Ceramic Fuel Cells Limited Continued Progress in Germany

RNS Number : 8259C

Ceramic Fuel Cells Limited Continued Progress in Germany 08 May 2012

Tuesday 8 May 2012

   --    Subsidy for early BlueGen units in the State of Saarland 
   --    BlueGen Unit in German Virtual Power Plant project 
   --    BlueGen features at Hannover Fair 

Ceramic Fuel Cells Limited (AIM / ASX: CFU) - a leading developer of high efficiency and low emission electricity generation products for homes and other buildings - is pleased to announce that its BlueGen gas-to-electricity units continue to generate strong interest in the German market.

Premier of the State of Saarland launches market introduction program

In the beginning of May 2012, Ms Annegret Kramp-Karrenbauer, the premier of the German State of Saarland, officially announced that the State will subsidise the cost of early BlueGen units. Under the "Climate Plus Saar" program, the State Government will pay 30 percent of the total cost of BlueGen units, including installation, for up to ten BlueGen units installed in Saarland.

Ms Kramp-Karrenbauer made the announcement when putting the State's first BlueGen unit into operation in the State capital of Saarbrucken.

This subsidy from the Saarland State Government is in addition to the subsidy from the German Federal Government, of 1,800 Euros per unit, and the existing feed in tariff regime, under which BlueGen customers get paid for excess electricity generated by BlueGen and exported to the local electricity grid.

The BlueGen product uses ceramic fuel cells to turn natural gas into electricity and heat for hot water, for homes, schools, offices and small commercial buildings. Surplus electricity can be sold back to the grid or used in supplementary applications such as charging electric cars. BlueGen units have the highest electrical efficiency of any small scale generating technology in the world, reducing energy bills and cutting carbon emissions.

Ceramic Fuel Cells and its German distribution partner sanevo are continuing to deliver and install sanevo's first order of 100 BlueGen units, as well as building the sales pipeline for future orders.

BlueGen Unit in German Virtual Power Plant

Ceramic Fuel Cells Limited is pleased to announce that one of its BlueGen gas-to-electricity units is operating as part of a Virtual Power Plant project in Germany. The BlueGen unit is operating in the Harz region, south of Hannover as part of the "RegModHarz" project, to develop and operate a Virtual Power Plant combining renewable energy and controllable distributed generation (creating electricity at the point of use).

A Virtual Power Plant is a cluster of distributed electricity generation units, controlled and operated by a central entity using integrated software systems. A Virtual Power Plant allows power generation to be modulated up or down to meet peak loads and balance intermittent power from wind or solar, with higher efficiency and more flexibility than large centralised power stations.

As the share of renewable electricity increases, one of the challenges for power grid operators is to match intermittent electricity supply with the local demand for power. In the Harz region of Germany about one-third of electricity used is produced from renewable sources. Controllable distributed generation, like BlueGen, can help balance this renewable generation. Each BlueGen unit is controlled over the internet and the power output can be turned up or down remotely, to help balance supply and demand of electricity. The RegModHarz project is funded by the German Federal Ministry for the Environment, Nature Conservation and Reactor Safety.

BlueGen featured at Germany's largest energy fair

BlueGen's involvement in the RegModHarz project was recently announced at the Hannover Fair, one of Germany's largest and most important energy industry events.

This year more than 190,000 visitors attended the fair, the highest number since 2008. The fair featured about 5,000 exhibitors from 69 countries.

Ceramic Fuel Cells exhibited the BlueGen product as part of the German Fuel Cell Initiative ("Initiative Brennstoffzelle", or IBZ). The IBZ is a consortium of leading German energy companies, fuel cell manufacturers, the German Energy Agency and the National Organisation for Hydrogen and Fuel Cell Technology (NOW).

The compact BlueGen unit generated much interest among prospective customers and sales and development partners as well as State and Federal policy makers and media.

Pictures from the Hannover Fair are available at www.cfcl.com.au/CFCL_Events.

