15th Aug 2022
- Through its groundbreaking SteelCell technology and electrolyzer division, Ceres Power is emerging as a frontrunner in hydrogen fuel cell innovation.
- Ceres Power delivered a strong fiscal performance in 2021, increasing its year-on-year annual revenue by 44%.
- Partnerships with companies such as Bosch, Hyundai Heavy Industries, and Horiba Mira are enabling Ceres Power to expand its international reach.
As environmental goals take center stage and the Russia-Ukraine conflict affects fossil fuel exports, a growing number of global leaders are turning to renewable sources of energy production.
With hydrogen emerging as a popular choice for green energy production, hydrogen stocks may be uniquely positioned to take advantage of this lucrative opportunity for growth. Among those hydrogen power stocks on the frontline of innovation is the United Kingdom-based Ceres Power Holdings.
Climate-conscious power production
For 20 years,1 Ceres Power Holdings has been developing fuel cell technology aimed at generating power from conventional and sustainable fuels such as hydrogen, biogas, ethanol, and natural gas. The company’s main product, SteelCell, is a Solid Oxide Fuel Cell (SOFC) aimed at lowering running costs while minimizing carbon emissions and pollutants.
In October 2019, Miura Co., Ltd partnered with Ceres Power to release a new fuel cell system that runs on SteelCell technology.2 Used to provide hot water and clean energy to commercial buildings in Japan, the system reached a 90% efficiency level, providing users with energy and cost savings while limiting carbon emissions.3
Later, the Japanese energy conservation specialist returned to Ceres Power, entering into a partnership with the company to develop a specialist maintenance team network for its combined heat and power (CHP) product. The product, which has been successfully launched into the Japanese market, is supported by Ceres Power’s solid oxide fuel cell technology.4
In addition to commercial power applications, SteelCell is also used in the transport sector as part of an electric vehicle (EV) range extender system developed by Ceres and Weichai Power as well as in data centers. Together with Cummins Inc, Ceres Power was able to achieve electrical efficiency exceeding 60% using SteelCell as measured in a US Department of Energy program.5
As Ceres continues to expand its SteelCell business, the company has also delved into the electrolyzer space. Ceres committed itself to invest £100 million in the development of electrolysis technology. Because of the similarities between solid oxide fuel cells and solid oxide electrolysis cells, Ceres planned to produce both technologies using the same facilities and resources.6
Through its SteelCell and electrolysis innovations, Ceres Power has managed to emerge as a strong fiscal performer among hydrogen fuel cell stocks.
By the numbers
In 2021, Ceres Power increased its year-on-year annual revenue by 44% to £31.7 million. The company raised its annual gross profit from £14.6 million in 2020 to £20.3 million in 2021, while also increasing its cash and investments from £110.2 million in 2020 to £250 million in 2021 largely thanks to the £179 million raised through fundraising efforts for its electrolysis division.7
Among those developments that contributed to Ceres Power’s fiscal success were the installation of 100 small scale fuel cell power plants in Germany, the launch of a 30KW stationary power system development program with Weichai, and the development of a solid oxide electrolyser 1MW-scale demonstrator; the first of its kind.8 While emphatic, these were not the only strategic advancements that enabled Ceres Power to drive its business growth in the past year.
Partners in growth
As the first quarter of 2021 drew to a close, Doosan Fuel Cell — a division of Ceres Power — signed a memorandum of understanding with Korea Shipbuilding & Offshore Engineering, a division of Hyundai Heavy Industries. The agreement involved the development of a solid oxide fuel cell system to supply ships with clean energy. This partnership enabled Ceres Power to enter the shipping industry.9
Ceres Power later signed joint development and equity agreements with RFC Power limited, a long-duration energy storage company that has been working on developing the world’s lowest cost flow battery. A hybrid between a battery and a fuel cell, RFC is looking to leverage Ceres Power’s electrochemistry and device engineering capabilities in the development of this technology.10
As a result of this deal, Ceres Power will acquire an 8.4% stake in RFC. Should RFC’s technology be found to be compatible with Ceres’ strategy, the company will have a 12-month option to acquire the remainder of RFC’s shares for a price of up to £25 million.11
Going into 2022, the company delved into the fuel cell testing space by signing a multi-million-pound partnership agreement with Horiba Mira, an automotive engineering and testing company. This deal is aimed at assisting Ceres Power to expand the delivery of UK hydrogen and fuel cell technologies to international markets.12
Together, the companies will develop a new testing facility in the West Midlands of the UK that will enable Ceres Power to upscale its product testing as it seeks to expand its international market reach. In addition to becoming Ceres Power’s electrolysis test partner, Horiba Mira has been chosen to supply the company with next-generation test stands.13
In the context of the Russia-Ukraine conflict and its impact on the growing global interest in renewable energy, Ceres Power decided to enter into a joint venture with Weichai Power and Bosch; the company’s two largest shareholders. As per the agreement, the companies will construct a solid oxide fuel cell manufacturing plant in China.14
Aimed at penetrating China’s fuel cell market, the joint venture will see Ceres Power earn royalties from the sale of products.15
Ceres Power’s innovations in the fuel cell and electrochemical markets have not gone unnoticed. As a result of the company’s international expansion with partners such as Bosch, Doosan, Miura, and Weichai, Ceres Power earned the 2021 Queen’s Award for Enterprise recognizing its excellence in international trade.16
In its quest to become one of the leading green hydrogen stocks on the market, Ceres Power earned funding for two major ship emission projects as part of the Clean Maritime Demonstration Competition run by the UK Department for Transport.17 The projects will involve Ceres Power determining how to integrate its fuel cells into a ship’s existing power infrastructure in order to optimize functionality and reduce emissions.18
Following its financial success over the past year, Ceres Power has decided to boost its research and development activities in an attempt to capitalize on emerging opportunities presented by the fuel cell and hydrogen markets. In 2021, the company injected £34.9 million into its R&D efforts, a 34% rise from 2020.19
With the global demand for renewable energy continuing on an upward trend, you may want to explore investment opportunities in this industry. While determining the best hydrogen stocks is a challenging task, it may be worth exploring a hydrogen stock ETF as a means of diversifying your investment capital across a focused portfolio of hydrogen related companies. Remember that diversification does not assure profit, nor does it protect against a loss.. If a hydro ETF sounds like something you may be interested in, consider investing in the HDRO green hydrogen ETF offered by Defiance ETFs.
