CFU - Ceramic Fuel Cells

[frankblack]

Generally speaking, utilities or large energy users tend to be very thorough when contemplating any technology they are not familiar with. That applies even to systems already proven elsewhere.

Just a few years ago a significant Australian electricity generator undertook substantial "real world" testing of diesel engines so as to work out their actual fuel efficiency. They were considering some large units for peaking / backup generation at the time and weren't happy to take someone else's numbers on fuel efficiency, maintenance requirements etc. So they leased some of the same units they were looking at and put them into operation...

Utilities are generally fairly conservative. They won't likely be ordering anything more than a trial batch of BlueGen's until they've done their own "real world" testing over a number of years (ie until they break or at least need a major overhaul).

Now lets assume we dont know which utilities/partners of CFCL have been testing what and for how long.
And we dont know any more than we did yesterday.

Testing has been done to death already, in 6 months from today, those testers will know it all.

 

[brty]

Frank,

Now lets assume we dont know which utilities/partners of CFCL have been testing what and for how long.

But we do know. The company keeps telling us each time a utility buys one of them as if it is a pivotal moment.

Testing has been done to death already, in 6 months from today, those testers will know it all.

Perhaps you should re-read what Smurf stated, they will do there own testing over time, probably years. There are only 12 out there now, the rest are yet to be delivered, the utilities need to get them installed before they START testing.

Do you not have an answer to my question about where you think the money will come from to keep going, given the current cash burn rate??
My take is a new share issue while the current share price rise is in progress as the logical place and time.

brty

 

[frankblack]

Frank,



But we do know. The company keeps telling us each time a utility buys one of them as if it is a pivotal moment.



Perhaps you should re-read what Smurf stated, they will do there own testing over time, probably years. There are only 12 out there now, the rest are yet to be delivered, the utilities need to get them installed before they START testing.

Do you not have an answer to my question about where you think the money will come from to keep going, given the current cash burn rate??
My take is a new share issue while the current share price rise is in progress as the logical place and time.

brty

Did answer your question, .
you might need to scroll back a couple of posts.

 

[Smurf1976]

Now lets assume we dont know which utilities/partners of CFCL have been testing what and for how long.
And we dont know any more than we did yesterday.

Testing has been done to death already, in 6 months from today, those testers will know it all.

One issue is credibility and financial backing of the supplier.

If this equipment was being manufactured by General Electric, ABB, Mitsubishi, Rolls Royce, Toshiba, Siemens or anyone else already well known to the utilities and who has fairly solid finances then that alone would add some confidence.

But it would be a huge risk for any utility to undertake a mass roll-out of a product with unproven long term performance from an unproven supplier. Anything is possible, but doing something like that doesn't fit too well with the inherently conservative business model of virtually all electric / gas utilities who are more likely to purchase a handful of units and see how they go over a period of years before making any major committment to them.

It really comes down to return on investment. If I have my capital returned via energy cost savings within 5 years then the odds are that the device will last at least that length of time. But if it takes 10+ years to break even then questions about longevity of the device, and longevity of any government policy supporting it, immediately come to mind.

 

[frankblack]

One issue is credibility and financial backing of the supplier.

If this equipment was being manufactured by General Electric, ABB, Mitsubishi, Rolls Royce, Toshiba, Siemens or anyone else already well known to the utilities and who has fairly solid finances then that alone would add some confidence.

But it would be a huge risk for any utility to undertake a mass roll-out of a product with unproven long term performance from an unproven supplier. Anything is possible, but doing something like that doesn't fit too well with the inherently conservative business model of virtually all electric / gas utilities who are more likely to purchase a handful of units and see how they go over a period of years before making any major committment to them.

It really comes down to return on investment. If I have my capital returned via energy cost savings within 5 years then the odds are that the device will last at least that length of time. But if it takes 10+ years to break even then questions about longevity of the device, and longevity of any government policy supporting it, immediately come to mind.

What it comes down to is, do the people who matter, think this will work.
Other systems are already being used especially in Japan, who along with Germany seem to be leading the fuel cell microgeneration race.
This kind of product is attracting alot of attention from a great many countries though.

CFCLs products have been tested to death, especially by CFCL.
CFCL has 'partners' they have been working with.
Quote,
"Ceramic Fuel Cells has been working with Paloma since early 2008.

In September 2008 Ceramic Fuel Cells installed a demonstration system at Paloma’s facilities in
Nagoya. The unit was successfully operated on one fuel cell stack for the agreed six month trial, until
the end of March 2009. The unit exported power to the local grid and met all Paloma’s technical
performance requirements, including daily modulation (where the power output of the unit is turned
up and down each day, to mimic the power needs of the average Japanese home).