ENDS

More information:

-- RegModHarz project www.regmodharz.de/ (in German)

-- IBZ www.initiative-brennstoffzelle.de/ (in German)

-- Hannover Fair www.hannovermesse.de/home (German and English)

-- BlueGen www.bluegen.info (German and English)

-- Sanevo Blue Energy www.sanevo.de/bluegen/ (in German)

Germany Introduces Capital Subsidy formCHP Product

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TIDMCFU RNS Number : 6744A Ceramic Fuel Cells Limited 03 April 2012 Tuesday 3 April 2012 Germany Introduces Capital Subsidy for mCHP Products Ceramic Fuel Cells Limited (AIM / ASX: CFU) - a leading developer of high efficiency and low emission electricity generation products for homes and other buildings - is pleased to announce that the German Federal Government has introduced a capital subsidy for micro power and heating (mCHP) products, including Ceramic Fuel Cells' products. From 1 April 2012, subsidies are available for eligible mCHP products which generate up to 20 kilowatts of electricity and meet demanding performance requirements, including a total efficiency of at least 85 percent. Ceramic Fuel Cells' BlueGen and integrated mCHP products will receive a subsidy of 1,800 Euros per unit. The subsidy is available to the end customer who installs the mCHP product. The subsidy program is administered by the Federal Office of Economics and Export Control (BAFA), which is part of the Federal Ministry of Economics and Technology (BMWi). This program is in addition to the existing German CHP Law, which requires that 25 percent of Germany's electricity generation comes from combined heat and power (small and large scale) by 2020. Ceramic Fuel Cells' Managing Director Brendan Dow said: "We welcome this policy to help the deployment of mCHP products. While the subsidy amount is modest, Germany continues to be a leading market for our clean energy products. We are actively discussing additional market introduction programs with State and Federal Governments in Germany. We look forward to these ongoing consultations to help achieve Germany's goal of a significant increase in high efficiency power and heat generation." Sales & Marketing Momentum Continues Ceramic Fuel Cells is also pleased to announce that its German sales partner sanevo blue energy has received its first order for a BlueGen unit in Austria, as well as a follow-on order in Switzerland. As part of its first order for 100 BlueGens, sanevo blue energy has sold a BlueGen unit to its Austrian distribution partner and two units to the Swiss regional utility Cosvegaz near Lausanne. Approximately 30 of sanevo blue energy's sales partners are now offering BlueGen to customers across Germany. Ceramic Fuel Cells has now received orders for 619 products (355 BlueGen products and 264 integrated mCHP units) from customers in ten global markets. Ceramic Fuel Cells continues to increase its sales and marketing activities in many global markets, including at the following industry events: E-world, Germany, February 2012 Ceramic Fuel Cells displayed a demonstration BlueGen unit at E-world 2012, held in Essen, Germany. E-world is the largest Specialist Energy trade fair in Germany, with more than 20,000 visitors. The BlueGen demonstration unit was retrofitted with a window which displayed the Gennex module, the heart of the BlueGen product. FC Expo, Japan, March 2012 With more than 300 exhibitors and 120,000 industry professionals, FC Expo is the world's largest business to business exhibition and conference on fuel cells. As part of the technical conference, Ceramic Fuel Cells' Chief Technology Officer Dr. Karl Foger gave a presentation on the Company's technology and progress in Europe. Green Cities, Australia, March 2012 Ceramic Fuel Cells exhibited BlueGen for the first time at Green Cities in Sydney, the largest green buildingconference in Asia-Pacific. During this exhibition visitors included small and large construction companies, local councils, leading architects and sustainability consultants/engineers. Ecobuild, UK, March 2012 Ceramic Fuel Cells showcased a BlueGen unit at the E.ON stand at Ecobuild in London, with many visitors showing considerable interest in BlueGen's role as the backbone of a community energy scheme. As part of the conference Mr Paddy Thompson, General Manager Business Development, delivered a presentation on Power led applications for domestic, commercial or community installations. A copy of this presentation is available at www.cfcl.com.au. Cleantech Forum, USA, March 2012 Ceramic Fuel Cells participated in the 10(th) annual Cleantech Forum as part of an Australian delegation, covering the themes of strategic partnerships across several industries including; utilities, energy efficiency and smart grids. BlueGen was included in these discussions as a component of modernising the energy industry towards a low carbon future. H2FC 2012, UK, March 2012 The 8th international conference, Smart Hydrogen & Fuel Cell Power - Hydrogen & Fuel Cell Products for a Low Carbon Future, is the UK's premier showcase for the latest in hydrogen and fuel cell products. Ceramic Fuel Cells showcased a BlueGen at this exhibition in Birmingham. In April 2012 Ceramic Fuel Cells will again be exhibiting at the Hannover Messe in Germany. The Hannover Messe is one of the world's most important technology events, showcasing groundbreaking innovations at eight international flagship fairs. 2012 also sees the premiere of IndustrialGreenTec, the new trade fair for environmental technology. Ceramic Fuel Cells will be exhibiting within the Group Exhibit Hydrogen + Fuel Cells 2012 in Hall 27 alongside companies such as E.ON Ruhrgas, EWE and EnBW. The Company is confident that these sales and marketing initiatives will continue to raise the profile of the Company's world leading clean energy products, and maintain the momentum in sales growth. ENDS

