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The Battle for Distributed Power – Ceres Power vs Ceramic Fuel Cells

June 28, 2010 7:46 pm by Dean Morel

Ceres Power vs Ceramic Fuel Cells

Overview

Ceres Power and Ceramic Fuel Cells are the two leading competitors in small scale combined heat and power (CHP) products. Both are targeting the residential market in Europe and have partnerships with German manufacturers and European gas suppliers. Both use technology based on Solid Oxide Fuel Cells (SOFCs) and if you believe their respective marketing both are the leading company in this niche area. So who is the leader and who is the pretender?

This series is primarily about Ceres Power and Ceramic Fuel Cells. Though it also contains a broader analysis of  the product life cycle and associated share price cycle of new product development companies. That relationship can be broadly characterised by initial excitement on major developments giving way to the stark reality of time to commercialisation.

Product development life cycles differ depending on the product and the company. As a general rule development takes considerably longer than the attention span of most investors. Consequently the share price of development companies waxes and wanes on limited information. For example it has taken $250M and 17 years to get Ceramic Fuel Cells to the verge of commercialisation, even long term investors can easily loose interest over a fraction of those time frames. The share price of both Ceramic Fuel and Ceres has recently wanned and are near their all time lows.

The market for residential CHP is massive, with around 15 million homes in the UK alone using gas for their heating. However, the cost of the units is still too high for mass adoption. For example Ceramic Fuel Cell hopes to have prices of less than $10,000 within four years, while the Victorian government recently paid $45,000 each for 30 units.

For those still struggling with the acronyms the big picture here is the move from centralised power production and distribution to distributed power systems. The first step is this transition will be gas based systems and the front runner at the moment is CHP. These systems use fuel cells to convert the gas to electricity and utilise the heat produced for water and space heating. These system greatly increase the efficiency of fuels thereby reducing carbon emissions.

Ceres Power Timeline

Ceres Power Timeline

Ceramic Fuel Cells Timeline

Ceramic Fuel Cell's Timeline

CERAMIC FUEL CELLS LIMITED (CFU) milestones and price chart

Comparison

Design

Ceramic Fuel Cells are way behind in the design stakes; however, they claim to have the most efficient product. I’d love to root for the little Aussie company, but in consumer products, design trumps efficiency every time. No-one will want a big ugly Ceramic Fuel box when they gave have a sleek wall mounted Ceres Power Unit. According to Ceres Power “in western Europe over 78% of all residential boilers sold are wall-mounted, representing a substantial opportunity for Ceres Power’s compact CHP design. Similar opportunities exist in Asia and North America to reduce the carbon footprint and energy costs of the built environment.”

The second major difference is Ceres’ fuel cells are based on a robust, cheaper, stainless steel design rather than the traditional ceramic approach of Ceramic Fuel Cells.

Ceres has developed a unique adaptation of Solid Oxide Fuel Cell (SOFC) technology, able to operate at temperatures substantially lower than conventional designs which typically run at 800 – 1000 degrees C. By using a new generation of ceramic materials known as CGO (cerium gadolinium oxide) instead of the industry standard YSZ (yttria stabilised zirconia), operation at 500 – 600 degrees becomes possible.

This in turn allows use of conventional stainless steel as the cell substrate, separating the functions of mechanical support and electrochemistry. The electrochemical layers can be made extremely thin and optimised for maximum performance, resulting in excellent power density levels, whilst the stack material costs are radically reduced. The efficiency of converting fuel into electricity and heat is therefore very high and this efficiency is maintained across a wide part-load range. In addition, the heat-to-power ratio is approximately one-to-one making the technology ideal for applications such as CHP, where levels of electrical output need to be maintained even where heat demand is modest.

In contrast to totally ceramic cells, these metal-supported cells are mechanically highly robust and can be easily sealed (e.g. through welding) and have thermal expansion coefficients well matched to their ceramic coatings. This allows great resistance to thermal shock, permitting rapid start-up times and the potential for many on/off cycles for everyday usability. In addition, the technology retains the fuel flexibility of SOFC, and has proven ability to run highly efficiently on commercially available fuels such as natural gas, LPG and biofuels. via Ceres Power

Efficiency

Ceramic Fuel Cells has claimed the lead with electrical efficiency of 60% and combined efficiency of up to 85%. I do not share in Ceramic Fuel’s view that their industry leading efficiency is a major competitive advantage, though it may give them a small edge if all else was equal. However, all else is not equal. Cost and design, in particular being wall mountable are the two key competitive advantages, and Ceramic Fuel lags on both fronts.  My requests to Ceres for the efficiency of the CHP have gone unanswered.

