information, please visit our website: www.afcenergy.com.