Ceramic Fuel Cells is also deploying fuel cell products with leading utility customers and appliance
companies in Germany, France and the United Kingdom.

Ceramic Fuel Cells Limited, (AIM / ASX: CFU) a leading developer of high efficiency and low
emission microgeneration products for homes, gives an update on its product development
project with Nuon for the Benelux market.

The parties have completed a joint review of the project to develop micro combined heat and
power (mCHP) products based on Fuel cell technology. During the project a semi-integrated
mCHP unit was installed and operated. The unit comprised a CFCL NetGenPlus fuel cell unit
connected to a boiler unit and was installed in September 2008.

The mCHP unit successfully met or exceeded all technical targets set by the partners,
including power export, electrical efficiency, and lifetime. CFCL’s fuel cell unit successfully
exported electricity to the local grid, and generated heat for the boiler, from natural gas. As at
31 March the unit has been operating for 4,624 hours."

If they dont know whether the CFCL fuel stack can deliver by now, they most probably will in 6 months.

Chances are no-one will rushing out to install 100 000 units, the approach
will be measured enough to minimize risk.

 

[brty]

My apologies Frank, you had indeed answered the question. For some reason my computer went to Smurf's post as the first new one and I missed your reply.

In regard to the 6 months cash, it would be prudent to gain more cash well before the wolves started to sniff. If it to be a capital raising, and the timing is what makes this necessary now, then too wait until cash becomes critical hurts existing shareholders by having the new raising performed at the desperation stage. Nobody wants that except competitors.

And going to the bank to get a loan, is that just out of the question.?
I think not.

This would be a particularly bad thing to do. The company does not have the cashflow to support a loan. If the company gets into debt at this stage then there is a high likelyhood of the shareholders losing the technology should the company be unable to pay the loan or break a covenant set by the lender.

So how are you calling the feed in tariff for the Bluegen in Victoria.?
Likely or not.?
I would see a positive outcome adding some more to the share price,
dont you.?

Feed-in tariff for Victoria? Because politicians are involved, and there is an election coming up (in Victoria), then there is a high probability of some favourable noises being made. Whether it comes to fruition or not later on, is a different question.

I would see a positive outcome adding some more to the share price,
dont you.?

Yes, it probably would kick the share price for a while, but that is separate from whether the unit makes economic sense at the current price or anything near it, eventually the market will realize this and the share price drop back.

There is always the lost millions still before the courts.

I would not expect a fast outcome here. Irrespective of the result, appeals would drag the process out for quite a while.

brty

 

[frankblack]

My apologies Frank, you had indeed answered the question. For some reason my computer went to Smurf's post as the first new one and I missed your reply.

In regard to the 6 months cash, it would be prudent to gain more cash well before the wolves started to sniff. If it to be a capital raising, and the timing is what makes this necessary now, then too wait until cash becomes critical hurts existing shareholders by having the new raising performed at the desperation stage. Nobody wants that except competitors.



This would be a particularly bad thing to do. The company does not have the cashflow to support a loan. If the company gets into debt at this stage then there is a high likelyhood of the shareholders losing the technology should the company be unable to pay the loan or break a covenant set by the lender.



Feed-in tariff for Victoria? Because politicians are involved, and there is an election coming up (in Victoria), then there is a high probability of some favourable noises being made. Whether it comes to fruition or not later on, is a different question.



Yes, it probably would kick the share price for a while, but that is separate from whether the unit makes economic sense at the current price or anything near it, eventually the market will realize this and the share price drop back.



I would not expect a fast outcome here. Irrespective of the result, appeals would drag the process out for quite a while.

brty

Always good to hear from you Brty,
Your points are valid as always, all plausible, all possible, all with a pessimistic leaning though, safety first.

Yet all your points could be countered with possible scenarios.
We dont know so we have to guess one way or other.
Who knows what the company may have up its sleeve,
what arrangements/agreements.?
Nobody.
We will know when the announcement is made.

I have not said you are wrong to say what you do, indeed its food for thought.
I have said many times you may be proved right in the end.
You may be proved wrong, too.
Just think you are being too negative.
All views are valid here, sadly more people dont join the discussion.

 

[mr. jeff]

Got to back Brty on this one; those conclusions are logical and the only way to think of the stock at the moment. Although there may be further announcements and excitement, until they have settled their books down and got the sniff of some positive cashflow, they are going to be borderline for a while. Although I do agree that we don't know enough and could find a great release around the corner, I think you all know my opinion by now, CFU just releases anything these days that is positive in any way...

 

[jbocker]

Appreciate the good and civil debate on this stock folks. Well done. It does highlight how damn difficult it is for an innovative company to make it to market. I have always liked the ideals of the company, their stickability, and understand the requirement to publish good news to keep supporters encouraged during these difficult (fickle) times.

