On charge: Ceres Power’s cells can be used in electric car charging points
Easter is supposed to be a time of optimism but many businesses are suffering from Brexitisis – a condition caused by prolonged exposure to the hapless wrangling between Westminster and the EU.
One notable exception to this corporate angst is Ceres Power, a fast-growing fuel cell firm based in West Sussex.
Ceres boss Phil Caldwellboss Phil Caldwell is not waiting for Government Ministers to reach trade deals with other countries. He is already working with some of the biggest companies in China, Japan and the US, as well as Bosch in Germany.
The shares are £1.75 and should rise in value as the business develops and gains news customers. Caldwell is extremely ambitious too. Today, Ceres is valued on the stock market at £265million but Caldwell is determined to take that valuation to more than £1billion over the next few years.
Caldwell’s belief in his company’s potential is not just a pipe-dream. Fuel cells have been around for years but they have struggled to become accepted because many use expensive materials, such as platinum, and they need hydrogen to function.
Ceres Power fuel cells are different because they are made from ordinary steel and they can use hydrogen or natural gas to generate electricity and heat. That makes them more cost-effective and practical than conventional fuel cells but equally good at doing the job.
And that job is increasingly important. Normally, fuel – such as oil, gas or coal – is burned to produce energy and that energy is distributed from power stations via the grid. Fuel cells do not involve combustion, so they avoid greenhouse gas emissions and they generate power on site, so they can be up to twice as efficient as the grid.
As governments become increasingly exercised about climate change and pollution, fuel cells are increasingly in demand.
Ceres’ particular brand of fuel cell was invented by the late Professor Brian Steele, a pioneer in the field, working at Imperial College in London. The group’s technology has improved steadily over the years and today its SteelCell is recognised as one of the most advanced fuel cell systems in the world.
When Caldwell became chief executive in 2013, Ceres was focused on the domestic market, trying to design, make and sell products for the home. The approach was laborious, time-consuming and gobbled up cash so Caldwell switched strategy. He focused on the commercial market and looked to develop partnerships with other businesses or license the Ceres technology to them.
This has worked wonders. Bosch is using Ceres technology to develop fuel cells that can be used in local power stations, factories, data centres and charge points for electric vehicles.
Last year too, Caldwell signed an agreement with Weichai Power, one of the largest bus and truck companies in China. The firm intends to put Ceres SteelCells into hybrid electric buses so they can travel up to 375 miles without needing to recharge, compared to around 120 miles on batteries alone.
German company Bosch is using Ceres technology to develop fuel cells that can be used in local power stations, factories, data centres and charge points for electric vehicles
A prototype is being launched later this year and the technology should be rolled out across Weichai’s fleet next year and beyond. Further ahead, Weichai and others are likely to use Ceres cells in trucks and lorries too. Politicians around the world are determined to phase out combustion-engine vehicles and fuel cells are ideally suited to long distance travel.
Both Bosch and Weichai have made serious financial commitments to Ceres, providing tens of millions of pounds to the business through a combination of share purchases, licensing deals and joint ventures.
Caldwell has also signed agreements with carmakers Nissan and Honda and Cummins, an American engine manufacturer with operations around the world and a stock market valuation of $26billion (£20billion). New deals are expected to emerge this year, further endorsement of Ceres’ world-beating technology.
In 2016, Ceres delivered revenues of £1.7million. By last year, the figure had increased to £6.3million and for the 12 months to June, brokers expect a more than doubling of revenues to £14million, rising to £23million by 2021.
The company is loss-making at the moment, as it invests in research, development and people. Employee numbers have doubled to 200 in recent years, including scores of engineers and scientists with PhDs. Caldwell is also building a state-of-the-art factory in Surrey to show customers how they can create Ceres SteelCells, once they have signed licensing agreements with the company.
Midas verdict: Fuel cells are likely to play a growing role in energy production and Ceres is at the forefront of the industry. An impressive UK technology business exporting its know-how around the world, the company should continue to thrive. At £1.75, the shares are a buy.