10th Mar 2015 08:45
LONDON (Alliance News) - AFC Energy PLC shares rose on Tuesday after it said it has signed a formal project development agreement with two South Korean companies to work together to deliver an initial 50 megawatts of fuel cell generation capacity, which will generate USD1 billion in revenue over 10 years.
AFC Energy shares shot up by 35% on the announcement to 12.00 pence per share Tuesday morning.
The industrial fuel cell power company said it has signed the agreement with Samyoung Corp and Changshin Chemcial Co for the development of a project in Daesun, South Korea.
The company said the 50 megawatts of power capacity will be delivered over two phases. The first phase of 5 megawatts will be operational by the end of 2016, with the second phase of 45 megawatts becoming operational by the end of 2019.
"Assuming a gross output of 50 megawatts from the fuel cell park, the joint venture is expected to generate revenues from the sale of electricity and Renewable Energy Certificates over a 10 year period of just under USD1 billion," said AFC Energy.
Under the agreement, AFC will hold a 40% stake in the project, with Samyoung holding a 45% stake and Changshin holding the remaining 15% interest.
"The project reflects the start of a partnership between the three companies, which is expected to see multiple projects developed beyond this first project," said AFC Energy.
The exact details of the investment each party will make in support of the joint venture is still subject to negotiation but it is expected that each party will make an upfront contribution, either in cash or in kind. The parties also intend to secure project finance for the joint venture.
All three companies will now begin developing a feasibility study for the project to establish the basis of design and economic analysis in support of a more detailed project engineering assessment.
It is proposed that AFC Energy will sell its alkaline fuel cell equipment into the joint venture along with providing technical and operational advice to the joint venture participants.
By Joshua Warner; [email protected]; @JoshAlliance
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