I hold CFU. I support their ideals, and truly hope they can manage the business through to ongoing success.

 

[Knobby22]

I would like to make another point.
If everyone agreed CFU was on a winner and we didn't have doubters then the price of the company would be too high and we should all sell.
The fact there are so many people doubting this company can succeed makes it the buy it is ... it is this judgement position that I believe is favourable, that must be weighed in peoples minds.

With regard to the utilites, this could give them additional cashflows with clients as rentals. It is a real positive for them and I am confident it will proceed.

As Brty says. cashflow is the problem near term.
If this is solved it could lead to a rerating. This management impressed with their last raising. I think we may see something innovative.

My faith so far has been rewarded as i am sitting on big profits but the next six months will be very interesting.

 

[frankblack]

I would like to make another point.
If everyone agreed CFU was on a winner and we didn't have doubters then the price of the company would be too high and we should all sell.
The fact there are so many people doubting this company can succeed makes it the buy it is ... it is this judgement position that I believe is favourable, that must be weighed in peoples minds.

With regard to the utilites, this could give them additional cashflows with clients as rentals. It is a real positive for them and I am confident it will proceed.

As Brty says. cashflow is the problem near term.
If this is solved it could lead to a rerating. This management impressed with their last raising. I think we may see something innovative.

My faith so far has been rewarded as i am sitting on big profits but the next six months will be very interesting.

Agree Knobby,
So I had a look at how CFU has been going as a stock over the last 12 months.
In the last 12 months compared to the small ordinaries CFU is killing the index,
now.
Compared to RIO TINTO, is beating them as well.
Thats all history now, wonder how we go from here.?

 

[mr. jeff]

Ok I'm in with this for the update:

"Company Announcement

CERAMIC FUEL CELLS’ BLUEGEN SALE TO JAPAN ’S LARGEST GAS COMPANY

Ceramic Fuel Cells Limited (AIM/ASX: CFU), a leading developer of high efficiency and low emission electricity generation units for homes and other buildings, will install a BlueGen gas-to-electricity unit with Japan’s largest gas utility, Tokyo Gas.

Mitsui & Co. has ordered the BlueGen unit on behalf of Tokyo Gas. The BlueGen unit will be installed and demonstrated by Tokyo Gas at its testing laboratory in Tokyo ."

Another trial unit.
Do any of these companies release trial results as an ongoing thing? haven't seen anything. Well it may help keep everyone excited, eventually CFU will get a proper bite! may be getting closer.

 

[frankblack]

Ok I'm in with this for the update:

"Company Announcement

CERAMIC FUEL CELLS’ BLUEGEN SALE TO JAPAN ’S LARGEST GAS COMPANY

Ceramic Fuel Cells Limited (AIM/ASX: CFU), a leading developer of high efficiency and low emission electricity generation units for homes and other buildings, will install a BlueGen gas-to-electricity unit with Japan’s largest gas utility, Tokyo Gas.

Mitsui & Co. has ordered the BlueGen unit on behalf of Tokyo Gas. The BlueGen unit will be installed and demonstrated by Tokyo Gas at its testing laboratory in Tokyo ."

Another trial unit.
Do any of these companies release trial results as an ongoing thing? haven't seen anything. Well it may help keep everyone excited, eventually CFU will get a proper bite! may be getting closer.

Thanks jeff,
clearly this Bluegen unit is SO,SO good, so good, nobody can even believe it,
and so, must test it themselves.
Either that or they are trying to steal the technology.
It has been tested too death already.

 

[Smurf1976]

Thanks jeff,
clearly this Bluegen unit is SO,SO good, so good, nobody can even believe it,
and so, must test it themselves.
Either that or they are trying to steal the technology.
It has been tested too death already.

As I posted earlier, utilities in general are unlikely to undertake a large scale purchae of any system they aren't familiar with, especially if it's not from an established supplier.

Experience does matter. Utilities with a background in coal-fired generation have no hessitation in building another coal-fired plant. They can do just about all the design and construction themselves and know exactly how to go about it. They'll stick with coal unless there's a very compelling argument to do something else. Likewise those with a background in hydro tend to keep building dams and so on.

Utilities are conservative by nature, and there are more than enough examples of doing something different leading to financial, technical or political disaster.

A trial they will certainly do. But they'll almost certainly await the results of their own trial before throwing serious $ at something new. History says that those who do otherwise tend to lose money.

 

[mr. jeff]

smurf, I agree. I wonder about trial periods, has there been any release by any of these energy companies about the unit trial, as it would be good to get some line on this so that we can all understand trial durations and expected announcements of outcomes etc.
Has the stack reliability (unknown/short? duration to replacement during a service(?)) issue been solved or is this what the utility companies are worried about as well?
Sorry, I have not been reading all the literature on this lately so I may have missed something...

