Fuel cells come in all shapes and sizes and differing technologies but the core principle is the same: there is an electrochemical reaction that produces power.
The hype of the 1990s was based on PEM (proton exchange membrane) technology primarily aimed at cars, as well as some smaller applications. AFC Energy was founded in 2006 to purchase, develop and commercialise some existing IP within another organisation.
Our technology is based on an alkaline fuel cell, which is a technology that has been around since the 1950s. It has been used on all space missions, both Russian and American; it’s a robust technology and one that is understood in detail.
We could produce a system that NASA would be very happy with. It would be very robust but perhaps not very practical or commercial for everyday power needs. We have taken that existing technology and updated it using new catalysts which were not available in the 1950s and 1960s, and re-engineered the fuel cell to give us a much more credible product for today’s marketplace in terms of longevity and reliability.
Focus on industrial applications
Our system is focused on larger scale industrial applications, particularly for the chlorine industry, because the electrolyte that we use is potassium hydroxide, which is a ‘sister product’ of sodium hydroxide, which itself is a by-product of chlorine production.
AFC Energy’s only installed systems at present are at AkzoNobel’s chlor-alkali plant in Bitterfeld, Germany. They are only in the tens of kilowatts range, but they allow us to operate in an industrial environment.
We commissioned our first commercial-design unit, known as the Beta System, at our Dunsfold HQ last June and following the completion of a rigorous HAZOP (HAZardous OPerability) study in August, we were then able to commission two further Beta Systems at Bitterfeld in October 2011. These units subsequently began producing electricity during late 2011. A comprehensive series of trials is continuing to allow us to assess a number of important factors intrinsic to future deployment and development, such as longevity and power density of electrodes.
Scaling up production
This system lends itself to in-line production. It is a series of plates put together to produce the fuel cell. While highly engineered, the plates themselves are not particularly difficult to work with once they have been ‘specced’. We can get product from plastic extruders or sheet metal workers that will fit within the fuel cell and the catalysts we use are not loaded with expensive precious metals.
The whole idea is that we can fully automate the production process once we have sufficient demand. At present the fuel cells are handmade. Very soon we will have built a pilot production plant in Dunsfold, albeit a handmade system, and once that has been tested we will work with our partners on an automated plant.
Our system is modular, with each individual cartridge delivering approximately 10 kW. We are aiming to be the lowest cost provider of fuel cells in the market and our model is based upon driving down the cost of materials and the production process as quickly as possible.
Prime and back-up power applications
Alkaline fuel cells are very good for industrial applications, so the chlorine industry is our first route to market. However, distributed energy systems plus UPS and back?up power opportunities, particularly larger size systems, have attractions.
We are looking at distributed energy products of 100-250 kW in a container. My colleagues and I argue whether that would be in a 20 feet or 40 feet container, but at the moment we are erring on the side of caution and say 40 feet for a 200 kW system.
For us the key factor is having hydrogen in the right location. That’s why chlorine is an interesting market for us as hydrogen is a by-product of chlorine production. We can use that hydrogen to produce on-site power. That provides additional advantages which the distributed energy applications do not have. For these applications we would either have to create the hydrogen or bring it in.
For 100-250 kW systems we would be looking to produce hydrogen on-site, probably via a natural gas reformation process. These are standard, off-the-shelf systems but they are not built in vast numbers.
The additional cost of a reformer, estimated at around £1million for a 100-200 kW system, makes the business case for fuel cells as a potential replacement for standby generators difficult to the point of impossibility. Clearly this is not the right technology for short-term applications, but over a 20?year horizon we can potentially see a route to making it a viable proposition.
Our blue chip partners have a desire to be low-carbon and this drives them in a certain direction. These projects do not have to be commercial from day one but they have to be commercial within the envisaged lifetime of the project. That’s really where we are at this point.
The safety case is well made in this instance and they are standard pieces of equipment, which may not be built in vast numbers, but they are off-the-shelf systems. In a data centre environment we would utilise a natural gas reformer to gain access to the marketplace.
It is not an easy position, as we would have to create the hydrogen molecule onsite. However, the expected reliability of our system coupled with a natural gas reformer, given the efficiency of the fuel cell, means that it is quite cost-competitive versus other UPS backup systems.
We have partnership arrangements with power utility Centrica and department store chain John Lewis. We are in discussions with them regarding where to put the first of these systems. It will not be for a data centre application, but for a distributed energy application. The principle is exactly the same. These systems would be between 150 and 180 kW. We are also very optimistic that we will have further partners in the distributed energy field in the months ahead.
As we drive the costs down, eventually a single cartridge could be used in the UPS application of the size which other fuel cell companies are beginning to deploy in various parts of the world.
Fuel cell UPS systems
The biggest market for fuel cell UPS systems right now is in the United States, particularly since Hurricane Katrina. Mobile phone masts need to have eight hours back?up power in case the grid fails. Certain US states like California have environmental legislation in place which means that traditional methods, such as diesel generators, can not be used to achieve this back?up power requirement.
Companies have looked around for alternatives such as batteries, but they will not last for eight hours unless they are housed in a very large, air-conditioned area. There has been a marked success by the fuel cells industry in installing thousands of systems in telecoms applications.
