Ceramic Fuel Cells packs its bags and moves to Europe

The technologies change, but the economic opportunities remain the same, and so does the narrative of yet another Australia technology export and the myopia of Australian governments and its energy industry. Ceramic Fuel Cells has all but abandoned hopes of a rapid deployment of its ground breaking technology in Australia, and has instead shaved down its workforce, ended local production, cut commercial ties and will focus all its efforts on Europe instead.

The new strategy was confirmed at the company’s annual general meeting on Monday night, when the company gave details of new incentive payments in the German state of North Rhine-Westphalia, which it said would “take away the sticker shock” of the estimated €30,000 cost ($A37,400) of its ground breaking Blue-gen units, and pave the way for high volume production and cost reductions.

Ceramic Fuel Cells had already prepared for such an outcome when it agreed to establish its commercial manufacturing operations in Germany several years ago, and – like solar PV and solar thermal technology developers before it – has finally given up on any similar encouragement in its home country

It has been pushing for its technology to be included in various state and federal incentives for renewables in Australia, and although the Victorian government’s pricing regulator recommended fuel cells be included in a feed in tariff, the rate is not expected to be attractive and recognise the benefits of distributed generation. And CEO Brendan Dow also took a swipe at Australia’s utilities, suggesting they had virtually shut up shop in embracing new technologies, and were more intent on protecting their age old business models and retaining customers.

In Germany, however, which has provided the most sustained incentives for renewable energy sources such as solar and wind, the focus of new tariffs is now being switched to other sources of technology, particularly those that can help customers reduce their dependence on the grid, and to provide balance for renewables.

The most exciting of these incentives are being introduced in North Rhine Westphalia, the largest and most populous state. Indications are that this could help reduce the upfront capital cost of the fuel cells by a third. With this and other rebates and tariffs, this could offer a payback for the fuel cells of around 7 years, as this table shows.

North Rhine Westphalia is investing €250 million over the next few years to kick-start new technologies as it seeks to source 25 per cent of its energy from combined heat and power, of which fuel cells could be a key component. This transformation could happen as quickly as 10 years, which is when the nuclear fleet is due to be taken completely offline, and this budget is aimed specifically at systems of 50kW and below.

The result of this, and new feed in tariffs introduced in the UK, means that Ceramic Fuel Cells’ commercial focus is now almost entirely based in Europe. The company which developed its technology in Australia and listed on the ASX in 2004, now employs 30 people at its plant in NRW, but it has cut 56 jobs in Australia in the last four months. More may follow. The manufacture of components at its Noble Park facility in Victoria will cease in the new year, and its HR, commercial, legal and manufacturing operations have all been moved overseas. A distribution agreement with Harvey Norman has also ended. Dow says that the roles of the CEO and the CFO may also follow overseas.

In effect, the company is following in the footsteps of the solar PV and solar thermal technologies that were similarly frustrated in Australia, and formed the basis of what is now Suntech, the world’s largest solar module manufacturer, and Areva Solar, the solar thermal technology.

Dow said the German incentives in particular will drive sales volumes, which in turn would give scale and then help reduce manufacturing costs. Dow said in an interview with RenewEconomy earlier this year that the next few years in Germany would likely be the game changer for the technology, but it will also likely be make or break.

Today, he told RenewEconomy:  “This is a pretty tasty deal for us. We’re feeling pretty positive about life.”

Dow said the proposed feed in tariff in Victoria, which would pay little more than a wholesale price for energy, did not reflect the benefits of distributed power. “Tariffs should have regard for people for putting power back into grid and recognise the benefits of distributed generation.

“This is a lost opportunity for Australia. In all honesty, we’ve just found the utilities here have been unwilling to engage with us, and to think about different ways of engaging with customers. It’s disappointing on so many levels.

“The big three (utilities) are shutting up shop. They are not really embracing solar, and are more worried about their loss of market share and their ability to acquire customers. But we’ve seen in Germany what happens when utilities don’t embrace change. The big four generators there are not making money, but they are now desperately trying to change the business model in the german market, which is undergoing a huge transition.

“It will happen here as well. New business models will emerge, it will just take a bit longer. That’s why we are leaving Australia. The governments overseas want this to happen, and they have introduced short lived market introduction programs. We can circle back (in Australia) when profitability permits.”

 

Comments

9 responses to “Ceramic Fuel Cells packs its bags and moves to Europe”

  1. Mart Avatar
    Mart

    “It has been pushing for its technology to be included in various state and federal incentives for renewables in Australia”

    Amazing that they claim that BlueGen has anything to do with renewables. After all it runs on natural gas and it even requires electricity to run.

    I also doubt their claims about efficiency. On the Harvey Norman website an electrical efficiency of up to 60% is claimed. But if you do the sums it requires 12MJ(=3.36kWh) of gas to produce 1.5kWh of electricity. To me that looks more like a 45% efficiency. Makes me wonder about their 85% total efficiency claim (electricity + heat) as well.