German Distributor secures customers for first 100 BlueGens 23 January 2012

23 January 2012

German Distributor secures customers for first 100 BlueGens

First German utility marketing BlueGen to customers

Ceramic Fuel Cells (AIM / ASX: CFU) a leading developer of high efficiency and low emission power products for homes and other buildings, and its sales partner sanevo blue energy have successfully introduced BlueGen to the German market.

After only six weeks into sanevo's marketing campaign, sanevo has received customer commitments for its first order of 100 BlueGen units. Sanevo has received commitments from public energy utilities in six German states as well as from residential and commercial customers. The BlueGen units are expected to be delivered and installed over the next six months.

Sanevo's largest customer for BlueGen is Stadtwerke Aalen, the local electricity and gas utility in the region of Aalen in Southern Germany. Working with sanevo, Stadtwerke Aalen is now the first German utility to actively promote and support sales of BlueGen to its customers, including by providing an incentive payment to early BlueGen customers.

Ceramic Fuel Cells' Managing Director Brendan Dow said: "This is a great start to our partnership with sanevo. There is huge interest in BlueGen from customers and utilities in Germany, plus supportive policy settings. We look forward to delivering on these first orders and securing larger follow on orders."

BlueGen converts natural gas into electricity and heat for hot water for homes and other buildings. BlueGen delivers an electrical efficiency of up to 60 percent - the highest in the world. When the heat from BlueGen is used to produce hot water, total efficiency increases to up to 85 percent.

The launch offer by sanevo includes the supply and installation of the BlueGen, plus complete integration with hot water systems, as well as a three or ten-year full-service contract, including maintenance, warranty and support services.

Ceramic Fuel Cells appointed sanevo as a BlueGen distributor in July last year, with an initial order for 100 BlueGen units. sanevo has a target minimum of 500 units for delivery in its second year and a target of 2,000 BlueGens over years three and four.

In Germany a number of federal states are contemplating market introduction programs for fuel-cell based micro CHP systems. The federal state of Saxony has announced a '1,000 Basement Programme' to provide financialincentives for installing fuel cell based micro CHP units. In late 2011 the state of North Rhine Westphalia also announced plans to increase the share of CHP electricity production to 25 percent, by providing funding of EUR 250 million over several years to support the deployment of local CHP systems.

Ceramic Fuel Cells appoints German Distributor Initial order for 100 BlueGen units

25 July 2011

Ceramic Fuel Cells Limited (AIM/ASX: CFU), the world's leading developer of high efficiency and low emission power products for homes, has received an initial order for 100 BlueGen units from sanevo Lizenz-GmbH & Co. KG. Ceramic Fuel Cells has also signed a distribution agreement with sanevo to market, sell, install and service BlueGen gas-to-electricity products in regions of Germany and Austria.

Sanevo has placed an initial order for 100 BlueGen units to be delivered in the first year, with a target minimum order of 500 units for delivery in the second year and a target of 2000 units over years three and four.

