AFC Energy, the industrial fuel cell power company, is pleased to announce that it has signed a formal Project Development Agreement (PDA) with two South Korean partners.

Samyoung Corporation (Samyoung) and Changshin Chemical Co. (Changshin) for the deployment of an initial 50MW of fuel cell generation capacity in Daesan, Korea.

The 50MWs of installed fuel cell capacity will be created across two phases with an expected revenue of approximately (US) $1bn for the joint venture over 10 years of operation.

The first phase of 5MW is set to be operational by end of 2016 (subject to permitting) with the remaining 45MW in the second phase forecast to be operational by end of 2019 (subject to permitting).

The overall project is a JV between the three companies with indicative participating equity interests of: AFC Energy (40%); Samyoung (45%); Changshin (15%).

This landmark deal confirms AFC Energy’s transition from research and development to a global energy company working in collaboration with two of South Korea’s most reputable companies.

South Korea’s strong incentives in the deployment of fuel cell technologies has brought significant investment and employment opportunities to the Daesan region, which AFC Energy is proud to support.

Assuming a gross output of 50MW from the fuel cell park, the joint venture is expected to generate revenues from the sale of electricity and Renewable Energy Certificates (RECs) over a 10 year period of just under (US) $1bn.

The project reflects the start of a partnership between the three companies, which is expected to see multiple projects developed beyond this first project. Negotiation of the suite of project agreements is expected to commence immediately having now established the framework principles for collaboration within the Joint Development Agreement. The exact details of the investment each party will make in support of the joint venture is still subject to negotiation but it is expected that each party will make an upfront contribution, either in cash or in kind. The parties also intend to secure project finance for the joint venture. The parties are set to commence development of a feasibility study for the project to establish the basis of design and economic analysis in support of a more detailed project engineering assessment, further details of which will be supplied in due course.

It is proposed that AFC Energy will sell its alkaline fuel cell equipment into the joint venture along with providing technical and operational advice to the joint venture participants.

Between Samyoung, which will manage the development of the project as Engineering Procurement and Construction and permitting of the 50MW project, and Changshin, which will supply hydrogen, land and logistical support on site, and AFC, the partnership creates an environment, which will drive a successful and profitable enterprise in the execution of this project.

Adam Bond, AFC’s Chief Executive Officer, said, “Having spent the last week in Seoul with our colleagues from Samyoung and Changshin, I am confident our new partners are strongly aligned with AFC’s renewed and aggressive commercialisation strategy into South Korea. With Samyoung’s entrepreneurial drive and respected international EPC contracting experience spanning Europe, the Middle East, North America and Asia, together with Changshin’s strong growth trajectory in South Korea, we are exceptionally well placed to succeed in this historic agreement for AFC.”

Mr Dong Heum Keum, President and Chief Executive Officer of Samyoung, said, “We are privileged and honoured to be involved in this exciting project with AFC Energy and Changshin which reconfirms our growing leadership position within the Korean fuel cell space. Our strong commitment to this project is demonstrated in a preparedness to inject our own funds into the success of the project.”