AFC Energy has entered into a Heads of Agreement with Daniel Inc., a fuel cell focused power plant owner and development company in South Korea.
The deal is for an initial 1MW fuel cell system with a follow-on option for a further 3MW project making a total potential sales value of approximately $15m.
The company believes this agreement, once ratified with a formal contract, will represent the largest sale in revenue terms by any British fuel cell manufacturer in South Korea for a stationary system in an industrial setting. It will also represent the biggest deal won by AFC Energy since its inception in 2006.
The initial 1MW alkaline fuel cell system will be deployed in stages and will include a long term maintenance agreement. Under the terms, a deposit of $1.25m will become payable to AFC Energy upon signing of the formal contract and supply agreement, before deployment of the system commences. The formal contract will also include the opportunity for a follow-on order for a 3MW system at a second site, depending on performance.
The first system will use a mixture of liquefied natural gas (LNG) and biomass gas as its primary energy source to generate electricity. AFC Energy will install, operate and maintain its low cost fuel cell systems at Daniel Inc’s. site and the project will benefit from South Korea’s clean energy incentive program that focuses on the aggressive deployment of fuel cells by large electricity producers and users.
Ian Williamson, Chief Executive of AFC Energy PLC, said, “This initial agreement represents a tremendous opportunity for AFC Energy and, together with our other commercial-scale projects, is expected to establish a strong foundation to build a truly world class British fuel cell company focusing on industrial, chemical and utility sectors. South Korea is one of the world’s fastest growing fuel cell markets where US companies have traditionally made early inroads due to their long history. After entering this market less than two years ago, we have now established a significant bridgehead with strong partners and believe that this is the first of many more orders to come from this country.”
This project has been facilitated with the assistance of KDB Daewoo Securities (“Daewoo”), South Korea’s leading investment banking firm, acting as introducer for AFC Energy. Daewoo have indicated that going forward they will continue to support the Company in a referral function for other client companies and will receive appropriate compensation.
This agreement is the second major advance made by AFC Energy in South Korea and follows a Memorandum of Understanding announced earlier this week with Chang Shin Chemical Co., for the supply of multiple fuel cell systems with a total potential generating capacity of up to 5MW. In addition, the Company is already executing a €6.1m EU-backed flagship project, Power-Up, with Air Products at a major chemicals complex in northern Germany. It also has an ongoing strategic project with AkzoNobel at their site in Bitterfeld, Germany.