Provided sanevo orders these agreed minimum numbers of BlueGen units during 2012 to 2014, sanevo has exclusive rights to distribute BlueGen to commercial and residential customers in the German States of Baden-Wurttemberg and Bavaria, and in Austria. Ceramic Fuel Cells retains full rights to sell BlueGen units to utilities and energy service companies.

The order for 100 units is the largest order so far for the Company's BlueGen product, and builds upon the recent order for 25 units from Ausgrid in Australia. Ceramic Fuel Cells has now received orders for a total of 206 BlueGen units and up to 200 integrated mCHP products.

Based in Offenbach, near Frankfurt, sanevo has substantial experience in marketing and selling new technology power and heating products in Germany through more than 120 qualified sales partners.

Sanevo has partnered with SAG GmbH - one of Germany's largest independent service and system providers for electricity, gas, water and telecommunications products and networks - to provide installation and after sales service for BlueGen products. SAG has more than 8,300 staff in operations across Germany and Europe. With sales revenue of one billion euro, SAG has over 120 locations throughout Germany to provide a high level of service availability.

In April 2011 sanevo and SAG each purchased a BlueGen unit for their own buildings.

BlueGen uses ceramic fuel cells to turn natural gas into electricity and heat for hot water, with each unit capable of producing more than three times the electricity needed to power the average German home. (In Germany the average home consumes an estimated 4,100 kilowatt hours of electricity per year.)

Surplus electricity is sold back to the grid or used in supplementary applications such as charging an electric car. In addition, surplus heat is captured for domestic hot water use. BlueGen units generate electricity with the highest electrical efficiency of any small scale generating technology in the world, reducing energy bills and cutting carbon emissions.

BlueGen customers in Germany are eligible to receive a feed in tariff for the power exported back to the grid.

E.ON has been named one of the 100 best employers in Germany.

E.ON has been named one of the 100 best employers in Germany. E.ON also achieved an excellent 5th place postion in the category "Companies with over 5,000 employees" in the coveted Great Place to Work® Institute "Deutschlands Beste Arbeitgeber 2011" awards. This is the 8 time E.ON, one of the largest power and gas companies in Europe, has been successful. The award recognizes attractive employers with a special quality and was conferred by the Great Place to Work® Institute Germany and the Federal Ministry of Labour and Social Affairs at an award gala in Berlin.


Regine Stachelhaus, member of the E.ON AG Board of Management said: "Our ranking among the top 5 employers in Germany is an award for our HR work. We will not let up in our commitment to create attractive working conditions and development possibilities in order to offer our employees a rewarding working environment and, in an increasingly tighter market, to continue to remain among the best for recruiting talent."


As part of the nationwide employer competition, seven German E.ON companies participated in an anonymous employee survey. The key assessment criteria were credibility, respect and fairness, identification of the employees with and the team spirit in the company. In addition, the activities and concepts of the company’s HR work were analysed and assessed in a ‘culture audit’.


A total of 290 companies from all branches of industry, size categories and regions applied for the quality seal " Deutschlands Beste Arbeitgeber 2011". They were subjected to a thorough examination and an independent assessment of their quality and attraction as employers. The Great Place to Work® Institute Germany surveyed a total of some 120,000 workers.

The annual study and the competition " Deutschlands Beste Arbeitgeber" are conducted by the Great Place to Work® Institute Germany in cooperation with the New Quality of Work Initiative (INQA), the University of Cologne and the Federal Ministry of Labour and Social Affairs. The "Handelsblatt" newspaper and "personalmagazin" are the media partners.

Ceramic Fuel Cells Limited Cashflow Report quarter end 31st Dec 2010

RNS Number : 9315Z

Ceramic Fuel Cells Limited

24 January 2011

24 January 2011

Ceramic Fuel Cells Limited

Quarterly Cashflow Report and Trading Update

Ceramic Fuel Cells Limited (AIM / ASX: CFU) a leading developer of high efficiency and low emission power products for homes, today released its quarterly cashflow report for the period ended 31 December 2010.

