Tuesday, 25 August 2009

AFC Energy (Hydrogen Fuel Cells)

The problem with hydrogen fuel cells — a much-promoted green energy technology that creates electricity by passing hydrogen and oxygen atoms through an electrolyte solution — is that they require a supply of hydrogen, a gas that is expensive to produce and transport.
AFC Energy, an AIM-listed company whose chairman is Tim Yeo, the Conservative MP, has decided to dispense with the problem of hydrogen supply by targeting businesses that create hydrogen as a byproduct, such as chlorine manufacturers. Yesterday, AFC secured a contract to supply a fuel cell at a huge chlorine plant at Runcorn. The plant, owned by Ineos, consumes enough power to run a city as large as Liverpool and already recycles 85 per cent of its hydrogen output into power generation, but AFC Energy reckons that its fuel cells could generate several megawatts of power from the unused hydrogen at the Runcorn plant.
The AFC fuel cells have been shown to work at an Akzo Nobel chlor-alkali plant in Germany, so the challenge is to turn them into a commercial business that can sell power efficiently into a grid and create value by reducing energy costs and industrial carbon emissions.
This is a highly speculative venture, but at 12p the shares are well off last year’s highs of 30p and are worth a look.