    Besides, the BlueGen unit seems to run 24hours/day. What would I do with all that heat and electricity? Electricity could be fed into the grid. But what about the heat?

    In other words, the BlueGen is expensive, is less efficient than claimed, could waste up to 55% as heat, generates electricity at a much higher cost than PV, and runs on a non-renewable fuel.

    The only way I could see the BlueGen as worthwhile is if the Germans were indeed going to implement Power-to-Gas on a large scale. Could that be the real reason why Ceramic Fuel Cells is gambling on a shift to the land of the Energiewende?

    1. Lars Avatar
      Lars

      Mart,

      You forgot to take into account the heat savings which will life the efficiency of their unit. Of course, here in Australia our heat requirements may not be so great so some of this would go to waste unless several homes could benefit from the heat for say hot water.

      You are right that one unit is too big for a single home so that’s why FIT’s are required or some sort of sharing between neighbours. A display home here in Sydney uses excess energy to power up an electric car at night. You are also right in stating that it is not a renewable source of energy – perhaps lower emissions with greater efficiency – so perhaps a transition technology to meet base load.

      I have done my own calculations and also question the 2,600 Euro savings which would deliver a 7 year payback. Unless both gas and electricity are 2 times higher than here in Australia this figure is quite optimistic. I have estimated savings of around A$1,500 pa. – of course assuming you required all that electricity and heat and did not feed back into grid.

    2. Robert Avatar
      Robert

      BlueGen units don´t run 24 hours the day. By the way a BlueGen unit is always working together with a thermal energy storage. That means, such a unit will produce electricity when there is less wind energy or the thermal energy storage is empty.

      Is gas renewable? Germany is producing much biogas, which is to some extent feed into the gas-grid and of course power-to-gas will be big in maybe ten years. At the moment, the car-maker Audi is investing lots of money into the power-to-gas technology. And of course, the government too (many millions into research). I think, BlueGen and the other CHP-companys will be a key element in the Energiewende.

  2. Chris C Avatar
    Chris C

    It is just typical of this country, just give the product away, when we say slow on the uptake what do we compare this with??? It is no wonder we give away the best minds in the world…

  3. Brenton Hamdorf Avatar
    Brenton Hamdorf

    How very disappointing that another leading technology, developed by Australians in Australia, is not supported by this country. So much rhetoric about the need for innovation and renewable energy; so much finger pointing about Australia’s purported inability to commercialise technologies; but so little support from Government or industry to develop anything smarter than digging holes in the ground. Is it any wonder Australia struggles to be recognised as anything more than a resource based economy? Will Australia ever embrace and develop its own high tech manufacturing? I sympathise with Brendan Dow’s frustrations.

  4. Skeptic Avatar
    Skeptic

    In this case the government is not to blame – the technology is. CFCL’s high temperature fuel cells simply do not work. They degrade quickly and have no chance of lasting for ten years, let alone seven. Note that the company hasn’t published any lifetime test results from it’s systems (only a small laboratory stack). Furthermore, recycling or disposal costs will be high, considering the exotic, often toxic materials used. CFCL has had a fair amount of government support and I don’t think they deserve any more.

    In comparison, solar PV, large scale solar thermal (with storage) and wind are more realistic solutions for Australia. I agree with Beyond Zero – let’s move away from gas and aim for 100% renewables.

  5. Sokkha Avatar

    @Mart,
    The Harvey Norman website refers to http://www.bluegen.info/AU_FAQ/ which says: “when operating at normal capacity and generating 1.5 kW of electricity, BlueGen uses about 9.5 Megajoules (MJ) of gas per hour”
    You mention 12 MJ of gas for 1.5 kWh electrical energy.

    In Victoria, the BlueGen unit saves about 1,000 kg of CO2 when it replaces power from brown coal power stations. (340 kg CO2/kWh versus 1,300 kg CO2/kWh.) This is about the same emissions saving achieved by solar PV panels in other States where black coal power is replaced.

    Solar PV panels provide useful competition with coal power stations during periods of sunlight. BlueGen units provide similar competition at other times of the day. They are an effective complement to renewable power generators looking for a credible response to fossil fuel advocates who attack intermittent renewables on the grounds that they are unreliable.

    Whatever its perceived shortcomings for using hated natural gas, it is still a useful ally when in competition for market share with coal power stations.

  6. suthnsun Avatar
    suthnsun

    biomethane from biowastes is a potential renewable feedstock for the fuel cell process (as well as the methane from renewable power mentioned earlier) – we should be keeping this technological pathway to 100% renewables well and truly open in Australia – we have an enormous investment in gas delivery infrastructure and gas storage is easier than electrical storage.

    The virtual power station concept with fuel cells, currently being implemented in Germany, is an immediate fix for the brown coal generation problem in Victoria.

  7. Concerned Avatar
    Concerned

    Do what Honda has done.Use a spark ignotion engine running on gas.
    Same result,but costs a few thousand.Maintenance,go to your mower shop.
    Bluegen can only survive on sudsidies,which Germany loves.

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