The cashflow report is available at www.cfcl.com.au.

Highlights

-- Conditional order for up to 200 integrated mCHP products - total contract value of up to 4.9 million Euros (AUD 6.6 million) over two years

-- Further sales of BlueGen units - cumulative orders for 62 BlueGen units in many large global markets

-- First BlueGen sale in Italy

-- Hills Industries Limited appointed as BlueGen distributor and national service and support partner in Australia

-- Progress towards product certification for UK feed-in tariff

-- BlueGen assembly transferred from Melbourne to Germany and operational from January 2011

-- Supply agreement with HC Starck secures long term volume supply of fuel cell components at agreed prices

-- Powder sale contract - CFCL's UK plant to supply ceramic powder to HC Starck

Operational Review

Order for 200 integrated products

In December the Company received a conditional order for up to 200 integrated power and heat generators from German energy service provider EWE. This is the largest order the Company has received, with total revenue of up to EUR 4.9 million over two years.

The integrated units use Ceramic Fuel Cells' patented technology to convert natural gas into electricity, hot water and space heating, with the world's highest level of electrical efficiency in small scale generators.

Ceramic Fuel Cells will supply the core Gennex fuel cell module and related components. Ceramic Fuel Cells and its local manufacturing partner, Gebruder Bruns Heiztechnik GmbH, will integrate the fuel cell module with a boiler into an integrated power and heating product for supply to EWE. EWE will then install the units in homes in the Lower Saxony region in northern Germany.

EWE is one of the largest utilities in Germany, with 6,400 staff and revenues of EUR 5.8 billion. Based in Northern Germany, EWE also has operations in other German states as well as Poland and Turkey.

The order is conditional on EWE receiving partial funding under the German government's national hydrogen and fuel cell technology innovation program. This Government program is providing EUR 700 million between 2008 and 2018. EWE has submitted a formal funding application and a positive decision is expected in early 2011.

Subject to EWE obtaining Government funding and to the units meeting agreed performance targets, EWE will order 70 units for delivery in 2011 and 130 units for delivery in 2012. The performance targets, unit prices and the rates for ongoing service and support have been agreed in a contract signed by EWE and Ceramic Fuel Cells.

This is a significant follow-on order from EWE, the Company's longest standing utility customer. The Company is confident that the German government will support the project and we look to updating shareholders in due course.

Apart from Germany, during the December quarter the Company also continued to operate integrated power and heating units with its appliance partners in the United Kingdom and France.

BlueGen sales

Apart from the integrated product, the Company has also developed a modular power and heat generator called BlueGen, to provide low emission power plus heat for hot water. One BlueGen can provide about double the electricity the average home needs - excess power can be exported to the grid - plus hot water for an average family's needs.

Like the integrated product, BlueGen uses the Company's Gennex fuel cell module to achieve electrical efficiency of 60 percent - far higher than any other small scale generator. The Company believes this very high electrical efficiency will deliver significant value to BlueGen customers, and will create a significant competitive advantage in the fast growing global market for small scale power generation.

During the December quarter the Company continued to receive orders for BlueGen units from leading energy companies and other foundation customers.

As at 24 January 2011 the Company has received orders for 59 BlueGen units, from customers in Germany, Switzerland, the United Kingdom, The Netherlands, Italy, Japan, Australia and the USA. A total of 21 BlueGen units are installed and operating in customers' sites.

Highlights during the December quarter and up to date include:

First Order in Italy

The Company has sold its first BlueGen units in Italy, to leading energy company Edison S.p.A. Edison will install one BlueGen unit, initially at its test laboratory and then at its headquarters in Milan. Edison has an option to install two further BlueGen units with Edison customers.

Founded in 1884, Edison is Europe's oldest energy company, with businesses in 10 countries in Europe, Africa and the Middle East. Edison is one of Italy's leading electricity and gas companies, providing 15 percent of Italy's electricity and 17 percent of its natural gas. 2009 revenues were EUR 9 billion. In 2010, Fortune magazine ranked Edison as the "Most Admired Company" in Italy and second worldwide in the energy sector.

