Jump-Starting the Hydrogen Economy: AFC Energy Takes a Back to Basics, Commercial Approach
AFC’s Chlor-Alkali Commercial Business Model
Key to AFC’s approach, and another thing that distinguishes it from others in the industry, is the company’s commercial model.
It’s a tack that’s differentiates AFC from the mass of fuel cell industry participants, who in large part have relied on government and public-private sector partnerships to research and develop their fuel cell technology for particular applications, according to White.
It’s also a tack that’s led AFC to partner with chemical industry partners, such as AkzoNobel, that produce hydrogen as a normal aspect of the commercial activities, specifically their chlor-alkali plants.
Chlor-alkali plants use about 1 percent of worldwide electricity, White noted. “Akzo Nobel, Dow, Samsung, anyone whose in chemicals makes chlorine. It’s used in the manufacture of about 60 percent of all manufactured compounds.
“Sixty percent of worldwide chlorine production is used in PVC (polyvinyl chloride) manufacturing, the rest is used in just about anything that’s white – paper, plastic, paint, white chalk, they all require chlorine.”
Chlor-alkali plants produce hydrogen as a by-product through electrolysis of brine. “You get soda ash on one electrode and chlorine on the others,” he explained, and much of that is considered a waste by-product.
Low Hanging Fruit
For AFC and its hydrogen fuel cells, the chlor-alkali industry “is low hanging fruit,” White said.
“South Korea is one prime target for us because you can buy hydrogen for 10 cents or less per kilowatt-hour (kWh), take 6 cents for capex/opex and then sell it for the 23-cent tariff price. That’s seven cents per kilowatt-hour; that’s a lot of money in the energy business.”
“At the moment, a lot of chlor-alkali companies essentially throw their hydrogen away, or burn it to produce steam heat,” he continued. “Some 10-15 percent is thrown away across the board. Some are burning most of it; but they’d get a lot of money from us rather than burning it in an even very efficient steam-cycle electricity generator, which is about 22-23 percent efficient.”
AFC has commissioned two beta systems with AkzoNobel that will be switched on “imminently,” according to White, from which point it will commence live trials at a third-party site.
“The business model there will be slightly different,” he elaborated. “They have hydrogen they are literally throwing away, that’s got zero value.”
In order to foster and promote energy efficiency and the transition to clean energy sources, the German government subsidizes combined heat and power (CHP), or cogeneration, installations.
“We would get an advantage of approximately 50 euros per megawatt-hour (MWh) as a subsidy, plus the value of the electricity, say 70 euros per MWh. That’s 120 euros per MWh.
“Our capex/opex amounts to about 6.5 euros. We’ll split the income split with Akzo Nobel. Whatever they get is essentially found money. Akzo would take the DC power generated, or they may have to convert to AC in order to make it grid-ready and qualify for the subsidy.”
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