Time to Market

It appears Ceramic Fuel has a slight lead. Ceres are currently conducting sheltered trials in empty house and expect commercial field trials to commence mid 2010. Their plan is to launch the product commercially in the UK in H2 2011. Ceramic Fuel has units in commercial field trials and has adopted a partner appliance model as well as its own BlueGen.

Other competitors

Bloom Energy. Can the American’s with the big name backing and the pizazz steal the show?

CERAMIC FUEL CELLS LIMITED (CFU) compared to Ceres Power Ltd

Further Information

Disclosure: No position in either at time of writing. Ceramic Fuel Cells is an Australian company. I’ve been following Ceres Power for a few years and am consequently more familiar with their design and advantages.

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7 Comments »

  • JohnC said:

    The problem with both, the elephant in the room, is whether this technology will ultimately be viable for the target customer, as without strong international backing for realistic carbon pricing, heating & electricity drawn from energy generated by coal power stations will continue to trump all alternatives. The GFC has distracted world leaders from what remains a dire long-term environmental trend.

  • Dean Morel said:

    Ceres Power says fuel cell boiler trials delayed via Reuters http://af.reuters.com/article/energyOilNews/idAFLDE6610GZ20100702, for further details see the announcement http://pdf.reuters.com/Regnews/regnews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20100702:

    Fri Jul 2, 2010
    * Trials for combined “green” boiler delayed by 3 months
    * Boiler only ready for mass market by mid 2012
    * Shares down 4.3 pct

    British alternative energy company Ceres Power said trials for its “green” fuel cell boiler have been delayed and it will not be on the mass market until mid 2012, a year later than first planned.

    Ceres Power is working with British Gas, Calor Gas and Dutch company Daalderop to provide an energy efficient boiler which produces heat and electricity using methane gas.

    The company said in a statement that systems engineering problems related to hardware and software changes meant the wall-mounted product would not reach the mass market until mid-2012, at least six months later than initially scheduled.

  • BG said:

    “My requests to Ceres for the efficiency of the CHP have gone unanswered.”

    I wonder why? Their failure to answer speaks volumes. Compared to the CFU unit, the CERES cell seems to be form over function. Fuel cells are being designed to reduce energy consumption and carbon emissions. Achieveing this is solely dependant on EFFICIENCY.

  • joe said:

    What a joke of an article. The CFCL unit has worlds best efficiency of 60%, and Ceres won’t answer theirs. Well in their recently released 2010 fin report they say it has gone from 44% to 47%. Still nowhere near. And this counts for little? This counts for everything. Who cares how pretty it looks? And the price of the Ceres? Who knows. No mention of it here. 1Kw for the Ceres and 2Kw for the CFCL unit. From my research the Ceres doesn’t come close to the CFCL unit. You would think the opposite reading this article! One of the most unresearched and misleading articles I can remember reading in a while. Poor.

  • Dean Morel said:

    Thanks for providing an update on Ceres efficiency. I recommend you research the history of technology, you’ll soon discover just how often the technologically ‘better’ product losses out.

    For the record I remain interested in a long position in CFU, but am happy to wait until they prove themselves, my patience has been rewarded thus far. Joe, I hope you haven’t lost too much money on your CFU speculation, but there is no need to lash out with rude comments due to the abysmal share price action of CFU.

    Interesting article in the Telegraph on Ceres and another Fuel Cell company ACAL Energy
    http://www.telegraph.co.uk/sponsored/business/workingforchange/8397497/Green-Growth-The-power-whose-time-has-finally-come.html

