Australia 'too difficult' for high-tech energy company

A HIGH-TECHNOLOGY energy company spun off from the CSIRO two decades ago says entrenched power companies and shifting government policy are forcing it to all but abandon Australia.

By InvestSMART · 2 Nov 2012

By InvestSMART ·
2 Nov 2012

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A HIGH-TECHNOLOGY energy company spun off from the CSIRO two decades ago says entrenched power companies and shifting government policy are forcing it to all but abandon Australia.

Ceramic Fuel Cells, which makes small fuel cells that generate power and heat from gas or renewable energy, has shed 60 of its 110 local staff since July, and expects 98 per cent of sales to come from overseas this year.

The company will retain its research and development at Noble Park but will shift the bulk of its operations to Germany.

"With the current conditions, the current support that we have, the current incumbent utilities, it means that the job of commercialising in Australia is just too difficult," managing director Brendan Dow said.

Known as BlueGen, the company's product creates electricity and heat by passing natural gas over ceramic fuel cells.

The company says it cuts the average home's annual carbon dioxide emissions by 18 tonnes.

Mr Dow said power consumers were at the mercy of the dominant power generators and retailers such as Origin, Energy Australia and AGL, which had little incentive to innovate or improve energy efficiency.

Without bipartisan support for an overhaul of the industry, he said it was unlikely the federal government's energy white paper, to be released next week, would make much difference.

"We're focusing on those markets that give us the absolute certainty," Mr Dow said.

That certainty included financial support, with the company able to tap into a ?250 million ($A312 million) business development fund offered by Germany's North Rhine-Westphalia state.

Its BlueGen fuel cell costs about $30,000 in Australia but as little as ?10,000 ($A12,500) in Europe, he said. The company sold 40 units locally last year but the number may fall to as few as 10 this year.

Generous feed-in tariffs mean an operator of the unit can generate about ?2600 ($A3250) a year in Germany, more than twice the $1500 average return an Australian operator can expect, he said.

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Frequently Asked Questions about this Article…

Why is Ceramic Fuel Cells (BlueGen) shifting most of its operations out of Australia?

According to the article, Ceramic Fuel Cells’ managing director Brendan Dow says entrenched incumbent utilities, weak commercial support in Australia and shifting government policy have made it “too difficult” to commercialise locally. The company will keep R&D at Noble Park but shift the bulk of its operations to Germany where it can access stronger financial support and markets.

How many Australian jobs has Ceramic Fuel Cells cut and what staff changes were announced?

The company has shed 60 of its 110 local staff since July and expects to move most operations overseas, retaining only research and development at Noble Park.

What percentage of Ceramic Fuel Cells’ sales does the company expect to come from overseas this year?

Ceramic Fuel Cells expects about 98 per cent of its sales to come from overseas this year, reflecting the shift in focus away from the Australian market.

How do BlueGen fuel cell prices and returns compare between Australia and Europe?

The article states a BlueGen unit costs about $30,000 in Australia but as little as €10,000 (about A$12,500) in Europe. Generous German feed-in tariffs mean a German operator can earn roughly €2,600 (A$3,250) a year, compared with an average return of about $1,500 for an Australian operator.

What market support is Ceramic Fuel Cells tapping into in Germany?

The company can tap into a €250 million (A$312 million) business development fund offered by Germany’s North Rhine-Westphalia state, which the article identifies as part of the certainty driving the move to Europe.

How many BlueGen units did Ceramic Fuel Cells sell in Australia last year and what are local sales expected to be this year?

Ceramic Fuel Cells sold 40 BlueGen units locally last year, but the company warned that local sales may fall to as few as 10 units this year as it focuses on overseas markets.

What environmental benefits does the BlueGen fuel cell claim to provide?

The company says its BlueGen product reduces the average home’s annual carbon dioxide emissions by 18 tonnes by generating electricity and heat from natural gas or renewable energy passed over ceramic fuel cells.

Will Australia’s upcoming energy white paper change Ceramic Fuel Cells’ plans?

Brendan Dow told the article that without bipartisan support for an industry overhaul it is unlikely the federal government’s energy white paper, due next week, will make much difference to the commercial challenges the company faces in Australia.