As of this writing the following stocks mentioned are current holding of Defiance’s ETF, HDRO: Ceres Power Hldgs, Doosan Fuel Cell
For current performance and holdings, please visit defianceetfs.com/HDRO
2 “Ceres Power: spotlight on a hydrogen heavyweight”, 14 March 2022, https://www.thearmchairtrader.com/ceres-power-hydrogen-share-price-forecast/
3 “Miura Co Launches Fuel Cell Product in Japan With Ceres Power Technology”, 20 June 2019, https://fuelcellsworks.com/news/miura-co-launches-fuel-cell-product-in-japan-with-ceres-power-technology/
4 “Miura in Partnership with Ceres to Establish Maintenance Network for its Solid Oxide Fuel Cell Product”, 23 March 2022, https://fuelcellsworks.com/news/miura-in-partnership-with-ceres-power-to-establish-maintenance-network-for-its-solid-oxide-fuel-cell-product/
5 “TECHNOLOGY Applications”, accessed 12 April 2022, https://www.ceres.tech/technology/applications-bm/
6 “Ceres Power looks to grow electrolyser division”, 30 September 2021, https://pemedianetwork.com/hydrogen-economist/articles/green-hydrogen/2021/ceres-power-looks-to-grow-electrolyser-division
7 “FULL YEAR RESULTS For the year ended 31 December 2021”, 17 March 2022, https://wp-ceres-2020.s3.eu-west-2.amazonaws.com/media/2022/03/Ceres-Power-Holdings-plc_Prelims-Presentation_FOR-PRINTING-1.pdf
8 “Significant Progress Drives Growth And Investment For Future Scale”, 18 March 2022, https://www.hellenicshippingnews.com/significant-progress-drives-growth-and-investment-for-future-scale/
9 “Doosan Announces Joint Development With Hyundai Heavy Industries For An Sofc Marine System”, 18 March 2021, https://www.ceres.tech/news/doosan-announces-joint-development-with-hyundai-heavy-industries-for-an-sofc-marine-system/
10 “Strategic collaboration with RFC Power for long-duration energy storage”, 11 November 2021, https://www.ceres.tech/news/strategic-collaboration-with-rfc-power-for-long-duration-energy-storage/
11 “Ceres Power Holdings and RFC Power Limited partner on hydrogen based storage”, 15 November 2021, https://energynews.biz/ceres-power-holdings-and-rfc-power-limited-partner-on-hydrogen-based-storage/
12 “Ceres and HORIBA MIRA partner to accelerate hydrogen and fuel cell technologies”, 08 March 2022, https://www.ceres.tech/news/ceres-and-horiba-mira-partner-to-accelerate-hydrogen-and-fuel-cell-technologies/
13 “Ceres Power shares rise 8% after signs testing systems deal”, 08 March 2022, https://www.morningstar.co.uk/uk/news/AN_1646740486693644800/ceres-power-shares-rise-8-after-signs-testing-systems-deal.aspx
14 “Joint ventures power progress for Ceres”, 17 March 2022, https://www.investorschronicle.co.uk/news/2022/03/17/joint-ventures-power-progress-for-ceres/
15 “Ceres Power soars on partnership with Bosch and Weichai to target whole Chinese fuel cell market”, 09 February 2022, https://www.proactiveinvestors.co.uk/companies/news/973571/ceres-power-soars-on-partnership-with-bosch-and-weichai-to-target-whole-chinese-fuel-cell-market-973571.html
16 “Ceres awarded Queen’s Award for Enterprise 2021”, 29 April 2021, https://www.ceres.tech/news/ceres-awarded-queens-award-for-enterprise-2021/
17 “Ceres Power Awarded Funding for two Ship Emission Projects, Solid Oxide Fuel Cell (SOFC) Technology in Megawatt-class Cruise Ship Applications”, 16 September 2021, https://hydrogen-central.com/ceres-power-ship-emission-projects-solid-oxide-fuel-cell-megawatt-class-cruise-ship/
18 “Ceres Awarded UK Funding to Add Fuel Cell Technology in Two Maritime Projects”, 16 September 2021, https://fuelcellsworks.com/news/ceres-awarded-uk-funding-to-add-fuel-cell-technology-in-two-maritime-projects/
19 “Ceres Power sets sights on ‘big opportunity’ in hydrogen as revenues climb”, 17 March 2022, https://www.proactiveinvestors.co.uk/companies/news/977057/ceres-power-sets-sights-on-big-opportunity-in-hydrogen-as-revenues-climb-977057.html