Jump-Starting the Hydrogen Economy: AFC Energy Takes a Back to Basics, Commercial Approach

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There’s a lot going on in the fuel cell world. Applications both large and small are increasing as utilities, industrial and commercial customers install fuel cell systems as primary or back-up sources of clean electrical power. A string of automakers have recently announced commitments to fuel cell vehicle development programs. Fuel cell use is even growing in the residential market. Moving further down in scale, they’re increasingly being used in consumer electronics.

In most cases, longstanding challenges to wide-scale commercialization remain, however, due to one simple fact: production costs remain all too high, putting large-scale commercialization off in the distant future.

The UK’s AFC Energy is intent on changing that, and as quickly as possible. On the verge of announcing its first commercial-scale installations with an industrial partner, AFC founder Howard White talked with Clean Technica about the company’s laser-like focus on taking the basic, time-tested and proven alkaline fuel cell technology invented in the 19th century and updating it through the use of modern materials and manufacturing processes.

The result is a modular, low cost-high-performance alkaline fuel cell system that if not commercially viable today soon will be, certainly in specific industrial sectors, according to White.

If AFC succeeds, White sees its success as opening up a global market for hydrogen that in large part is viewed and treated as a waste by-product in industry.

“The internal combustion engine monetized what was essentially a nuisance product. Today, companies are throwing hydrogen away as a waste product, a nuisance product, because it’s too expensive to move around. We monetize the value of hydrogen, and when that happens, we and others will start looking for it.

“We’re turning a mechanical operation into a solid state solution at a much lower cost, with the same efficiency,” White explained. “I think we are the breakthrough technology that will help usher in a hydrogen economy.”

A Disruptive Alkaline Fuel Cell Technology

AFC’s alkaline fuel cell system is a low temperature, low pressure technology that operates at 60 percent electrical conversion efficiency, the highest in the industry, according to White. “That means we can aim at low cost-high efficiency systems that can compete” with conventional technologies already out in the marketplace.

“We’re not competing with other fuel cell companies, but with internal combustion engines. [Ours] is a disruptive technology to turbines in power generation.”

AFC’s is modular system based on 10 kilowatt-hour (kWh) ‘blocks.’ They’re manufactured using high-grade thermal plastics, “so no special materials are needed,” White explained. “Nothing in our fuel cell is welded, so they’re easily set up and broken down.

“Inherent in our design is reuse-recycle. We seek to have a balance of plant that can build up or reduce with a cartridge that at the moment has a 10 kWh capacity, soon to be 20 kWh, lasting 12 months.

“Then, you take them out and put another one in. We warranty our power stations for 20 years, but theoretically they can last forever.”

The electrodes in AFC’s systems are recyclable. “We clean and reuse them. The catalyst on the electrode is what wears out. They can be hot-swapped.”

AFC’s target for capital and operating expenditures (capex/opex) is less than 4 pence (~6 US cents) per kilowatt-hour, but White believes that AFC will exceed that. “Once we get into mass production, we’ll be able to drive that price down aggressively,” he said.

“Our technology, besides clever design and an enormous amount of IP (intellectual property), is no more difficult than that found in a refrigerator, and the maintenance can be done by [adequately trained] technical and maintenance people,” such as are found in the HVAC (Heating, Ventilation and Air Conditioning) industry, White continued.

“Cartridges are no more difficult to make than those used in refrigerators. It’s not so much a manufacturing process as such; it’s an assembly process.”

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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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Updating an Overlooked Fuel Cell Technology

Updating well-known and proven alkaline fuel cell technology is another key to AFC’s commercialization strategy. “One of the advantages of alkaline fuel cells is that we’re using the oldest, proven fuel cell technology.

“It’s been used to run the Apollo and Challenger space missions. Everyone knows that they work, and they work to ‘five-nines’ reliability.

“We’re pretty much there on power output at the moment, and that was originally done some 20 or 30 years ago. Now we’re focused on delivering that at low cost,” White related.

Eliminating platinum as a catalyst has moved AFC a big step towards realizing that goal. So is conservative financial management and working with industry partners, such as AkzoNobel, to further develop and refine its alkaline fuel cell system.

“Our burn rate in a year is a half or quarter of what Ballard or FuelCell Energy burn in a quarter – around $5 million a year. Either we’re mad or we’ve got a total cost breakthrough. We’ve burned through $14 million since inception, and we’ve got about $10 million in banks, enough to last two years.”

“We’re at a point where we’ll have a reference site in Germany; we’ve got a frozen commercial design, and now we’re optimizing the technology.

Though a milestone, AFC sees achieving the four UK pence (6 US cents) per kWh capex/opex cost target as a “transitional number; it’s not our final destination,” White said.

“We’re now getting down into the numbers at which we will start to compete directly with turbines, and their costs will certainly be going up, especially if they use hydrocarbons.”

Mapping the Path to Zero Emissions Electricity

AFC views itself as a clean energy company, “one that just happens to design and build fuel cells,” White explained. Using pure hydrogen at chlor-alkali plants, as opposed to syngas, biogas or natural gas, means that its fuel cells produce zero emissions.

“We see fuel cells as the transitional technology to achieving zero emissions electricity,” he told Clean Technica. “You not only have to compete with existing technologies, but show a path to a lower cost with de-carbonization.

“If you look at the big picture where we’re producing massive amounts of carbon dioxide and want to go carbon-free, we’re looking at a 50-year window of transition. We have to be using fossil fuels sensibly, and that’s where the de-carbonization of electricity production comes in.

“But you have to increase the efficiency and bring the costs [of such technologies] down. You can’t throw huge amounts of money at the problem and watch as everyone goes broke. It has to be done in a politically and economically adept fashion.”

Microsoft in a Garage

By and large, excessively high costs of capital continue to hold back commercialization of fuel cells, according to White. “I want every fuel cell company to work, to succeed,” but for the industry in general, “the cost base is just too high to be commercial.”

In contrast, AFC’s low cost hydrogen fuel cells have been referred to “as Microsoft in a garage,” White stated. “[Alkaline fuel cells] are an overlooked technology. What’s happened is very simple. In the past 15 years, materials science and new manufacturing processes have produced products that didn’t exist then [when Sir William Grove invented the first fuel cell in 1839].

“We applied these to an older technology and came up with a very low cost engineering solution that works. We have not reinvented the wheel.”

AFC’s brought on a new CEO to lead the company into what it sees as the home stretch to commercialization. “Ian Williamson is one who knows our market extremely well,” White commented, “and he sees this as a market that’s going to happen. He is ‘Mr. Hydrogen Solution’ in Europe.”

For more on fuel cells and the hydrogen economy, check out:

– Residential Use of Fuel Cells on the Rise
– Fuel Cell-Coal Plant CO2 Capture: Clean Tech Breakthrough or Ill-Conceived Diversion?
– Hydrogen Storage-Fuel Cell System to Smooth Out Intermittent Wind Power in Germany