AFC Energy : Annual Report October 2024

Annual Report and Accounts 2024

Overview

Strategic Review

Corporate Governance

Our purpose

Financial Statements

We're on a mission to replace fossil fuel generation with end to end hydrogen solutions

Our vision

H2

We want to help create a world where power no longer comes from using fossil fuels. A world full of green technology including electric vehicles, renewable generation, battery storage and of course hydrogen fuel cells. The hydrogen economy is here and growing fast.

OVERVIEW

2024 Highlights 2

At a glance 4

STRATEGIC REVIEW

Chairman's Statement 6

Chief Executive's Statement 10

Q&A 12

The Role of Hydrogen in the Future of Energy 14

Hyamtec Market Opportunity 18

Strategy in Action 22

Financial Review 24

ESG Governance and Strategy 26

Section 172 33

Risk Management 34

CORPORATE GOVERNANCE

Board of Directors 38

Roles of The Board and Sub-Committees 40

Corporate Governance Statement 42

Audit and Risk Committee Report 43

Nomination Committee Report 45

Remuneration Committee Report 47

Directors' Report 59

Statement of Directors' Responsibilities 60

FINANCIAL STATEMENTS

Independent Auditor's Report 61

Statement of comprehensive income 70

Statement of financial position 71

Statement of changes in equity 72

Cash flow statement 73

Notes forming part of the financial statements 74

Company information 100

At a glance	CEO - Q&A	Hyamtec Market
page 4	page 12	Opportunity
page 18

Scan to view online report

Overview

Strategic Review

Corporate Governance

2024 Highlights

Financial Statements

Financial

Commercial

Strong financial performance driven by sales of hydrogen fuelled power generators to Speedy Hire Services Delivering generators, scaling production capabilities and driving the commercialisation of ammonia cracker technology

Operational Delivery

£4.0m

of equipment sales

£4.4m

of development costs capitalised

£15.8m

(gross) funds raised

£0.5m

UK Government grants received with a further £3.7 million to follow in FY2025

£15.4m

cash at year end

• • Manufacture and delivery of 20 fuel cell generators to our joint venture with Speedy Hire plc, Speedy Hydrogen Solutions. Detailed engagement with leading UK construction companies to unlock generator deployments.

• • Production facility capable of producing up to 250 fuel cell units annually (Dunsfold Park, Surrey).

• • Deployment of 45 kVA H-Power generator (comprising 30kW fuel cell and 60kWh battery) at an ACCIONA construction site in Madrid, Spain.

• • Launch of Hyamtec to drive the commercialisation of AFC Energy's proprietary ammonia cracker technology for an affordable, scalable and accelerated route to hydrogen production. Ongoing discussions with potential partners for deployments in energy intensive sectors.

• • Opportunity to support fuel cell deployment in the UK construction sector through an end-to-end solution.

ESG

• • 1.68 Lost Time Injuries (LTIs) per on-site hours (LTIFR).

• • Achieved ISO 14001 certification.

• • High levels of employee engagement for annual staff and ESG surveys.

Technology In Development S Series Generator

• • Third Generation S Series Generators with reduced cost, size, and weight.

• • Improved performance, low-cost S series stack technology.

• • Smaller, cleaner, quieter and more flexible than equivalent diesel generators.

S+ Series Generator

• • Compact 100 kW modular, scalable fuel cell power module.

• • Second Generation S+ Series Generator with reduced cost, size and weight.

Hyamtec

• • Scaling our current architecture x100 to address large scale hydrogen demands.

• • Improved energy efficiency and thermal response for load-following applications.

• • Confirmation and protection of the manufacturing methods for low-cost assembly.

• • Commercial roll-out and demonstration of our systems to build up in-field operational data.

30kW

S Series generator

200kW

S+ Series generator

Overview

Strategic Review

Corporate Governance

At a glance

Financial Statements

Improving the world with hydrogen power solutions

Led by values

With ambition, team-work and innovation we are making progress for our customers, our planet and our shareholders. We do this by bringing great solutions for our end users.

Customer first

Collaboration

Accountability

Responsibility

Innovation

Our Story

We're AFC Energy - delivering hydrogen power solutions to replace fossil fuel generation. For over a decade we've been using our engineering knowhow, technology patents and shared vision to develop clean energy technology.

