UPDATE: Ceres Power's Boiler Trials Meet Another Delay

2nd Jul 2010 11:23

(Adds detail, analysts' comments, share price) By Hannah Benjamin Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Fuel cell company Ceres Power Holdings PLC (CWR.LN) Friday announced another delay to the trial of its combined heat-and-power boilers in people's homes, which will stall the unit's commercial launch until mid-2012. Ceres said trials now won't take place until the final quarter of this year, about three months behind the original schedule. The units have been tested in unoccupied homes, but Ceres said it needs more time to make certain changes to the design to get the required CE safety mark. Nomura Code analyst John-Marc Bunce told clients in a note Friday that he is "unsurprised" by the latest delay in rolling out the high-tech boilers, which are being pitched at the roughly 1.5 million U.K. homeowners a year who are forced to replace their boilers. "It is the optimization of complete fuel cell system in order to meet tough commercial criteria (electrical efficiency, longevity and cost) that has proven challenging for all fuel cell companies," he said. However, Bunce said while the delay to trials was only three months, the delay in launching the boiler was "more significant" and is now about a year behind the original schedule. Initial product sales are now expected in mid-2012. Ceres said it is working with British Gas for an accelerated volume ramp-up within six months of the new launch date. At 1022 GMT Ceres Power Holdings shares were trading 2 pence, or 2.3%, higher at 77 pence, compared with a 0.5% rise in the Dow Jones Smaller Companies index. KBC Peel Hunt analyst Andrew Shepherd-Barron slashed his price target on Ceres to 65 pence from 131 pence previously, telling clients: "We think customers will demand more, hence we think that the volume ramp-up will start even more slowly than the new time line indicates." The company's technology has attracted the interest of electricity company Centrica PLC (CNA.LN), which agreed to provide GBP5 million in funding for the power unit's development. Centrica's British Gas unit has placed orders for 37,500 units. Nomura Code's Bunce has reservations about the boiler's "complex" control strategy, as the unit switches on and off regularly and will throttle power output to try and match the power demands of a home. "We believe this reflects the close involvement of British Gas in the designing of the unit, however, we highlight that British Gas' historic thoughts on design and internal desires may not be aligned to the current state of the markets for these products," he told clients. Ceres also Friday said it expects to end fiscal 2010--which ended June 30--in a robust financial position with net cash and short-term investments of not less than GBP40 million, in line with its previous guidance. -By Hannah Benjamin, Dow Jones Newswires; 44-20-7842-9298; [email protected] (Jason Douglas contributed to this article) (END) Dow Jones Newswires July 02, 2010 06:23 ET (10:23 GMT)