Amanda Lyne’s company, ACAL Energy, hit the headlines earlier this year when it received a £1 million grant from government agency the Carbon Trust to fund the development of its cell system which, if it comes to fruition, holds out the hope of replacing traditional car engines with an alternative that runs on air and hydrogen.
The company has since raised a further £1 million equity investment from US-based I2BF – only the second UK investment for the international clean technology asset management group.
The reasons for these investments, and the excitement that surrounded their announcement, are clear. While fuel cell technology – which uses hydrogen to generate electricity which can then power a motor – already exits, ACAL’s version is, VP strategic business development (a title aimed at US investors if ever there was one) Lyne says, cheaper because it eliminates most of the platinum used in competitors’ designs, replacing it with another catalyst.
“We have 15 or 16 patents at various stages,” she says.
Runcorn-based ACAL was founded by Lyne and Dr Andy Creeth in 2004. The company was initially backed by the Rising Stars Growth Fund and had, before the I2BF deal, raised over £10 million in venture capital funding and research and development collaboration grants.
ACAL’s fuel cell, a “catholyte” system invented by former Unilever chemist Creech, uses a proprietary system based on commodity chemicals.
Its latest fundraisings provide the company – which is, Lyne tells EN, “a good few years off the revenue stage” – with capital for it to continue developing its automotive cell. In the meantime it is also developing “static” fuel cells for use in back-up power provision, which can be commercialised earlier in order to provide a return for its original VC backers.
One of ACAL’s investors is Belgian chemical company Solvay – and ACAL, which employs 32 people, is to install its fi rst mini power plant to provide back-up power to a Solvay site in Warrington, Cheshire.
But it’s the automotive application that is the Holy Grail – powering cars over a long range (because it relies on fuel rather than batteries). The Carbon Trust believes the industry could be worth £180bn globally by 2050.
The model behind ACAL is, Lyne says, “far more akin to a pharmaceutical fi rm than a traditional VC-backed business because it’s a long development cycle”.
“We have always needed venture money but the public venture capital from the Carbon Trust helps us work to a longer-term horizon,” she continues.
“The Carbon Trust have given us incubator support, research and development grant funding and equity investment. Also, their specialist knowledge in terms of knowing where our technology fi ts into the bigger picture helps us to get funding we wouldn’t otherwise have got.”
Developing the technology is only half the commercialisation story, though. In some ways the lack of refuelling infrastructure is as big a challenge.
Lyne says, “Most auto companies have announced they will launch fuel cell-powered cars in 2015 and beyond. Uptake requires a network of hydrogen fi lling stations so it’s a chicken and egg situation.
“Daimler, GM and Honda all have good cars, though. But they are all based on conventional technology. Our technology will be 40 per cent cheaper than theirs in mass production.”
Other carmakers to have signed an agreement with the German government to produce fuel cell vehicles include Ford, Hyundai, Kia, Renault, Nissan and Toyota. And ACAL is, we understand, working with an unnamed Japanese car company to develop a commercial car engine by 2015.
Storing hydrogen, which is highly unstable, both in filling stations and car fuel tanks is one of the big stumbling blocks. Germany and California have, though, pledged to build networks of hydrogen fi lling stations.
In any event, Lyne acknowledges that ACAL’s long-term future lies, like that of all other VC-backed companies, in a sale. The various rounds of fundraising mean that she and Creech own “peanuts”, she continues – less than five per cent of the business between them.
But if the company succeeds in commercialising its automotive product and can convince its backers to hang on long enough for some kind of mass market to develop then those could be some of the most valuable peanuts you’ve ever seen.