The technology deployed is mostly PEM cells but there is potential for alkaline fuel cells to be used, right the way down to 10-15 kW. Most of the alkaline fuel cell technology companies have fallen by the wayside because of this hype for PEM, which has taken the industry in a different direction. We are very confident that this can be reversed.
If you feed a fuel cell with the right feedstock, such as biogas, then a fuel cell could be eligible for green energy credits just like any other system. What we do not have is the feed-in tariff for fuel cells. It would help our industry be more creative and accelerate deployment if we had something like a feed-in tariff for output from fuel cells.
South Korea project for AFC Energy
South Korea has a targeted feed-in tariff aimed directly at fuel cells. Their Renewable Portfolio Standard (RPS) requires electricity producers to generate 10% of their output using new and renewable technologies by 2022, equivalent to approximately 6 000 MW of new capacity.
Fuel cells are awarded the highest weighting of all renewables in the RPS, which demonstrates the massive opportunity for large scale stationary fuel cell systems in South Korea alone. The current feed-in tariff is US$0.23 per kilowatt?hour of electricity and as a consequence, virtually all the installed stationary fuel cells have been installed in South Korea.
The main one is a company called Fuel Cell Energy, which uses molten carbonate technology. There are several megawatts installed in South Korea based on that system. We perceive South Korea as big target market for AFC Energy, but we would need to have the right partnership to be eligible for support. We are in discussions with a South Korean company to achieve that.
Whether the hydrogen is produced from a chlor-alkali plant or via a steam methane reformer, the South Korean feed-in tariff allows a company to afford the capital cost of the fuel cell and make a profit. Obviously, this will drive down the cost of fuel cells.
For back-up power applications, of course, a feed?in tariff would be practically useless. In the United States, some states including Delaware, have offered capital credits for fuel cells in stationary applications, mostly in fork lift trucks, but there is little sign of similar schemes on the horizon in Europe.
The Japanese will probably also concentrate more on fuel cells in stationary applications due to the Fukushima nuclear accident and a subsequent move towards decentralised energy. China is massively into fuel cells but we probably won’t enter that marketplace due to intellectual property issues.
AFC Energy employs 36 permanent staff, mostly scientists who work in their laboratories testing individual fuel cells, subjecting them to various environmental conditions in order to ascertain their longevity. This develops our own in-house intellectual property as to what’s the best mix and optimum design of the fuel cell.
There are a few things that are protectable. Some of the design of the fuel cell is protected as is the way that we create the electrodes. Whichever production methods we may use, the key elements of producing an AFC Energy fuel cell will be protected, although we may choose to license them.
Driving down the cost of production
The focus of the company is towards larger modules rather than the 10 kW units in our laboratories at present. First of all we need to get our marketplace sorted. We anticipate that the chlor-alkali industry will be by far our biggest market because these systems are in the megawatts and that means supplying millions of individual fuel cells into that market space.
UPS systems may only be in the hundreds of cells and I need to go down the production cost curve. The market which drives us down the cost curve most quickly is chlor-alkali. At the moment, the chlorine industry either sells its surplus hydrogen to industrial gas companies or uses it internally to produce steam. Very occasionally, they may use it to power a turbine.
A fuel cell, however, is more efficient than any of those applications. We would like AFC Energy to be a production company, but it may be that other companies end up producing them.
Up until now we have only had very limited funding from the European Union’s 7th Framework Programme (FP7), which is managed by European Fuel Cell and Hydrogen Joint Undertaking (FCH JU). Last December the consortium we are leading was awarded a grant of €1.4 million (US$1.8 million) towards a €2.9 million research and development project.
AFC Energy’s share of the grant is €405 600.This money has been earmarked for technical development of a project called Laser Cell, specifically laser drilling of our electrode plates to enhance high-volume production of alkaline fuel cells. The consortium includes Air Products and Nanocyl, and we feel this is of interest and could lead to commercial sales.
As yet we have received no funding from the UK government. We could approach the UK government to fund a demonstration of an alkaline fuel cell plus a natural gas reformer for a data centre application, but the UK’s Technology Strategy Board’s (TSB) fuel cell funding is mostly aimed at transportation. However, the TSB has put out a call for funding for stationary power and we are considering making an application.
Huge potential for AFC Energy
I was with Air Products for 27 years straight from University. I had several different jobs, but I found myself as the head of their hydrogen energy division, which was really a company within a company.
The industry was surprised that I left Air Products to come here. The easy decision would have been to stay and take the pension, but AFC Energy has a very interesting product that is about to come of age. I was brought in to take what is essentially an R&D outfit to the production phase. That is my skill set.
Is AFC Energy a potential takeover target? If so then most likely it would be a company in the energy space rather than necessarily the hydrogen market. Hydrogen is just a means to an end, it doesn’t add value.
If we look at what AFC Energy will be doing in the waste-to-energy space, which Air Products is entering, then there could well be a fit. The first waste-to-energy plant Air Products is to build will feature a test bed for our fuel cells. That is how I became involved with AFC Energy.
A number of large energy equipment manufacturers have visited our Dunsfold site, including GE and Siemens. We get regular visits from multinationals to keep themselves abreast of technology and where it stands. This has the potential to be a massive company.