Ceramic Fuel Cells Ltd. (CFU) recently announced its preliminary results for the year ended June 30, 2014. The group’s total revenue increased by 43% to AUD $6.1M (~ $5.7 million). The increase in revenue is due to 210 units being sold during 2014, compared to 147 in 2013.
Forty-five units were sold for a virtual power plant initiative on the island of Ameland in the Netherlands. The company believes that this type of project, which requires its BlueGEN to operate in tandem with solar-and wind-generated power, will provide further sales opportunities in the future.
CFU has demonstrated the potential for its product in Germany, the Netherlands and the UK markets by selling directly to customers, as well as through a number of distribution partners and installers. CFU focused its limited sales and marketing resources on Germany and the UK due to the fiscal incentives in those countries. In Germany, in addition to North Rhine Westphalia, the States of Hesse, Baden Wurttemberg, Saxony and Rhineland Palatinate recently announced subsidy programs to support mCHP installations. In the UK, large-scale project sales, principally in the social housing sector, are being targeted and a number are currently under negotiation.
More than 580 units have now been sold in 11 countries. Having reviewed its sales strategy, the company has moved to the development of larger-scale projects rather than direct sales. This has resulted in a reduction in the sales resource/cost base and allowed the team to pursue the project-based opportunities. CFU continues to apply major focus to reducing the standard cost of its unit in order to reduce its sales price. This could lead to greater market acceptance and open markets where the unit is not yet economically viable. The company continues to investigate product distribution options with potential partners in Europe, North America, China, Korea and Japan.
CFU remains confident that its technology has a significant advantage over other combined heat and power (CHP) products. The product’s reportedly high electrical generation efficiency, combined with its overall CHP efficiency, is able to significantly reduce carbon emissions and provide greater value to the customer through the reduction in the marginal cost of electricity.
CFU continues to assemble a low volume of BlueGEN units in Heinsberg, Germany. The plant is currently able to produce 1,700 stacks per year. This capacity can be increased substantially, with limited capital outlay, once unit sales ramp up. The company continues to review its supply chain, and raw materials from alternative suppliers are being evaluated in order to establish second suppliers so that the company does not become exposed to supply chain restrictions.
The company’s relationship with its fuel cell supplier remained strong throughout the year. The quality of the components sourced from them remains high. They are now being tasked with the development and production of other stack components.
From June 2012 to June 2014, CFU has reduced the unit’s standard cost by 29%. This remained a major focus during the year. The company remains confident that further cost reductions will ensue through the placement of volume orders for components, as well as a combination of value engineering, process efficiency improvements and the outsourcing of manufacturing.