In a rare instance of European hydrogen technology being utilised in China, a Chinese state-owned conglomerate has signed a licensing agreement that will allow it to manufacture solid-oxide fuel cells (SOFCs) designed by UK-based Ceres Power.

Engine manufacturer Weichai Power — which is Ceres’ largest shareholder, with a stake of about 19.5% — plans to build a manufacturing facility at an undisclosed location to produce fuel cells and stacks using Ceres’ technology.

Weichai will primarily build the stacks for use in its stationary power systems in China.

The new contract signed yesterday, the value of which remains undisclosed, builds on the existing partnership between the two companies, which signed a systems licence agreement in 2018.

Ceres’ systems licence agreements only allows its partners to use Ceres’ cells or stacks in full electrolyser or fuel-cell systems, while its manufacturing licences allow Ceres’ partners to manufacture products using its technology, which in this case seems to be components supplied by the UK company.

“Weichai intends to establish a manufacturing facility to produce cells and stacks for the stationary power markets supported by key components supplied from Ceres, targeting power for AI data centres, commercial buildings and industrial applications. SOFC systems will complement Weichai’s existing product portfolio for power generation, including gas engines and powertrains.”

While alkaline and PEM fuel cells need hydrogen to produce electricity, SOFCs can also run on natural gas or biogas, making them more attractive for power production, as natural gas is a lot cheaper and easier to access than H2.

And unlike solid-oxide electrolysers, they do not need external heat sources to operate at maximum efficiency, they actually produce heat during operation, and may need active cooling to maintain optimum operating temperatures.

The latest move expands Ceres’ global manufacturing licence partners to four, adding to existing deals with Delta Electronics in Taiwan (for both fuel cells and electrolysers, Denso in Japan (for electrolysers only) and Doosan Fuel Cell in South Korea (for fuel cells only).

A significant part of Ceres’ business model is to licence its technology to other manufacturers, rather than building multiple expensive factories itself.
“We are excited to extend our relationship with Weichai with a manufacturing licence to produce Ceres-based products in China, further expanding the ecosystem for our technology,” said Ceres CEO Phil Caldwell.

“Our relationship with Weichai, a leading supplier of conventional gas engines in China and internationally, represents both an endorsement of Ceres technology and a significant business opportunity for both companies.

“There is now an acute need for power systems to service AI data centres, industrial power needs, grid reinforcement and commercial buildings. Adding Ceres’ high efficiency SOFC that can be deployed where the power is needed at pace represents a multi-billion market opportunity and continues our mission to establish Ceres as the industry standard solid oxide technology.”

The news led London-listed Ceres' share price to rise by more than 20% to $3.87 in early trading yesterday, before it fell to $3.72 at market close.

The few European hydrogen companies with manufacturing facilities in China include: Belgium’s John Cockerill, which manufactures its pressurised alkaline electrolysers via a 100%-owned Chinese subsidiary (that had previously been a joint venture with Suzhou Jingli); Germany’s Linde, which has a joint venture with Dalian Bingshan Group to manufacture hydrogen refuelling stations; and Norway’s Hexagon Purus, which has a joint venture with CIMC Enric to produce high-pressure hydrogen cylinders.

Shandong-headquartered Weichai owns majority holdings in various European companies such as German materials handling equipment manufacturer Kion Group AG and Italian shipbuilding company Ferretti Group. The Chinese company also owns French marine and industrial diesel engine manufacturer Baudouin.