Commercialising Technology

We've been busy designing, building, testing and refining our fuel cell technology. Generations of working prototypes, each one a technical improvement on the previous, has led us to the latest range of efficient and commercial hydrogen power generation technologies - we've come a long way.

Pioneering spirit

We're based at Dunsfold Aerodrome, historically home to pioneering organisations including British Aerospace. A perfect location for our base that includes offices, research, testing and manufacturing centres

Commercial Relationships

HYAMTEC

AFC Energy Launches Hyamtec to Drive Commercialisation of Ammonia Cracker Technology

Unique Technology

Ammonia crackers are critical to unlocking an affordable, scalable and accelerated route to hydrogen generation, enabling industries to decarbonise without requiring extensive new infrastructure.

Proven Innovation

AFC Energy has designed and developed modular, compact ammonia crackers to meet industry's needs.

Strategic Focus

Hyamtec will drive the commercialisation of ammonia cracking technology, offering low-cost and scalable on-demand hydrogen production for industrial and mobile applications.

Key Markets

Hyamtec is targeting:

• • Hydrogen-rich fuel gas for decarbonising industrial heat generation applications.

• • Ammonia conversion for large capacity combustion engines in power generation, marine and mining sectors.

• • Modular, purified hydrogen production for fuel cells and transport applications.

Scan to read more or clickwww.hyamtec.com

Delivering to our joint venture with Speedy Hire plc and scaling up AFC Energy's manufacturing capability

This year, we achieved significant milestones that reflect our operational progress, including the production and delivery of our first batch of fuel cells, the successful launch of the Hyamtec brand, and the expansion of our manufacturing capacity to support these developments. These achievements reinforce AFC's position as a key contributor to the global energy transition.

The market environment for hydrogen is rapidly evolving, and the momentum behind renewable energy remains strong. Globally, numerous large-scale projects have reached final investment decisions to produce hydrogen from renewable sources, with many adopting ammonia as a transport medium. Challenges remain, particularly in the availability, logistics, and cost of hydrogen. However, regulatory and commercial pressures on sectors such as construction to achieve net-zero emissions is increasingly driving adoption of clean energy alternatives. In the UK, initiatives such as the Hydrogen Allocation Round and investments by the National Wealth Fund are paving the way for increased hydrogen supply at more attractive prices. Against this backdrop, AFC's ammonia cracking technology offers a transformative opportunity to support decarbonisation in hard-to-abate sectors like heavy manufacturing, cement, industrial heating and stationary engines, providing a carbon-neutral alternative to LNG and natural gas.

Strategically, our focus on the construction sector represents a deliberate and necessary shift in AFC's approach. Over recent years, we successfully demonstrated our fuel cell technology across a variety of applications, gaining positive feedback from partners. However, while the technology performed to expectations, commercial traction in these sectors remained elusive. Challenges such as the lack of affordable hydrogen supply, infrastructure constraints, and transportation hurdles often stalled broader adoption. Even in cases where hydrogen was available at competitive prices, companies were hesitant to commit to substantial changes in their business models, particularly where reliance on government subsidies created uncertainties. The lack of experience with hydrogen as a fuel and a reluctance to take on the risks of being first movers further compounded the issue. Adoption will inevitably occur in these sectors, and whilst validation and verification of our technology has been proven, our focus is now concentrated on where the barriers to adoption are lower.

As such, the construction sector presented a uniquely compelling requirement for hydrogen solutions. In this industry, immediate demand is being driven by significant infrastructure projects with zero-emission mandates and regulatory changes such as the removal of advantageous red diesel pricing in the UK. These dynamics created an environment where hydrogen is not just a desirable option but an essential one. At the same time, the construction sector is challenging, with demanding environmental conditions, a need for highly mobile and user-friendly equipment, and requirements for seamless integration into existing workflows and risk assessments. Tackling these challenges has given us the opportunity to refine and enhance our offering, building capabilities that can be applied across less demanding sectors in the future.

Our partnership with Speedy Hire plc, through the Speedy Hydrogen Solutions joint venture, has been pivotal in this strategy. Speedy's willingness to invest as a first mover in this sector aligns perfectly with the immediate needs of the UK construction market. By working closely with Speedy and major UK construction companies, we are gaining invaluable insights that inform the continuous development of our products and associated services. The rental model employed by Speedy also lowers the risk for end users, making it easier for them to adopt hydrogen-powered solutions. Furthermore, the characteristics of our 30kW fuel cells often allow them to replace much larger diesel generators, particularly when deployed as part of hybrid systems incorporating renewable or traditional energy sources.