The Company believes that Italy will be an ideal market for its products. There are more than 18 million homes connected to natural gas. The Italian Government has introduced several measures to support low emission power generation, including a tax benefit specifically for high efficiency micro-generation from natural gas.

E.ON UK Order

In December the Company sold three BlueGen units to one of the UK's leading energy companies, E.ON. One BlueGen will be installed in early 2011 at the E.ON training centre in Tipton, where E.ON's Property Services department trains its staff in the installation and maintenance of gas and electrical appliances. The other two BlueGen units will be installed at demonstration sites.

The Company believes that the BlueGen installation at the E.ON training centre will be particularly beneficial. Having a well trained network of installers and service technicians is critical to deploying BlueGens and integrated mCHP products in larger volumes, and to receiving accreditation in order to access the UK feed in tariff (discussed below).

In parallel with installing three BlueGen units, Ceramic Fuel Cells and E.ON are continuing to develop fully integrated power and heating products for the UK market. Under a product development agreement signed in 2009, Ceramic Fuel Cells and E.ON have agreed the development stages to move into production of commercial units. The partners are currently discussing the project plan details for the next phase of product development and deployment.

European Orders

During the quarter the Company received further orders from leading Germany energy companies, including EIFER (the European Institute for Energy Research) and EnBW, the third largest utility in Germany, and Gasag, based in Berlin. Gasag has announced that it will invest EUR 50 million in small scale power and heating over the next five years.

During the December quarter BlueGen was accredited by the relevant German Government authority (BAFA) and BlueGen customers in Germany are now eligible to receive the feed in tariff for small power and heating products.

BlueGen units were also independently tested and operated by the German Gas Association (DVGW). The Company is confident that these successful tests, and the continuing very strong interest from German energy companies, will lead to significant further BlueGen sales in Germany.

A BlueGen unit was also successfully tested at Kiwa-Gastec in The Netherlands, and is now installed in the home of a board member of Gasterra, one of the largest gas utilities in The Netherlands. A press release from Gasterra is available at their website - nieuws/berichten/Pages/woning_wordt_echte_elektriciteitsleverancier.aspx

In December the Company's French utility partner, GDF SUEZ, also ordered a BlueGen unit. GDFSUEZ will test and demonstrate the BlueGen in parallel with the existing project to develop an integrated power and heating product for the French market. GDF SUEZ is one of the largest energy companies in the world, with 214,000 staff and 2009 revenue of 79 billion Euros. GDF SUEZ is the largest buyer of natural gas in Europe.

Australian Sales

In November the Company installed the first BlueGen units as part of the order of 30 units from the Victorian Government. The BlueGen is installed in a home in the Melbourne suburb of Hampton East, and is providing electricity and hot water for the home. The Company is continuing to work with the Victorian Government Office of Housing to install the remaining units, in Melbourne and in Shepparton.

Leading Australian energy retailer Origin Energy has offered all tenants who install BlueGen units as part of the Victorian Government project a package of Green Gas plus a one-for-one feed-in tariff for the excess electricity generated by the BlueGen units. This means that a tenant who exports power to the grid will get a credit on their bill equal to the normal retail rate of electricity.

In December the Company installed a BlueGen unit at Adelaide's Central Market, South Australia's most visited tourist attraction. The Adelaide City Council and the South Australian Government have installed the BlueGen unit together with an electric vehicle charging station. This enables city shoppers to recharge their electric vehicles from low emission sources rather than carbon intensive power from the electricity grid. The new station, located in the Central Market car park, is free to users and can charge two vehicles at a time.

The Company believes that BlueGen is an ideal companion to electric vehicles, providing low emission electricity for distributed re-charging stations. The Company is pursuing several opportunities in the fast growing market for electric vehicle recharging infrastructure.

During the quarter the Company also received its first order in Queensland. A BlueGen unit will be installed by the Queensland Department of Public Works, in the Joint Contact Centre in Brisbane.

First BlueGen operating in USA

In November the Company installed the first BlueGen unit in the United States, at a Southern California Gas facility in California. Southern California Gas is the largest gas utility in the USA, with 20 million customers in California, and is part of the Fortune 500 energy services company, Sempra Energy.

