The Ceres Power agreement with BGE builds on the existing Ceres Power natural gas fuel cell CHP program with British Gas, and will use the same core fuel cell technology platform, allowing Ceres Power to exploit economies of scale. The Ceres Power innovative intermediate-temperature solid oxide fuel cell (SOFC) runs at 500–600°C, rather than the 800–1000°C of conventional SOFCs, which offers several advantages in terms of the materials employed in the fuel cell stack.
Ceres Power and BGE aim to establish fuel cell CHP as the low-carbon residential energy system of choice for Ireland. There are more than 2.5 million homes in the Republic of Ireland and Northern Ireland, and Bord Gáis Energy is the leading Irish natural gas and electricity supplier. Bord Gáis also provides appliance servicing of products to customers focusing on boiler service and repair.
Under the agreement, BGE will pay Ceres Power £1.6 million (US$2.7 million) in milestone payments during the initial phase of development and trialing of the Ceres Power fuel cell CHP product, including an upfront payment of £1m. In addition, BGE will place a call-off order for a total of 16 000 fuel cell CHP products over a four-year period for the Irish market, conditional on successful completion of the initial phase and agreement of standard commercial terms, including price, for the supply of fuel cell CHP products.
This first international contract for Ceres Power outside the UK mainland, forms part of plans for Ceres Power to expand into Europe, initially targeting adjacent growth markets. Subject to BGE meeting minimum order volumes, Ceres Power has agreed to sell the fuel cell CHP product to BGE for the Irish market on an exclusive basis for a four-year period, anticipated to begin in early 2012.
Ceres Power and BGE intend to maximize sales of the fuel cell residential CHP product by addressing both the installed base of existing homes that would benefit from an upgrade, as well as the boiler replacement market.