This focused approach has enabled us to transition away from one-off projects in other sectors, where short-term commercial traction was unclear, to concentrate on scaling and improving our current fuel cell solutions. In parallel, we are investing in the development of future iterations and scaling-up opportunities. The experience and success we are achieving with Speedy in the UK serves as a potential blueprint for geographic expansion into markets such as the Middle East and the US.

Our strategic rationale also includes the development of ammonia cracking technology. With major global players committing to hydrogen production using ammonia as a carrier, we see a clear path to addressing the needs of energy-intensive, hard-to-abate sectors such as cement, asphalt and mining. Ammonia is also the obvious choice for marine applications, given the scale and efficiency required.

In certain use cases, hydrogen combustion engines (powered by ammonia-cracked hydrogen) offer a better solution than fuel cells, particularly for heavy-duty equipment like excavators and other plant machinery.

The pace of our development, combined with validation and interest from leading industrial players, reinforces our confidence in the potential of our technology. We are developing a roadmap to deliver on-site cost parity (or even superiority) with diesel, without relying on government subsidies before 2030.

By unlocking the potential for cost-effective hydrogen deployment, we are laying the groundwork for widespread adoption of this critical fuel, driving decarbonisation and opening new opportunities for AFC Energy in the global clean energy economy.

This year has also been notable for governance and leadership transitions. We achieved ISO certifications 9001, 24001, and 14001, which underscore our commitment to operational excellence and sustainability. Internally, we continue to enhance our sustainability framework through an active ESG Committee chaired by Monika Biddulph, reflecting our commitment to being a responsible business. Our executive management has been strengthened by the addition of John Wilson and Karl Bostock, whose proven track records in scaling engineering companies make them the ideal leaders for AFC's next growth phase. At the same time, we acknowledge the significant contributions of Adam Bond, who, after twelve years with the company (ten as CEO) returned to his family in Australia, and

Peter Dixon-Clarke, who provided invaluable support over the past two years as CFO. During this transitional period, I stepped in as interim CEO before resuming my role as Non-Executive Chairman. While we have chosen not to make changes to the composition of our Non-Executive Directors at this time, we remain aware of the need to improve diversity.

We successfully raised £15.8 million (gross) during the year, an important achievement in a challenging small-cap market. This funding has supported our strategic initiatives and strengthened our financial position. Shareholder engagement has been a priority, with visits from institutional investors and the introduction of interactive 'Investor Meets Company' sessions, which have broadened our communication with retail shareholders.

One of the Board's key responsibilities is fostering the Company's corporate culture. To do so, the Board regularly reviews AFC Energy's culture, behaviours, skills and principal risks against the values the Company has adopted, including the results of the staff survey (details of which are set out on page 28). The Board considers that the executive management continues to build the appropriate culture and underlying processes to maintain and enhance a corporate culture fit for success.

Looking to the future, we are focused on scaling our operations to meet the increasing global demand for clean energy solutions.

Gary Bullard Chairman

18 March 2025

This year, we took a major step forward in repositioning the Company, transforming from a research-driven organisation into one with serious manufacturing capability and a clear focus on commercialisation.

We successfully delivered our first significant revenues in the Company's history and launched our world-leading capabilities in ammonia cracking technology. These achievements reflect the depth of our innovation and our commitment to delivering sustainable, zero-emission power solutions at scale.

Hydrogen is poised to become a cornerstone of the future zero-carbon economy. While much attention has been focused on the production of hydrogen, there remains a critical need to address its usage and transport. AFC Energy is uniquely positioned to bridge this gap, with solutions that enable hydrogen to be utilised effectively for off-grid power, as a clean alternative to diesel, and through ammonia cracking to provide a scalable and immediate solution in hard-to-abate sectors. These include industries currently reliant on gas or LNG, where electricity is not a viable substitute.

In the short term, our joint venture with Speedy Hire plc (Speedy), Speedy Hydrogen Solutions, has provided us with a unique opportunity to address an immediate and compelling need in the construction sector. By collaborating with Speedy, we have been able to deliver practical, deployable solutions, gaining invaluable insights that inform our product development and strategy.

