HORSHAM, UK: Ceres Power Holdings (AIM: CWR.L), a global leader in fuel cell and electrochemical technology, announced that non-binding Heads of Terms have been signed setting out plans for a three-way collaboration with Weichai Power and Robert Bosch GmbH to access the substantial opportunities that exist for fuel cell technologies in the Chinese markert.
The addition of Bosch to the existing Weichai and Ceres partnership, and an increase in scope to include stationary power applications, significantly strengthens the planned joint venture. It is now intended that two separate Joint Ventures (JVs) will be formed in Shandong Province, specifically:
· A three-way system JV will be set up for the development and manufacture of solid oxide fuel cell (SOFC) systems. Bosch and Ceres will licence their respective SOFC system IP to the JV for mobile and stationary applications in China and will share royalties from the sale of products. Weichai will be the majority shareholder. Ceres will hold a maximum 10% share with Board representation. Its investment over time is likely to be around £20 million, to be finalised in the detailed agreements.
· Separately, a stack manufacturing JV will be established to supply fuel cell stacks to the system JV and potentially other third parties. The Stack JV would be the second manufacturing facility for Bosch and is planned to follow its initial 200MW facility in Germany, where start of production is anticipated for 2024. Bosch and Weichai intend to form the JV with Bosch as the majority shareholder. Ceres will not be a shareholder in this JV but will provide the SOFC technology through an extension of Bosch’s existing manufacturing licence to supply the Chinese market. Ceres will receive royalties from this JV on the sale of stacks.
License fees of £30 million from the System JV and Stack JV to Ceres are expected over the next three years in line with those agreed in the original Weichai-Ceres agreement in 2018, with minimum payments and annual royalties receivable following start of production from each of the JVs. Detailed agreements are now being prepared, with the JVs intended to be formed following the signing of definitive contracts.
Phil Caldwell, Chief Executive Officer of Ceres: “This exciting collaboration represents an important step in Ceres’ ambitions for the Chinese market and a critical part of delivering global manufacturing capacity for our technology. We have every confidence in our partnership with Weichai and with the addition of Bosch’s expertise in industrialisation and manufacturing have the potential to establish one of the strongest partnerships in the fuel cell industry.”