BlueGen Distribution and Service in Australia

In January 2011 the Company signed an agreement with Adelaide-based Hills Holdings Limited (ASX: HIL) for Hills to sell and service the BlueGen product. Hills will distribute BlueGen, initially in South Australia, and will also provide installation and after-sales service for BlueGen products Australia-wide.

Hills is a leading manufacturer, distributor and installer of home products including premium solar hot water products. The company had revenues last financial year of AUD 1.1 billion.

The agreement is in line with Ceramic Fuel Cells' strategy to sell BlueGen units in Australia through distributors and to outsource the installation and service of BlueGen units. The agreement with Hills follows similar BlueGen distribution agreements with green products retailer Neco, based in Melbourne, and Harvey Norman's Commercial Division, in NSW and the ACT.

Hills is the Company's first BlueGen service and support partner. The Company is in discussions with potential service and support partners in other markets outside Australia and will make further announcements in due course.

UK Feed in Tariff

Ceramic Fuel Cells is continuing to make progress towards having BlueGen certified under the Microgeneration Certification Scheme ("MCS") in order to access the UK Government's feed in tariff. All microgeneration products must be accredited under MCS in order to be eligible for the UK feed in tariff.

In the December quarter a new MCS standard for electricity led micro combined heat and power units was developed, approved and published. Ceramic Fuel Cells was instrumental in instigating and promoting this new standard which is an essential requirement for accreditation under MCS. The existing standards applied to micro heat and power products which maximised heat output. This new standard applies specifically to micro heat and power products whose primary purpose is to generate electricity, with domestic hot water being an additional output.

During the December quarter the Company also successfully completed a range of tests required by the MCS.

BlueGen was successfully tested under the PAS67 standard - the British Standards Institution standard for tests to determine the heating and electrical performance of micro-cogeneration packages. This testing confirmed that BlueGen provides hot water for domestic use as well as significantly reducing net carbon emissions when compared to a modern condensing gas boiler and electricity from the UK grid. BlueGen was also tested by an independent body for its noise output.

In December the MCS auditor, BRE Global, conducted a factory assessment at Ceramic Fuel Cells' production facility in Melbourne. The Company expects the review of the data provided during this site visit to be completed during the first quarter of 2011. The Company expects this to be the final stage of the process before BlueGen is formally accredited under MCS.

Manufacturing

The Company has built a plant in Heinsberg, Germany for the volume assembly of its fuel cell stacks. All the assembly processes at the plant are fully commissioned and operating, including the ink mixing equipment and the robotic seal dispensing and assembly machines.

The Company is currently making fuel cell stacks in Heinsberg, and in Melbourne, in sufficient quantities to meet current demand. In order to increase production the Company has shipped three additional furnaces from Melbourne to Heinsberg. These additional furnaces will be fully operational in February 2011.

In order to further increase the volume of stacks the Company intends to use larger furnaces already installed at the Heinsberg plant. The Company is continuing to work with the supplier of the large volume furnaces to identify changes needed to ensure the furnaces will produce fuel cell stacks in larger volumes at acceptable quality standards.

During the quarter the Company began the process of transferring the assembly of BlueGen units from its Noble Park research and pilot production plant to the Heinsberg volume production plant, in the same building as the fuel cell stack assembly operation. The Company has expanded the Heinsberg plant, installed assembly and materials handling equipment and hired additional staff. The Heinsberg plant will begin making BlueGen units from late January 2011.

Powder and Cell Supply Agreement

In addition to scaling up its own manufacturing capability, in order to further secure a volume supply of components the Company has entered a volume cell supply agreement with leading German ceramics company HC Starck.

HC Starck is an international group of companies with more than 2,900 employees at 12 production sites in Europe, North America and Asia. HC Starck develops and manufactures a wide range of advanced ceramics products, including fuel cell components. Ceramic Fuel Cells and HC Starck have been working together since early 2008.