This year's operational achievements reflect the hard work and adaptability of our team. A significant milestone was the establishment of a production facility capable of producing up to 250 fuel cell units annually (demonstrated by a production run with output greater than five units per week on a single shift). Such a production run requires the assembly of nearly 1,000 components per unit from a global supply chain. Usability was a particular focus - our redesigned user interface now mimics traditional diesel generators, making it more accessible to operators unfamiliar with hydrogen technology. Integration with battery energy storage systems and advanced telemetry for remote monitoring has added further value, ensuring our solutions meet the complex needs of modern construction sites.

The launch of our Hyamtec subsidiary has opened up a wealth of opportunities in ammonia cracking. Over the past two years, we have focused on developing and protecting the intellectual property for a wide range of applications. Our work includes collaborations with institutions like the University of Nottingham to integrate ammonia crackers with engines, the production of the largest operational modular cracker capable of producing hydrogen to fuel-cell quality, and the development of smaller, more flexible units for live testing and deployment. Discussions are also underway with potential partners for large-scale deployments in energy-intensive sectors, such as asphalt production.

Of course, challenges remain. Hydrogen pricing and logistics continue to pose barriers, while adoption in some sectors, such as EV charging and marine, is hindered by market readiness rather than our technology. However, these markets are now showing signs of accelerating and it is also possible that ammonia cracking will play a part in addressing these issues, allowing hydrogen to be transported efficiently and used flexibly across multiple applications.

Our people have been at the heart of our success this year, enabling us to transition from engineering to production and deployment with remarkable speed. Staff numbers peaked at 145 to support intensive production and engineering projects, but we have since reduced this to under 120. Contractors have largely been converted to employees, reducing costs and reinforcing the stability of our workforce as we scale for the future.

Looking ahead, AFC Energy's goal is clear: to position ourselves as a world leader in the deployment of hydrogen-fuelled solutions. We aim to demonstrate an effective path forward for our chosen sectors, not just in the UK but globally. We also see significant potential to unlock shareholder value through the expansion of our ammonia cracker business, helping to overcome key barriers and open new markets for hydrogen as a fuel.

To support these ambitions, we have begun playing a more active role in the UK hydrogen ecosystem. Through engagement with bodies like Hydrogen UK and the UK Government, as well as collaboration with other world-leading hydrogen companies, we believe the UK has the potential to replicate its leadership in offshore wind within the hydrogen economy. By fostering collaboration across the value chain - from electrolysers and fuel cells to distribution and combustion engines - the UK can capture and retain its world-leading intellectual property, driving both economic and environmental value.

AFC Energy is proud to be at the forefront of this transition. With our innovative solutions, strategic focus, and commitment to sustainability, we are well-positioned to lead in shaping the future of hydrogen-powered energy.

John Wilson

Chief Executive Officer 18 March 2025

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Q

What is your long-term vision for AFC Energy?

AFC's longstanding vision has been to work to create a world where power no longer comes from using fossil fuels. I share this vision wholeheartedly.

Q

Hydrogen companies have had a difficult time in recent years, are you convinced hydrogen still has a role to play in the energy transition?

Yes, I am absolutely convinced that hydrogen will have a prominent role in the energy transition.

Hydrogen is the most abundant element in the universe - it is high in energy, versatile and produces almost no pollution when burnt.

It is true that the global hydrogen sector has faced challenges as it scales, but over the last four years clean hydrogen projects reaching final investment decision (FID) have increased from 102 committed projects in 2020 (c. US$10 billion in committed investment), to 434 in 2024, representing c. US$75 billion.* So it is clear that the appetite amongst stakeholders to embrace investment in the hydrogen sector is accelerating at pace and continues to do so.

The transition to clean energy will involve a variety of energy sources and innovative solutions. AFC Energy is proud to be part of that transition.

Q

How do you plan to compete against the use of diesel for off-grid power?

We are one of the only companies that has an end-to-end fuel to power solution that can meet global net-zero ambitions.

Hydrogen supply from our on-site ammonia cracker can provide the lowest cost hydrogen in the UK. Alongside easier logistics for fuelling and continuous on demand availability, a cracker removes the challenges of moving and storing hydrogen. Together with our H-Power Fuel Cell generators we offer a compelling power solution in high power density, best in class hydrogen efficiency and zero emissions. Our H-Power generators are ultra-low noise, highly portable, require less maintenance, have extended fuelling intervals and are simpler to use than a conventional diesel generator.