 

[mrbrisbane]

The announcements look great, the financials are showing some income and the concept is almost too good to be true except for the commercial innertia that you all keep referring to.
This has got to be something that would surely be of interest to Australian companies such as AGL or Origin who are large scale gas producers and distributors but who have also become electricity retailers as well. It is one way in which they can actually start generating their own electricity with fairly small capital outlay while actually increasing the volume of sales in their core business (gas)

Given the magnitude of dollars that have been sunken into LNG projects and the reserved domestic consumption quotas that are in place, something like this could basically double a household consumption of gas but then provide the bonus of electricity output that is not weather dependent.

From a consumer point of view, would you rather have all that stuff up on the roof and still get a power bill, or something about the size of a washing machine under the house that sees energy bills almost erradicated.

Seems like a lot of ppl have run out of patience with this one (21c down from one time highs of 80 ish) just as all the planets are starting to line up.

My forecast is that an utility company will make an offer of some sort of joint venture and the critical factors will be how desperate the company (cfu) has become to get either the $ or the market exposure.

I still put it in the biotech / small miners basket - try and pick a few goodies and keep exposure to the point that a total loss is something that you have a little weep about but doesn't change your life.

 

[mrbrisbane]

Re below - maybe I am an accounting blind man but the attached seems to say to me there is a bout 6 months to get some serious income happening or the venture partner? will just pick up the leftovers for virtually nothing.

OOps it won't let me post the link - but it is in the latest ASX announcement and also on the CFU website.




On Saturday afternoon some ppl go to the races, I write share orders.

CFD = eachway bet ????????

 

[frankblack]

As I posted earlier, utilities in general are unlikely to undertake a large scale purchae of any system they aren't familiar with, especially if it's not from an established supplier.

Experience does matter. Utilities with a background in coal-fired generation have no hessitation in building another coal-fired plant. They can do just about all the design and construction themselves and know exactly how to go about it. They'll stick with coal unless there's a very compelling argument to do something else. Likewise those with a background in hydro tend to keep building dams and so on.

Utilities are conservative by nature, and there are more than enough examples of doing something different leading to financial, technical or political disaster.

A trial they will certainly do. But they'll almost certainly await the results of their own trial before throwing serious $ at something new. History says that those who do otherwise tend to lose money.

If as you are suggesting , the trialing/testing thus far, is inconclusive, then the units will need to be tested for at least another 4 years to to get a result.
The fuel cells are changed after 5 years or so, everything thing else just goes on working.
The fuel cells have been tested to death.

 

[brty]

Frank,

The fuel cells have been tested to death.

This is clearly not the case from the perspective of the utilities that have been purchasing one or two units. Why else would they buy so few unless they wanted to test them??

The fuel cells are changed after 5 years or so

The current contracts for the lease of the units, and what is available to the public now, includes replacing the fuel stack after 2 years.

In terms of CFU joining with a large utility, I find it interesting to note that LNC has teamed up with the British firm AFC to develop fuel cell electricity generation from their CTG developments. The AFC fuel cells are much cheaper than CFU's and operate at lower temperatures and have claimed 55-60% efficiency. They plan to make the electricity 'clean' by using carbon capture and storage at the same time.

brty

 

[frankblack]

Frank,



This is clearly not the case from the perspective of the utilities that have been purchasing one or two units. Why else would they buy so few unless they wanted to test them??



The current contracts for the lease of the units, and what is available to the public now, includes replacing the fuel stack after 2 years.

In terms of CFU joining with a large utility, I find it interesting to note that LNC has teamed up with the British firm AFC to develop fuel cell electricity generation from their CTG developments. The AFC fuel cells are much cheaper than CFU's and operate at lower temperatures and have claimed 55-60% efficiency. They plan to make the electricity 'clean' by using carbon capture and storage at the same time.

brty

I dont see the recent orders to test the units as real.
This is some kind of relationship building exercise on the part of the utility,
and to get a bit of hands on experience of the goods.
What are you saying then .?
The Bluegen should be tested 15 years to see if it lasts as long as claimed.?
5 years testing for the fuel stack.?
What?
All have been tested to death.
The utilities are waiting for the first serious players orders to come.
Who wants to be the first.?
Then their testing will be forgotten about, the flood gates will open.

I am a big fan of LINC, but totally a different kettle of fish, and long way from actually up and running. And of course so much more testing to do.
As for carbon capture and storage has that even been proved possible.?
Or just something they are working on.?
The speed of which LINC gets things done wait 10 years.