Ceramic Fuel Cells Gets First Major Order
Author: Chris Wills and Hsu Chuang Khoo
Shares in Ceramic rose 10 percent to 21p after it announced the five-year deal with Dutch energy firm and utility partner Nuon, worth between 75-100 million pounds ($147-197 million).
The deal means boilers containing its fuel cell units will start appearing in Dutch homes towards the end of 2009.
The units, called stacks, turn domestic gas boilers into mini power-stations, using gas that is already going into the boiler to produce electricity that is fed back into the grid.
Boilers containing the company's stacks could be fitted in British homes from late 2009 or 2010 if utility Powergen, already a partner of Ceramic, orders units this year, analyst Nick Walker at broker Liberum Capital said.
Nuon will order 50,000 stacks for delivery from June 2009, providing Ceramic meets performance targets.
"This is fantastic news," said analyst John-Marc Bunce at broker Nomura Code. "If Ceramic gets commitments from two or three utilities in the next 12 months it would support an 80p price target."
The fuel cell units will be priced at between 1,500 and 2,000 pounds apiece, a person familiar with the deal said, and will be used in boilers priced at over 3,000 pounds and owned by the power utilities.
The order should generate "substantial revenue" for Ceramic Fuel over the five-year period, the company said.
Utilities will save so much money by producing electricity in people's homes, which is twice as efficient as producing it in big power stations and sending it through the grid, that analysts expect they will give the next-generation boilers to customers for free.
The boilers will have a four to five-year payback for the utilities, Walker at Liberum Capital said.
Before Wednesday, loss-making Ceramic Fuel had only received orders for prototypes of its fuel cell units, although rival Ceres got an order for 37,500 units from British Gas owner Centrica in January, for delivery from 2011.
"This massively trumps Ceres Power's deal with Centrica. It's bigger, earlier and has a higher value unit," said Nomura Code's Bunce.
He said the Nuon deal is worth more than analysts had expected because it relates to a 2 KW fuel cell, rather than the 1 KW unit that had been assumed. But production will start three to six months later than hoped, in the second half of 2009.
Nuon is the Netherlands' largest energy firm and Ceramic Fuel Cells' partner in that market.
Australia and Europe-based Ceramic Fuel is also developing its fuel cell stacks with E.ON's Powergen, Germany's EWE and Gaz de France.
Ceramic Fuel said it will invest 12.4 million euros to build a manufacturing plant to make the units in Heinsberg, Germany.
(Reporting by Chris Wills and Hsu Chuang Khoo; Editing by Catherine Evans)