Q&A - AFC Energy: Developing the hydrogen supply chain

AFC Energy is a UK based hydrogen company working across the hydrogen supply chain. The company provides a range of hydrogen fuel cells and hydrogen carrier fuel conversion technologies primarily focusing on off-grid power solutions where diesel power generation holds the most prominence. AFC has pinpointed construction, electric vehicle charging, shipping and data centres as its major focus areas, with a particular focus on the UK and European markets.

In March [2023] AFC made a significant step in its long term strategy in the launch of its new ammonia cracker technology platform. The cracker offers companies a scalable solution to support both small- and large-scale hydrogen developers to support the growing need for low cost, on-site hydrogen production.

inspiratia speaks to Adam Bond, CEO of AFC about the development of a hydrogen supply chain, which jurisdictions offer the most opportunity for companies in the space and the impact hydrogen will have on hard to abate sectors move to decarbonise.

Adam Bond, CEO of AFC Energy

What is AFC Energy?

AFC Energy is a hydrogen solutions business with a dual focus: One side of the business focuses on developing hydrogen fuel cell power generator technology to replace diesel generators, which as a global market is $25bn

(£19.5bn €22.9bn) and still growing.

The other side of our business is developing technology to produce hydrogen as a fuel, utilising hydrogen carrier fuels such as ammonia. We have a state-of-the-art ammonia cracking technology, which converts the energy-dense ammonia into fuel cell ready hydrogen. This technology opens up opportunities to decarbonise hard-to-abate sectors such as maritime, aviation and rail.

What sectors have the best applicability for decarbonisation through hydrogen?

It is increasingly accepted that hydrogen will have a large role to play in supporting the decarbonisation of hard-to-abate sectors. One of the main challenges is the proximity of the power demand to the fuel supply. Because hydrogen isn't massively energy dense, storing it in ships, for example, is difficult. One of the ways the industry is trying to address that is by using so-called hydrogen carrier fuels, such as ammonia, where the hydrogen in the form of ammonia gets stored in a ship's hold. In turn, our cracker technology can convert that ammonia onboard the ship and provide hydrogen as and when it is needed for powering the ship. Zero carbon propulsion is either provided by onboard fuel cells or a hydrogen combustion engine.

As for specific industries for fuel cell power generation – it's really any industry that uses diesel generation currently.

Construction is a big one, and mining, which we know is critical in delivering the energy transition, also relies highly on diesel generation. The more you can make that resource extraction process greener, the better. Data centres, which use diesel generators for back-up power, are another focus area for consideration – data centres currently account for 2-3% of global power demand, and it's only getting bigger. Another interesting one is the TV and film production industry, where we've recently been working with a few groups on decarbonising film sets.

What jurisdictions do you see as having the biggest growth potential within the hydrogen sector? And where is AFC Energy's main focus?

In terms of the fuel cell, the market opportunity is very broad due to its primary focus on displacement of the diesel generator market. Additionally, with energy demand only increasing, the potential of off-grid solutions also increases.

Our target markets are construction, EV charging, events, and anything that requires consistent off-grid power.

For our cracker technology, our geographical target markets are Europe and Asia, the main reason being there is a surplus of demand for hydrogen over supply which is expected to in part be met by ammonia imports. Ammonia supply comes from places like Australia and the Middle East, with the cracking process (converting ammonia back into hydrogen fuel) happening in Europe, Japan, and Korea. Within the European market, mainly due to the war in Ukraine, the bloc has sought to wean itself off Russian gas; hydrogen has been identified as an alternative fuel, which has therefore extended the opportunities for our ammonia cracking technology.

AFC Energy has partnered up with several construction firms to replace diesel generation on their sites. What is the scalability of hydrogen within the sector? Can hydrogen generation fully replace diesel generation?

Firstly, can hydrogen replace diesel generation? Yes 100%! No doubt in my mind. There will be applications where the fuel cell or hydrogen is part of a portfolio approach to decarbonising construction sites, we're not saying that hydrogen is the only means of decarbonising construction. But in built-up urban areas, where there is no space for onsite renewable generation, the need for our compact off-grid fuel cell generators increases.

The transition to hydrogen will take time due to the established investment in diesel generators. Most of these generators have a life of several years, making the opportunity to drive decarbonisation high in the near future. In October 2022, the Construction Leadership Council published a consultation document seeking 500 of the UK's construction contractors to sign up for a diesel ban on sites by the end of 2025. While that is fairly aspirational, the message is that it's likely to be a much sooner transition than perhaps people think. We're very keen and well positioned to be leaders in this space.

Affordability is touted as one of the main selling points of AFC Energy. However, with hydrogen still an emerging technology, what needs to happen to bring down overall costs to support its market penetration?

Currently, the cost of hydrogen differs significantly from country to country. For example, in the UK the cost is much higher than in Germany, with some places in Europe up to a quarter of the UK price.

When considering the cost of power from hydrogen, the fuel is the predominant driver, not the fuel cell itself. From a CapEx perspective, the fuel cell will be more expensive than a diesel generator for a little while, but you've got a longer period to amortise that. Unlike a diesel generator, which will break down with some regularity because it's mechanical, a fuel cell has very few moving parts so potential for a much longer life.

We are lobbying governments to support the drive down in costs for hydrogen. The UK needs more investment, as underinvestment in the UK runs the risk of being left behind Europe and North America which are investing now in building their hydrogen economy.

Is the development of the hydrogen transmission infrastructure on the onus of governments or private companies?

It's far too easy for companies to say it's on the government's shoulders. It needs to be the industry driving this change and the government setting the policy agenda and providing short-term subsidies to facilitate its development.

For us, one of the reasons we look at ammonia cracking is because it is a way of transporting hydrogen cost-effectively through existing supply chains rather than creating new ones.

In 2021 AFC Energy partnered with ABB to further the advancement of fuel cell technology integration. What is the progress of this partnership, and what role does hydrogen have in powering data centre systems?

Our relationship with ABB started in 2020. Its initial focus was providing charging for commercial electric vehicles, and then grew to also look at data centres. As one of the leading providers of equipment and components to the data centre market, ABB were looking for complementary technologies that supported the decarbonisation of their data centre offering.

For data centres' back-up power, you need systems 400kW and above, so we are developing technology with higher power output to gain entry into the data centre market. We are currently working on a modular fuel cell system that could be configured to 1-2MW, and are looking to deliver this system later this year.

So while our target market today is more diesel generator replacement in construction, temporary power and EV charging, our plan is to expand into the data centre market.