I think we have a tremendous opportunity to accelerate commercial viability, on a cost basis, through achieving parity with diesel generators, and diesel fuel by 2030.

Q

What are your priorities for the first year in your new role?

In the fuel cell business, the key priorities are to work with Speedy Hire in the deployment of our generators to customer sites and to develop a comprehensive strategy for geographic expansion to maximise the commercial opportunity. In Hyamtec we are prioritising the development of our extensive IP portfolio and validation and verification of our technology through partnerships/agreements which we believe will ensure competitive advantage.

Q

Which markets or industries do you see as the biggest growth opportunities for AFC Energy?

In the immediate term, we see the construction industry and our joint venture with Speedy Hire as a huge growth potential for the deployment of fuel cell generators; where demand is being driven by a combination of significant infrastructure projects with zero emission mandates and regulatory drivers. We are truly excited by the opportunities this offers and look forward to maximising the commercial opportunity in the UK with Speedy Hire.

Hyamtec has broad potential growth opportunities, including hydrogen rich combustible fuel gas for industrial applications, ammonia conversion of large-scale engines (such as power generation, marine and mining equipment) and modular purified hydrogen generation for fuel cells, transport and power.

Q

How will you balance innovation with scaling current technologies to meet market demand?

This is the challenge for every technology company! Innovation is at the forefront of what we do. Balancing innovation and building scale requires appropriate deployment of capital whilst retaining a high level of agility and financial discipline: our investment in innovation will be entirely focused on developments where we see significant commercial opportunity and, in a number of cases, will be supported by customers. We have established a network of scaling partners that provide economies of scale benefits and infrastructure to support a scaling transition.

Q

How do you plan to capture the value represented by Hyamtec?

We are exploring a number of potential opportunities with partners to deploy the cracker technology through joint development type agreements and/or trials. Such collaborations will be invaluable to us and potential customers in developing our knowledge of operation of the technology in real life circumstances.

The deployment of our H-Power generators, in combination with our low-cost hydrogen solution provides an immediate pull on hydrogen generated by our ammonia cracking systems. Looking more broadly, there is an extensive untapped potential to supply hydrogen and hydrogen generating equipment to both the UK and EU where the cost of hydrogen is a barrier slowing mass adoption of clean technologies.

We continue to broaden our intellectual property portfolio as we further refine and improve the technology and owning such IP rights are key to value creation and protection.

Overview

Strategic Review

Corporate Governance

Financial Statements

Q

How big an opportunity does your ammonia cracker technology represent?

The opportunity for Hyamtec is significant - in pioneering the development of modular compact ammonia crackers, Hyamtec has created technology which produces extremely cost effective hydrogen, is easily integrated into larger systems and operates efficiently and can therefore assist in removing the barriers some industries have in adopting hydrogen.

Q

How will you address challenges in deploying AFC Energy's technology on a global scale?

The exclusive Distribution Agreement we have entered into with TAMGO for the Middle East and North Africa is a good example as to how we are looking to leverage our commercial offering in local markets we are not directly familiar with, through the local experience, expertise and networks of local partners. Utilising channel partners serves to accelerate time to market and significantly lowers cost related barriers to entry.

Q

What attracted you to the role?

My professional background is as an engineer and technologist before moving into executive leadership and board level NED roles. I have long admired AFC Energy's cutting edge technology and the progress Adam Bond, as previous CEO, and the rest of the AFC Energy team has achieved to date. I am very excited about the future prospects of AFC Energy and look forward to working with the AFC Energy team to create value for all our stakeholders. When the opportunity arose to become CEO and lead a company at the forefront of the energy transition, it was one I could not turn down.

* Source: p.4 'Hydrogen Insights 2024' (September 2024) by Hydrogen Council and McKinsey & Co

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The Role of Hydrogen in the Future of Energy

Hydrogen is increasingly recognised as a cornerstone of the global energy transition

Its versatility as a fuel and its clean credentials make it uniquely suited to decarbonising sectors that are otherwise challenging to electrify, such as heavy industry, construction, shipping, long-haul transport, and high-temperature manufacturing processes like steel and cement production.

