Surrey-based hydrogen fuel cell producer AFC Energy (AFC) confirmed the renewal of its Air Products GmbH collaboration with a 5-year hydrogen supply agreement and site lease at Stade in Northern Germany near Hamburg.
The Stade site was originally constructed in 2015 by AFC Energy to house the EU co-funded "Power-Up" programme. It will now be repurposed to provide "Factory Acceptance Testing" (FAT) of the company's' H-Power Generator series of fuel cell systems.
The facility is expected to employ a small number of local staff to conduct system testing and diagnostics in advance of customer deployments. It should position AFC Energy to support a growing number of H-Power Generator deployments in Germany and continental Europe.
AFC Energy also said it was commissioning a study into potential co-location of development and large-scale contract manufacturing facilities in Germany, to support expected growth in system deployments.
The decision was welcomed by markets, lifting AFC shares by 3.4%. The news confirms AFC Energy's commitment to the European hydrogen market, particularly Germany, which continues to see sizeable growth in market size and hydrogen availability. Germany was chosen for AFC Energy's FAT mainly due to its materially lower price of hydrogen fuel compared to the UK, which is expected to provide substantial savings to the company over the life of the contract.
Furthermore, the Stade facility's repurposing will require a nominal investment due to its existing existing hydrogen supply infrastructure and grid connection. Germany also benefits from an existing supply chain for fuel cell components, with a large number of automotive facilities able to meet AFC Energy's projected fuel cell pipeline.
The choice of Stade is also strategic, as the EU continues to invest heavily in its hydrogen sector, with Germany in particular playing a lead role in the adoption of the decarbonised fuel.
Adam Bond, CEO at AFC Energy, summarised the decision: "The repurposing of our Stade facility creates a solid footprint within Germany and the wider EU hydrogen market whilst providing a cost effective path for our H-Power Generator factory acceptance testing programme. The market for zero emission off-grid power generation continues to grow internationally with our Stade facility now set to become a further catalyst in the delivery of H-Power Generators within one of the world's fastest growing hydrogen markets."
AFC Energy's current strategy is focused on displacing diesel generators at off-grid locations, initially in the construction sector where the company made material progress in 2022. The company is also seeing significant follow-on opportunities in the EV charging, maritime, and critical power back-up sectors.
The company's strategy was validated in 2022 when ABB E-mobility invested £2m in AFC Energy's S+ Series fuel cell technology. ABB made a follow-on investment in March 2023 of another £2m. Later in 2023, AFC Energy launched its new ammonia cracking technology platform and received a first order for its 50kVA H-Power S Series Generator from ACCIONA.
The outlook for AFC Energy is positive given its steadily growing revenue from system rentals and hydrogen sales with an already contracted pipeline of deployments, and growing pipeline of prospective H-Power Tower rentals. In its most recent final results for FY22, the company reported a revenue increase of 266% to £2.2m and a strong balance sheet of £40.2m in cash at period end.
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