Centrica has signed a major deal with Ceres Power that will help make fuel cell-based micro-combined heat and power (m-CHP) units a reality for households in the UK.
The two companies have signed a development, supply and distribution agreement covering Ceres Power’s wall-mountable fuel cell CHP unit. Centrica will also take a 10 per cent stake in Ceres through a share purchase equivalent to a cash investment of around £20 million.
This latest agreement follows closely on an announcement made by Ceramic Fuel Cells Limited that it had reached a major milestone in the commercialisation of its m-CHP product for the residential market in Europe.
As part of the agreement Centrica has placed a forward order for a minimum of 37 500 CHP units from Ceres over a four-year period, and will commit £5 million of funding between now and 2011 to support development and testing of Ceres’ technology.
It is the first forward order that Ceres has won. The agreement gives Centrica exclusivity over Ceres’ CHP product in the UK residential market.
Ceres’ fuel cell powered boilers generate heat and electricity for the home and are designed to overcome the inefficiencies associated with large-scale centralised generation. The technology could cut household carbon emission by up to 50 per cent, according to Centrica.
Over the initial phase of the agreement, Ceres will complete the value engineering of the CHP product and, together with British Gas, conduct commercial in- field trials with residential customers and commence initial sales. British Gas is committing its operational resources to support the roll-out of the product including training, installation, servicing and logistics.
Centrica will make an initial payment of £1 million following shareholder approval from Ceres. The remaining £4 million of investment will be made on achievement of certain technical milestones over the initial phase.
British Gas has also placed a forward order to purchase in aggregate a minimum of 37 500 CHP units on an escalating basis over a four-year period. This order is conditional upon the successful completion of the initial phase and on the companies agreeing standard commercial terms including the price for supply of the CHP Products.
Both Ceres and British Gas have agreed to promote the Ceres CHP Product with the intention of achieving substantially greater levels of annual sales over the four-year period.
Approximately 1.5 million boilers are installed each year in the UK and it is forecast by industry and governmental bodies that residential CHP could take 30 per cent of this market by 2015.
