While other electrolyser manufacturers plan massive factory expansions, Ceres takes low-risk licensing option in Taiwan

Ceres, a UK-based green hydrogen technology developer, saw a boost of more than 35% to its share price yesterday after announcing it had signed a licensing agreement for its solid-oxide stacks — for use in both electrolysers and fuel cells — with Taiwan-headquartered Delta Electronics.

This deal will see Delta integrate the stack technology into its own products, which it will begin to manufacture at its plant in Tainan City from 2026.

Ceres’ solid-oxide technology can be used in fuel cells that run on hydrogen or methane to generate power and heat at 60% efficiency, rising to 85% efficiency with a heat recovery system.

Meanwhile, when the stacks are used for electrolysis, the developer has boasted a 25% increase in efficiency compared to alkaline or PEM electrolysers — although the solid-oxide electrolyser has to be integrated with an industrial process that generates waste heat to reach that number.

In addition to royalties from sales of its technology to Delta’s customers, Ceres will see £43m ($54.6m) in revenue over the next three years — half of which will be recognised in 2024, with the remaining £21.5m split between 2025 and 2026.

Ceres had previously licensed its stack technology, albeit only for use in fuel cells, to Bosch and Doosan.

While the technology developer’s 1MW solid-oxide electrolysers are yet to complete testing by industrial partners AVL and Shell, with a third trial with Linde due to start this year, a spokesperson for the company told Hydrogen Insight that “Delta’s target is to begin production in 2026 so it is very close to being introduced to the commercial market”.

“Today’s announcement is a further demonstration of the quality of Ceres’ technology and of the benefits of the licensing business model,” the spokesperson said.

Although Ceres reported a loss of £23.8m in the first half of 2023 — and is yet to release its second-half results — its licensing approach cuts out the risk being taken on by rival manufacturers of building expensive new gigafactories.

For example, US-based Plug Power had invested $125m into building a 2.5GW electrolyser/fuel-cell factory in upstate New York, which opened last year. And with a lack of orders due to the unexpected delays to the US hydrogen tax credits, the company has been left short on revenue and seen its share price collapse.

Ceres is not the only electrolyser maker to explore licensing as a less risky approach to securing revenue. French manufacturer McPhy granted an exclusive license to Mumbai-based EPC firm Larsen & Toubro to produce its pressurised alkaline electrolysers at a gigawatt-scale factory in India for the domestic market, as well as “other selected geographies”.

However, licensing is not entirely risk-free, since future revenue from royalties will ultimately depend on how successful Ceres’ licensees are at bringing the electrolysers or fuel cells to market.