Overview

Strategic Review

Corporate Governance

Financial Statements

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When burned, hydrogen emits only water, making it an essential part of achieving Net Zero targets. Hydrogen's advantages go beyond emissions. It can be produced from a variety of low-carbon sources, including renewable-powered electrolysis and natural gas combined with carbon capture and storage (CCUS). This flexibility allows hydrogen to complement renewable energy systems by serving as a means of long-duration energy storage, balancing intermittent wind and solar power when natural conditions are not favourable. Hydrogen is also storable, transportable, and increasingly cost-competitive in many applications, making it a viable alternative to fossil fuels in hard-to-abate sectors.

Globally, hydrogen has gained momentum as governments and companies commit to significant investments in production, infrastructure, and applications. According to the International Energy Agency (IEA), global low-emission hydrogen production is expected to grow substantially by 2030. Countries such as Germany, Japan, and the United States are leading large-scale hydrogen initiatives, investing in production facilities, distribution networks, and applications in industry and transport. For example, significant hydrogen production projects are advancing across the globe, driven by increasing government and corporate commitments to clean energy.

In the Middle East, NEOM's $8.4 billion green hydrogen project in Saudi Arabia aims to become one of the largest facilities of its kind, leveraging abundant solar and wind resources to produce green hydrogen at scale.

Similarly, Air Products is leading a consortium to develop major hydrogen infrastructure projects globally, including large-scale production facilities in the US and Middle East designed to serve both local markets and international exports. Europe continues to ramp up hydrogen investments, with Germany committing billions of euros to hydrogen infrastructure, while the Port of Rotterdam is transforming into a hydrogen hub to facilitate imports from overseas. In Asia, Japan and South Korea are accelerating hydrogen adoption through national strategies that prioritise hydrogen imports and industrial applications. Collectively, these initiatives highlight the rapid expansion of global hydrogen capacity, with projections suggesting that production of low-emission hydrogen could reach over 200 million tonnes annually by 2030 if planned projects are realised. These developments underscore hydrogen's critical role in the global energy transition and demonstrate the growing momentum behind its adoption as a versatile and scalable clean energy solution.

However, significant challenges remain. The cost of low-carbon hydrogen production is still too high, and the infrastructure needed for storage, transportation, and distribution is underdeveloped in many regions. Despite announcements of substantial projects, not all have reached final investment decisions, underscoring the need for clearer policies and stronger incentives. Another hurdle is the limited market readiness of end-use applications, where unfamiliarity with hydrogen technologies and the risks associated with early adoption create hesitancy among industries. Overcoming these barriers will require a combination of technological innovation, regulatory support, and public-private collaboration.

The Role of Ammonia in Hydrogen Production and Transportation

One of the most promising solutions for addressing hydrogen's transportation and storage challenges is ammonia. Ammonia, a compound of hydrogen and nitrogen, can serve as a cost-effective hydrogen carrier, enabling hydrogen to be transported over long distances and stored more efficiently than in its gaseous form. Ammonia's role is particularly significant for industries and regions where hydrogen production is not yet economically feasible or where infrastructure constraints limit its use.

Ammonia cracking technology, which converts ammonia back into hydrogen at the point of use, is unlocking new possibilities for hydrogen applications. This approach enables distributed hydrogen production, particularly in sectors such as marine transport, mining, and heavy industry, where hydrogen combustion engines and fuel cells can replace diesel or LNG.

With significant global players committing to ammonia as a hydrogen carrier, the potential to accelerate hydrogen adoption is becoming increasingly evident. Ammonia offers a cost-effective and scalable solution for storing and transporting hydrogen over long distances. Unlike hydrogen gas, which requires energy-intensive compression or liquefaction, ammonia can be transported using existing infrastructure and converted back into hydrogen at the point of use through cracking technology.

Major projects around the world are showcasing ammonia's potential in the clean energy landscape. In Saudi Arabia, the NEOM green hydrogen project, led by Air Products, is set to produce up to 1.2 million tonnes of ammonia annually for export. The facility will utilise renewable energy to produce green hydrogen via electrolysis, which will then be synthesised into ammonia for easier transportation to international markets. Similarly, Japan is investing heavily in ammonia as part of its hydrogen strategy, with partnerships established to import ammonia from regions with lower production costs, such as Australia and the Middle East. For instance, Japan's IHI Corporation is developing advanced ammonia-fired turbines for power generation, positioning ammonia as a key fuel for decarbonising its energy grid.

