CERES POWER (LSE:CWR)
Ceres Power and KD Navien join forces with new deal
UK-based fuel cell developer strikes deal with South Korean heating industry giant
Ceres Power – the UK-based intermediate temperature metal-supported fuel cell developer – has announced a deal to supply its SOFC technology to South Korean boiler manufacturer KD (Kyung Dong) Navien.
Ceres will provide its hot module whilst KD Navien will bring the system integration expertise. The Seoul-based OEM will also, in the first stages, trial the fuel cell technology and use the micro-CHP prototypes already developed by Ceres as a means of accelerating the testing and development programme. On the back of this, KD Navien will develop and manufacture the new micro-CHP unit and it will also act as the route-to-market for Ceres Power’s technology in its home market of South Korea.
There is substantial potential for micro-CHP in the South Korean market – around 1 million gas boilers are sold each year, and very generous fuel cell micro-CHP subsidies are available. These are worth 80% of the purchase price for fuel cell micro-CHP at present (falling to 58% between 2013 and 2015, then 29% from 2016 to 2020). With KD Navien’s strong presence in other international markets, there is also potential to launch a product through its supply routes elsewhere.
Additionally – and similar to Japan – South Korea is hugely dependant on imported energy (around 96%) and so the Government has been heavily supportive of a move to a more energy efficient economy. Since 2010, it has allocated €7.7million a year to its fuel cell demonstration project and fuel cells also receive the best premium for electricity produced under its Renewable Portfolio Scheme (RPS) compared with other (renewable) sources. The Korean government is also committed to micro-CHP deployment in the residential sector; exemplified through its project to have “1 Million Green Homes by 2020”.
Delta-ee view: This is the first big partnership announcement since Ceres Power changed strategy, and it has found an excellent partner in KD Navien – one that can be very fast moving yet also boasts the necessary R&D resources to help get fuel cell micro-CHP product to market. If South Korea’s generous subsidies for fuel cell are to be tapped into in order to get volumes up, the race will be on to get product to market in time before the subsidy degression advances too far. With KD Navien’s geographic reach, the partnership should have access to other markets too, including the US. Such a spread out approach is likely to be necessary anyway, should the forecasted cost reductions sought by both companies to be achieved.
This is an excerpt from the August 2013 edition of the Delta-ee ‘News Service’, published exclusively for Members of the Delta-ee Micro-CHP Research Service. More information is available from www.delta-ee.com.
Delta-ee provides commercial insight and market expertise in decentralised energy and low carbon strategies. With in-depth expertise of the European micro-CHP industry, the company has been tracking the micro-CHP markets and technologies since 2004. Delta-ee supports clients through providing strategic insight and rigorous analysis on market size, competitive landscape, regulatory environment, and potential for future growth. Clients include many of the major heating equipment manufacturers, energy companies, and technology developers from around the globe.
Registered offices: Edinburgh, Scotland
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