The Battle for Distributed Power – Ceres Power vs Ceramic Fuel Cells
Ceres Power vs Ceramic Fuel Cells
Ceres Power and Ceramic Fuel Cells are the two leading competitors in small scale combined heat and power (CHP) products. Both are targeting the residential market in Europe and have partnerships with German manufacturers and European gas suppliers. Both use technology based on Solid Oxide Fuel Cells (SOFCs) and if you believe their respective marketing both are the leading company in this niche area. So who is the leader and who is the pretender?
This series is primarily about Ceres Power and Ceramic Fuel Cells. Though it also contains a broader analysis of the product life cycle and associated share price cycle of new product development companies. That relationship can be broadly characterised by initial excitement on major developments giving way to the stark reality of time to commercialisation.
Product development life cycles differ depending on the product and the company. As a general rule development takes considerably longer than the attention span of most investors. Consequently the share price of development companies waxes and wanes on limited information. For example it has taken $250M and 17 years to get Ceramic Fuel Cells to the verge of commercialisation, even long term investors can easily loose interest over a fraction of those time frames. The share price of both Ceramic Fuel and Ceres has recently wanned and are near their all time lows.
The market for residential CHP is massive, with around 15 million homes in the UK alone using gas for their heating. However, the cost of the units is still too high for mass adoption. For example Ceramic Fuel Cell hopes to have prices of less than $10,000 within four years, while the Victorian government recently paid $45,000 each for 30 units.
For those still struggling with the acronyms the big picture here is the move from centralised power production and distribution to distributed power systems. The first step is this transition will be gas based systems and the front runner at the moment is CHP. These systems use fuel cells to convert the gas to electricity and utilise the heat produced for water and space heating. These system greatly increase the efficiency of fuels thereby reducing carbon emissions.
Ceres Power Timeline
Ceramic Fuel Cells Timeline
Ceramic Fuel Cells are way behind in the design stakes; however, they claim to have the most efficient product. I’d love to root for the little Aussie company, but in consumer products, design trumps efficiency every time. No-one will want a big ugly Ceramic Fuel box when they gave have a sleek wall mounted Ceres Power Unit. According to Ceres Power “in western Europe over 78% of all residential boilers sold are wall-mounted, representing a substantial opportunity for Ceres Power’s compact CHP design. Similar opportunities exist in Asia and North America to reduce the carbon footprint and energy costs of the built environment.”
The second major difference is Ceres’ fuel cells are based on a robust, cheaper, stainless steel design rather than the traditional ceramic approach of Ceramic Fuel Cells.
Ceres has developed a unique adaptation of Solid Oxide Fuel Cell (SOFC) technology, able to operate at temperatures substantially lower than conventional designs which typically run at 800 – 1000 degrees C. By using a new generation of ceramic materials known as CGO (cerium gadolinium oxide) instead of the industry standard YSZ (yttria stabilised zirconia), operation at 500 – 600 degrees becomes possible.
This in turn allows use of conventional stainless steel as the cell substrate, separating the functions of mechanical support and electrochemistry. The electrochemical layers can be made extremely thin and optimised for maximum performance, resulting in excellent power density levels, whilst the stack material costs are radically reduced. The efficiency of converting fuel into electricity and heat is therefore very high and this efficiency is maintained across a wide part-load range. In addition, the heat-to-power ratio is approximately one-to-one making the technology ideal for applications such as CHP, where levels of electrical output need to be maintained even where heat demand is modest.
In contrast to totally ceramic cells, these metal-supported cells are mechanically highly robust and can be easily sealed (e.g. through welding) and have thermal expansion coefficients well matched to their ceramic coatings. This allows great resistance to thermal shock, permitting rapid start-up times and the potential for many on/off cycles for everyday usability. In addition, the technology retains the fuel flexibility of SOFC, and has proven ability to run highly efficiently on commercially available fuels such as natural gas, LPG and biofuels. via Ceres Power
Ceramic Fuel Cells has claimed the lead with electrical efficiency of 60% and combined efficiency of up to 85%. I do not share in Ceramic Fuel’s view that their industry leading efficiency is a major competitive advantage, though it may give them a small edge if all else was equal. However, all else is not equal. Cost and design, in particular being wall mountable are the two key competitive advantages, and Ceramic Fuel lags on both fronts. My requests to Ceres for the efficiency of the CHP have gone unanswered.
Time to Market
It appears Ceramic Fuel has a slight lead. Ceres are currently conducting sheltered trials in empty house and expect commercial field trials to commence mid 2010. Their plan is to launch the product commercially in the UK in H2 2011. Ceramic Fuel has units in commercial field trials and has adopted a partner appliance model as well as its own BlueGen.
Bloom Energy. Can the American’s with the big name backing and the pizazz steal the show?
Disclosure: No position in either at time of writing. Ceramic Fuel Cells is an Australian company. I’ve been following Ceres Power for a few years and am consequently more familiar with their design and advantages.