Overview

Strategic Review

Corporate Governance

The Role of Hydrogen in the Future of Energy continued

Financial Statements

Ammonia as a carrier for hydrogen

In Europe, the Port of Rotterdam is emerging as a central hub for importing green ammonia, with agreements in place to establish supply chains with countries such as Oman and Chile.

TWh

600 500 400 300 200 100

0

2035

2030

Reference: p.9-HM Government Hydrogen Strategy, August 2021

% = hydrogen as proportion of total energy comsumption in 2050

35%

20%

2040

2045

2050

These projects aim to provide a steady flow of ammonia to meet Europe's growing demand for hydrogen, particularly in industries such as steelmaking, cement production, fertiliser and heavy transport. The Netherlands' extensive ammonia-handling infrastructure, built around its traditional use in agriculture, provides a solid foundation for scaling up its use in clean energy.

Ammonia's role extends beyond transportation. Its ability to serve as a distributed hydrogen production source opens opportunities for hard-to-abate sectors. For example, mining and heavy machinery operators are exploring ammonia-cracked hydrogen to replace diesel in off-road equipment, where the fuel's high energy density and clean combustion make it an attractive option. Similarly, ammonia-cracked hydrogen is gaining traction in the maritime industry, where large engines powered by hydrogen combustion or fuel cells can significantly reduce emissions compared to traditional marine fuels.

The integration of ammonia cracking technology with hydrogen fuel cells is also unlocking new possibilities. At construction sites, ammonia could be delivered in liquid form, cracked into hydrogen on-site, and used to power a combination of fuel cells and hydrogen combustion engines. This approach not only reduces the cost and complexity of hydrogen transport but also addresses the supply challenges that have historically limited hydrogen's adoption.

As more global players invest in ammonia as a carrier for hydrogen, its versatility and economic viability are driving significant interest. With established supply chains, growing infrastructure, and its dual role as a transport medium and production source, ammonia is set to play a pivotal role in enabling hydrogen to achieve its full potential as a clean energy solution.

Hydrogen in the United Kingdom

The UK is positioning itself as a global leader in hydrogen, recognising its potential to decarbonise critical industries, enhance energy security, and drive economic growth. The Government's Hydrogen Strategy outlines ambitious targets to establish 1GW of low-carbon hydrogen production capacity by 2025, rising to 10GW by 2030. Hydrogen UK, the national trade body for the hydrogen sector, has highlighted the critical role of hydrogen in enabling hard-to-abate industries such as steel, chemicals, and heavy transport to meet Net Zero targets while protecting thousands of skilled jobs in the UK's industrial heartlands.

The UK's twin-track approach supports both electrolytic hydrogen, generated through renewable or nuclear energy, and CCUS-enabled hydrogen, produced from natural gas with carbon capture. This strategy enables the UK to capitalise on its natural advantages, such as its wind and solar resources, extensive industrial expertise, and existing gas infrastructure. All hydrogen production must meet the Low Carbon Hydrogen Standard (LCHS), ensuring that only genuinely low-emission hydrogen receives government support.

Infrastructure development is a key priority. The Government's cluster strategy is centred on Track-1 projects, including HyNet in the North West and the East Coast Cluster in Teesside, which aim to create shared CO2 storage infrastructure to support hydrogen production. These clusters are designed to lower costs through economies of scale and act as a blueprint for further expansion. The Hydrogen Production Business Model (HPBM), which uses a Contract for Difference (CfD) mechanism, is providing vital support to low-carbon hydrogen projects, with eleven projects already awarded contracts and more expected in future rounds.

The UK is also well-positioned to play a leading role in hydrogen transportation. With its strong supply chain, skilled workforce, and expertise in ammonia handling, the country can leverage ammonia cracking technology to enhance hydrogen distribution and address the challenges of long-distance transport and storage. Ammonia's ability to serve as a low-cost hydrogen carrier aligns with the UK's focus on scaling clean energy solutions across multiple sectors, from logistics and shipping to high-temperature industrial processes. As a member of Hydrogen UK, AFC Energy is actively contributing to the UK's hydrogen ambitions. Collaboration between industry and the Government will be critical to addressing remaining barriers, such as the alignment of production and demand and the development of refuelling and storage infrastructure. By accelerating investment in hydrogen projects and integrating innovative technologies like ammonia cracking, the UK can replicate its success in offshore wind and establish itself as a global leader in hydrogen.

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