Energy Research Announces Agreement with Daimler Benz Affiliate
22 July 1998
Energy Research Announces Cross-Licensing and Cross-Selling Agreement With Daimler Benz Affiliate
DANBURY, Conn.--July 22, 1998--Energy Research Corporation (AMEX:ERC) entered into an agreement today to expand its long term partnership with MTU Friedrichshafen Gmbh, of Daimler-Benz AG . The partnership has been in place for almost 10 years and includes a license for fuel cell technology and a significant equity position in ERC.
The agreement will allow both ERC and MTU to manufacture and sell each other's stationary power fuel cell products in their respective regions, and as a result ERC will manufacture and sell direct carbonate fuel cell (DFC) power plants based on MTU's 300 kW base module in North America. Also, under the agreement MTU will be allowed to manufacture and sell ERC's larger fuel cell power plant based on ERC's 1.25 MW base module in the European market. Each company will pay the other royalties based on sales. ERC expects for the foreseeable future to continue to produce the DFC-9000 fuel cell stacks used in both companies' products.
"This is a major step toward developing a worldwide market for our fuel cells" said Jerry Leitman, CEO of ERC. "It gives us access to the European market for our larger size plants, with the support of an aggressive marketing partner and an influential consortium. With the high price of fuel and electricity and the strong 'green' sentiment there, we believe there are excellent prospects for our fuel cell power plants because of their extremely high efficiency and environmental benefits."
"Secondly, this agreement gives us a small size fuel cell power plant to sell in the US without significant development expense. As the US electricity markets are becoming deregulated, we believe it makes sense to have a broader product line. In particular, we have noted increasing interest from natural gas companies wanting to get into electricity generation, and from industrial and commercial companies interested in saving on energy costs. Many of these potential customers may be interested in a smaller size power plant designed to maximize cogeneration power. In addition, we expect this product to be available for commercial sale earlier than our larger units, which continue on schedule."
"Finally, to the extent that this agreement, by opening up new markets for both companies' products, increases demand for ERC's DFC-9000 fuel cell stacks, it should help lower ERC's cost of production."
"Today's announcement is a significant milestone in our long-term partnership with ERC and a promising message to our customers in the US and Europe," said Mr. Michael Bode, Executive Vice President and Director of the New Technologies Group of MTU Friedrichshafen. With our Hot Module, MTU has implemented a first-of-its-kind design approach for a 300 to 500 kW modular DFC building block integrating one horizontally positioned fuel cell stack with auxiliary system components into a common containment. The Hot Module is the basis and core of our small to medium sized plants in the range of 0.3 to 2.0 MW specifically suited for cogeneration applications in the industry. To build larger size plants our friends in ERC offer their MCFC modular building block comprising four vertical stacks generating 1.25 MW of electrical power. As ERC and MTU combine their balance-of-plant know-how and use each other's modular building block and plant design we gain a full line of DFC plants from 300 kW approaching 10 MW for cogeneration and distributed power generation. With the Cross-Licensing and Cross-Selling Agreement ERC and MTU join their forces and take full advantage of complementary development and marketing efforts to the benefit of our customers. It's our move to speed up the commercialization of the DFC technology!"
The MTU fuel cell power plant is designed to greatly reduce the cost of smaller units by an innovative integration of fuel cell auxiliary equipment ("balance-of-plant") into the fuel cell module itself. Balance-of-plant typically has a cost twice that of the stack itself, and is thus a primary target for cost reduction.
ERC has focused on building large size (1MW) plants because several important balance-of-plant components become much less expensive per kW as the power plant size increases. The MTU design attacks this problem in a different way, by radically simplifying the design of the balance-of-plant, thus eliminating the need for many of the components. The result is a modular product measuring just 9.0 meters in length and 2.5 meters in width, able to fit in a standard shipping container or on the back of a truck, for easy delivery and installation.
Using fuel cell stacks manufactured by ERC, the MTU fuel cell module produces 300 kW of power with a greater efficiency level compared to conventional means, such as gas turbines and diesel generators, as well as other types of fuel cells. The ERC and MTU power plants both utilize pipeline gas, directly, as a fuel. These power plants have no requirement for an external reformer system to preprocess the fuel as do other types of fuel cells. Reforming is a chemical process which adds to power plant costs while at the same time lowering overall power plant efficiency. In addition to its electrical output, the MTU fuel cell creates high quality heat which can be used for industrial purposes or to generate additional electricity from a steam turbine. Low temperature fuel cells lack this capability.
MTU was aided in the development of its power plant by a consortium consisting of, Ruhrgas AG, the largest natural gas company in Germany, RWE Energie AG, a large, diversified company with interests in electric power, engineering, and petrochemicals, Elkraft, a Danish electric utility and Haldor Topsoe A/S, a leading Danish chemical plant engineering firm.
Energy Research Corporation, located in Danbury and Torrington, Connecticut, is an internationally recognized leader in the field of electrochemical technology for electric power generation and storage. ERC is developing its Direct Fuel Cells and batteries through funding from and in cooperation with government, electric utility and major international industrial organizations.
This press release contains forward-looking statements regarding the completion of the development, potential markets and commercialization of ERC's fuel cell products, as well as the manufacture and sale by ERC of MTU's carbonate fuel cell power plants in the United States. The successful development and commercialization of the fuel cell power plants involve significant risks and uncertainties. There can be no assurance that the development of ERC's fuel cells, or the manufacture and sale of MTU's fuel cells by ERC, will be able to compete successfully in any of the targeted markets. The forward-looking statements in this press release speak only as of this date. ERC expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement contained herein to reflect any change in ERC's expectation with regard thereto or any change in events, conditions or circumstances on which any such statement is based.