Under the agreement HC Starck agrees to supply a minimum volume of fuel cell components at fixed prices, subject to Ceramic Fuel Cells' specification and quality requirements. The Company believes this agreement is an important step in securing its supply chain for critical components, as well as delivering significant cost savings.

In order to make the fuel cell components for supply to CFCL, HC Starck has agreed to order a minimum volume of zirconia powder from Ceramic Fuel Cells' United Kingdom powder plant, located in Bromborough. Ceramic Fuel Cells will supply the zirconia powder at agreed prices and quality specifications.

Victorian Government Feed-in Tariff Review

In June 2010 the previous Victorian Government commenced a review into the expansion of feed-in tariffs to include low-emissions technologies like fuel cells. A feed-in tariff is a rate paid for electricity fed back into the electricity grid from designated electricity generation sources.

In Victoria there is a 'standard' feed-in tariff (equal to the retail price for electricity, or about 20 cents per kilowatt hour) for electricity fed back into the grid from wind, solar, hydro and biomass generators of up to 100 kilowatts capacity; plus a 'premium' feed-in tariff (of 60 cents per kilowatt hour) for solar systems up to 5 kilowatts capacity.

Feed-in tariffs are being used in many markets to encourage the deployment of renewable and low emissions technologies, including the United Kingdom, Germany, France and The Netherlands.

In the November 2010 election the previous Victorian Government was replaced by the Liberal National Coalition. The Liberal National Coalition plan for Energy and Resources, released before the election, includes a policy commitment to "strongly support feed-in tariffs that provide a fair reward and encourage the supply of renewable and low emissions energy into the grid".

According to the policy document, the incoming Government will direct the Victorian Competition and Efficiency Commission (VCEC) to inquire into and report on the design and implementation of a market-based gross feed-in tariff scheme (i.e. a gross feed-in tariff is based on the total amount of electricity generated rather than just the net amount exported). As part of that review VCEC will be asked to examine several possible features of a market-based gross feed-in tariff scheme, including making the tariff available to all solar, wind, fuel cell and other lower emission sources.

The Company is continuing to engage with Government on this issue and looks forward to the VCEC review.

Financial Review

Quarterly Cashflow

Net operating cash outflow for the December quarter was AUD 6.2m (GBP 3.8m) which was higher than last quarter due to increases in inventory requirements and the receipt last quarter of AUD 3.7m (GBP 2.3m) in relation to a legal settlement.

Receipts from customers for the quarter were AUD 1.1m (GBP 0.7m).

The net cash outflow after investing and financing activities for the December quarter was AUD 3.5m (GBP 2.2m).

During the quarter cash outflow from investing activities was AUD 0.6m (GBP 0.4m) for payments relating to the Company's manufacturing plant in Germany including the establishment of the BlueGen assembly operations there.

Cash inflow from financing activities included AUD 3.5m (GBP 2.2m) for the receipt of funds relating to the equity raising undertaken by the company in August / September 2010. This is in addition to AUD 26.7m (GBP 16.6m) that had already been received in the September quarter.

Net operating cash outflow for the financial half year was AUD 7.3m (GBP 4.6m) and includes receipts from customers of AUD 1.7m (GBP 1.0m). Working capital payments for the half year were AUD 6.2m (GBP 3.9m) which were AUD 4.6m (GBP 2.9m) higher then the equivalent period last year. This primarily relates to the purchase of components for both the BlueGen and Integrated m-CHP units that have been purchased to meet current period sales and expected future demand. At 31 December 2010 the value of inventory was AUD 4.9m (GBP 3.1m).

The closing cash balance measured in Australian dollars has been impacted by the strong appreciation in the Australian currency over the last 6 months. The Australian Dollar has appreciated against the pound sterling by 16.2% and the euro by 9.6%. This has given rise to unrealised foreign exchange translation losses of AUD 2.4m (GBP 1.5m) at December on the translation of foreign cash holdings back into Australian dollars for reporting purposes.

Cash at 31 December 2010 was AUD 29.8m (GBP 18.6m).

The quarterly cashflow report is also available on the Company's website at www.cfcl.com.au

For further information please contact: