AFC Energy will receive payments for the supply of its technology which will be used to produce electricity from hydrogen produced as a by-product from Akzo Nobel’s chemical production processes.

Akzo Nobel, one of the world’s largest chlor-alkali companies, will continue to make payments to AFC Energy which commenced in December 2006 under the terms of its previously announced Memorandum of Understanding. It is intended that delivery of AFC Energy’s first fuel cells to Akzo Nobel will begin during the first quarter of 2008.

Following successful installation of these initial units to Akzo Nobel’s Bitterfeld site in Germany, it is anticipated that further systems of 50kW and 200kW will be delivered, rising to a possible 1MW unit. The Directors of AFC Energy anticipate entering into further collaboration agreements with Akzo Nobel as the project moves forward.

The excess hydrogen produced by Akzo Nobel supports several Megawatts of green electricity and the AFC Energy business model will offer a capital payback within three years with effective zero cost electricity thereafter.

The fuel cells will be used to generate clean energy from the substantial quantity of hydrogen that is currently produced at chlorine production plants. This electricity will be used by Akzo Nobel to help meet its own energy demands. The chlor-alkali industry uses approximately 1% of the world’s electricity supply.

The directors of AFC Energy plc believe that waste hydrogen in the global chlor-alkali industry could support approximately 3,000 MW per annum of generating capacity, representing a potential market of approximately £1 billion.

Much of the cost savings achieved by AFC Energy have come from the development of a low cost electrode. The replaceable electrode technology will enable the ongoing maintenance of the units well past the five year guaranteed operating period.

In addition AFC Energy plc also announced today its intention to seek an AIM listing on the London Stock Exchange.

Gerard Sauer, Chief Executive, AFC Energy plc said;

“AFC Energy is entirely focused on producing low cost, commercially viable fuel cells and taking them to the hydrogen source.

“We have driven down the cost of an existing and proven technology through the application of our technologies which allow us to reduce precious metal usage. Consequently we are able to prove that clean energy can be produced without cost disadvantage.

“It is very pleasing that Akzo Nobel has recognized this and we look forward to enjoying a long and close working relationship with them.”

Knut Schwalenberg, General Manager Chlor-Alkali of Akzo Nobel added:

“The Chlor-Alkali industry is energy intensive, so improving energy efficiency is a top priority to keep the processes sustainable.

“Huge amounts of hydrogen are produced in the electrolysis process as by-product of chlorine and caustic lye. The immediate conversion of this hydrogen into electricity, based on locally installed fuel cells, and the use of this electricity back in the electrolysis process would create an ideal loop. Akzo Nobel regards the technology of AFC Energy as promising and we are looking forward to the results of the cooperation.”