    Despite their promise of efficient, pollution-free power for all, fuel cells remain a niche technology used in exotic applications in the industrial and space sectors.
    Reliability, durability and crucially, price, have prevented widespread commercial success and led in the 1980s and 1990s to investors getting badly burnt by technology that was overhyped and which underdelivered.
    While their long-promised mass deployment in homes, cars and industry is unfulfilled, start-ups all over the world are working on the next generation of fuel cells. There are promising signs that this could be the decade of the fuel cell, led by UK innovators.
    West Sussex-based Ceres Power is completing field trials of its ceramic fuel cell technology, which provides highly efficient combined heat and power (CHP) units in domestic homes that promise to cut household energy bills by converting natural gas into electricity as well as providing heating and hot water. Generating electricity where it is needed means almost no loss of energy compared to centrally generated power, two-thirds of which can be wasted by the time it reaches households.
    The signs are good a decade after the firm was spun out from Imperial College London. British Gas is confident enough in the technology to have pre-ordered 37,500 units and the technology has global potential in a market of 30 million units a year, according to figures from Goldman Sachs.
    At a time of fresh doubts about replacing UK nuclear power stations after the nuclear disaster in Japan, CHP technologies could help plug future electricity generation gaps. According to government estimates, CHP units could supply 30 per cent of the UK’s electricity if they were deployed in every home.
    The Runcorn-based fuel cell maker ACAL Energy has hopes for an even more dramatic power transformation. The company has developed a new way of reacting the oxygen in air with hydrogen by using a low-cost liquid catalyst.
    Minimising the use of expensive catalysts, a key component of fuel cells, is a key to successful mass fuel cell deployment. ACAL’s platinum-free cathode technology, which removes the need for 90 per cent of the platinum used in conventional fuel cells and simplifies the overall system, should cut unit costs by 40 per cent.
    It is confident its radical design will find its way into stationary power generators in the next two to three years. But the big prize is getting its fuel cell technology in hydrogen-powered cars. If successful, it could take a large slice of the market for engines predicted to be worth at least £180bn by 2050.
    Investors have put more than £10m into the start-up, including the Carbon Trust, which has invested £1m. Dr Robert Trezona, research accelerator director at the Carbon Trust, which backed the firm after staging a competition in 2009 to find the most promising fuel cell contenders, says the technology holds great promise. “I’ve been working in fuel cells for 10 years and this is the best thing I’ve seen, it is a genuine, novel, breakthrough approach. It changes a number of the costly system considerations in the fuel cell.
    “Car makers including Ford, GM, Honda, Toyota and Daimler have committed to launching vehicles for sale in 2015. People will say this happened last time around too but companies were naive about fuel cell technology and there’s been 15 years of R&D since. I think it’s very possible that we will see ACAL’s technology in the second generation of fuel cell cars.”
    ACAL’s first field trial unit, a stationary power generator, will be tested this summer. The first commercial applications will be in small mobile power generators that provide backup in remote locations. It is part of a global annual market worth $10bn, says ACAL’s chief executive officer, Dr S B Cha. “Our path in the static power market is well laid out and as the technology matures we will start to see it go into automotive. About 100 million engines are produced every year, so even taking 10 per cent of that would make a $10bn business.”
    Dr Cha admits that the process will take time. He adds: “It’s a long game, a 10-year cycle. Putting the technology in a car means meeting challenging cost, performance and packaging targets but we are seeing increasing interest from automotive companies. They know the era of the internal combustion engine is ending.”

  • Dean Morel said:

    Joe it’s a shame you are unable to learn something from my article. I am always open to contradictory opinions, in fact that is one of the primary reasons I post here, but I prefer if they expressed politely and add some value, hence I see no need to approve your reply as it has no value and is needlessly insulting. I’d love to approve a well written, informative comment from you that played the ball and not the man. If you can write a substantial reply and make a case for investing in Ceramic Fuel Cells I’ll even publish it as a guest article. If I was wrong in my assumption that you are long Ceramic Fuel Cells and have lost money then please feel free to correct that and state your position and interest in the company.

    There is no doubt that Ceramic fuel cells have better efficiency. I thought it spoke volumes that Ceres would not even reply to my requests for their efficiency data.
    There is no doubt that Ceramic fuel cells are currently the leader in the game, they are further along the development cycle.

    I find price totally moot at this point, as both are multiple years away from offering a price that will meaningful move this market. Naive investors think Ceramic is about to commence retail manufacturer or believe the company line that they are selling initial units at a high price as part of some strategy. From my perspective the company has allowed investors to naively over estimate the status of their German plant and under estimate time to commercial production.

    I lived in Europe. I’ve visited a Ceramic Fuel Cells demo site. Talked to the potential installers and Ceramic company reps. Investigated the technology. All that lead me to believe that Ceramic was not a great investment and to really succeed they would need to improve the design of the box. I stand by that.

    In technology it is the imitators that often win the game not the innovators. I hope Ceramic wins as they are a local company, just like I also hope they are more transparent with their investors.

    I also hope that investors learn to realise that their oh so cherished fact or two may not be the best mast to pin their colours to.

  • Dean Morel said:

    Good presentation of Ceres CHP
    http://www.cerespower.com/InvestorRelations/PresentationsandVideos/CHPProductDemonstration/

    Unit can respond rapidly to power demand, i.e. it can load follow. Blue Gen can not do that. UPDATE: It appears the Bluegen units can modulate their power output, though at a slow rate of change http://www.fuelcellseminar.com/media/5180/dem41-2_hody.pdf
    It can also respond to economic pull factors, i.e. high external price.

    Interim results
    http://www.cerespower.com/store/files/233-Ceres%20Power%20March%202011%20Results%20Presentation%20FINAL.pdf

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