AFC Energy

A Good Start.

Good Morning Team.

Late last year, I laid out the case for AFC Energy as my moonshot for 2026 - a company with genuine technology, credible partnerships, and a clear path from £100 million market cap to £1 billion valuation by end of 2028.

The thesis was straightforward:

AFC had developed ammonia-to-hydrogen cracking technology that could sell hydrogen at circa £10/kg (versus £30-60+ in the UK market), with energy efficiency six times better than electrolysis.

The actual production cost is significantly lower. The aim here is to completely disrupt the economics whilst maintaining a healthy margin.

They’d redesigned their fuel cell generators to achieve massive cost reductions. They had partnerships with serious industrial players.

And they were targeting commercial viability without government subsidies in a sector where everyone else was either waiting for infrastructure or depending on support that hasn’t materialised.

Bold claims.

Since publishing that piece, I’ve had the opportunity to sit down with both CEO John Wilson and Chief Strategy Officer Nick Walker for extensive conversations about where AFC is heading and how they plan to get there.

I wanted to understand not just what they’re building, but how they think, what drives their decisions and whether they actually grasp the market they’re trying to serve.

And in the past few weeks, three significant announcements have landed that validate what they told me.

This update does three things:

First, it walks through the recent announcements - the LC30 generator delivery, the Komatsu partnership, and the upcoming demonstration day - with context from my conversations with management.

Second, it explores why the broader hydrogen sector has struggled and why AFC’s approach might succeed where hundreds of billions in investment has failed.

Third, it revisits the investment thesis with updated data and assesses whether the pathway to 10x returns remains intact.

This is a long read. But if you’re considering whether to invest in AFC Energy - or whether to hold your existing position - you need to understand not just what’s happened, but why it matters.

Let’s dive in.

The LC30 Generator: Delivered On Time, Under Budget

On 21 January, AFC announced completion of the first next-generation LC30 30kW liquid-cooled fuel cell generator.

The headline: they didn’t just hit their 66% cost reduction target. They achieved 85%.

Management set an ambitious target, then beat it by nearly 30%.

When I spoke to John Wilson back in December, he walked me through the entire thinking behind this redesign:

‘What we are building at AFC is a commercially viable, clean energy business that disrupts the sector within which it operates,’ he told me.

‘Nobody’s making any money in the wider hydrogen sector. Everyone’s kind of tired of investments into businesses that are horrifically loss making. We don’t need that. We’ve positioned the business over the last 10 months to get us to a point where, with low volume, we can be a profitable enterprise.’

He was brutally honest about the previous generator:

‘The fuel cell generators we have currently in our Speedy JV, they’re a work of art, an absolute work of art. There’s 10,000 components. It’s like a car in terms of its complexity in the supply chain that one requires to build behind that. I’m not bright enough to be able to rationalise all of that in my head. And we don’t have the balance sheet to support that huge supply chain.’

The solution? Radical simplification.

‘We’ve gone from 10,000 bits to a couple hundred bits. Rather than having 12 individual fuel cells, 12 2.5-kilowatt fuel cells, we’ve got one 30-kilowatt fuel cell, the cost of which is equivalent to one of those fuel cells. Rather than everything being bespoke, so the skid that it sits on was bespoke, it’s a case of saying, right, what’s the nearest size skid that we can buy off the shelf? So rather than paying £15,000 for a skid, we’re paying £5,000.’

The specs tell the full story:

• 85% lower manufacturing cost

• 50% mass reduction

• 45% volume reduction

• 95% fewer components (from 10,000 to a couple of hundred)

• 20% more efficient

• Operating range expanded from -5°C to +40°C to -20°C to +50°C

This last point is crucial. The previous generator couldn’t operate in extreme conditions. The new one can deploy globally across all inhabited continents.

Saudi Arabia? Scandinavia? Sure.

That’s opening up entire markets that were previously inaccessible.

Before the updates, I pushed John on whether investors should believe these numbers.

He smiled:

‘I remember on an investor call, a guy basically called me a liar and an idiot’ about the 66% cost reduction target. ‘But I think we’ve proven that we actually went better than that.’

The unit is now operational and producing power to specification.

On schedule.

And below budget.

As John put it in our conversation:

‘With our fuel cell generators, for example, they’re cash flow positive when we sell them. It’s not like the previous generation, which cost £355,000 to build - it’s probably more than that, but that’s the cost we’ve stated - that we sell into a JV, the 200 of which we contribute £100,000. So the economics of our business and business model stack up.’

That’s execution.

Komatsu: US$43 Billion of Validation

This week, AFC announced a Joint Development Agreement with Komatsu.

Komatsu is a $43 billion market cap company. One of the world’s leading manufacturers of construction, mining, forestry, and industrial heavy equipment.

Listed in Tokyo and Osaka.

The JDA is worth approximately $2 million, subject to milestone delivery.

The objective: integrate AFC’s ammonia cracking technology with a Komatsu industrial internal combustion diesel engine. Demonstrate that you can run a diesel engine on liquid ammonia with minimal modifications.

Why does this matter?

Because if successful, it opens an entirely new vertical. Komatsu has fleets of construction and mining equipment globally. Heavy machinery that currently runs on diesel.

If you can crack ammonia on-site and fuel those engines directly, you’ve created a decarbonisation pathway for an industry that has limited alternatives.

This isn’t about fuel cells anymore. This is about the cracker technology standing on its own as the enabling solution.

When I spoke to Nick Walker, AFC’s Chief Strategy Officer, about the competitive landscape, he was emphatic about what sets AFC apart:

‘There are a number of companies out there who build very large, what I call stick-built ammonia crackers. Companies like KBR, Topsoe, Casale - they build crackers that cost hundreds of millions, if not billions of dollars. They take many years to build.’

The difference?

‘Where we see the opportunity for AFC Energy is in what we call the decentralised cracker market. Our systems are small, they’re compact, they’re containerised, and you can transport them on the back of a low-load lorry and put them down on a customer’s site.’

But the real advantage is efficiency. Nick explained:

‘If you take, for example, a published figure from ITM Power’s Neptune 5 system - they published a figure of 55 kilowatt hours per kilogram to produce hydrogen. Our system, we have a published figure in the market of 9.5. It’s approximately one-sixth the amount of power to produce a kilo of hydrogen from our system compared to electrolyser systems.’

One-sixth the power. In a country with the highest industrial power costs in the world.

‘For production of hydrogen from electrolysis,’ Nick continued, ‘around 70% of the cost of producing hydrogen is the power. And this is one of the things that has made it very challenging.’

Komatsu’s Chief Technology Officer, Taisuke Kusaba, clearly understands this:

‘We are very pleased to be working with AFC Energy and its leading ammonia cracking technology to further explore measures to decarbonise our fleets of equipment. Our goal is to achieve a sustainable society and facilitate business growth. We envisage AFC Energy’s ammonia cracking technology as potentially playing an important role in fulfilling our goal.’

That’s a $43 billion industrial conglomerate publicly stating they see AFC’s technology as important to their decarbonisation strategy.

Let me remind you: the mystery S&P 500 partner from the original thesis? They chose AFC after evaluating the global competitive landscape. They’re reimbursing development costs and targeting material revenues from 2027.

Now Komatsu - a company with the resources to develop in-house or partner with established giants - has also chosen AFC.

Nick told me about the due diligence process companies go through:

‘That S&P company looked at a number of companies around the world that are developing the compact type of ammonia cracker technology and did quite a significant number of months of due diligence. And obviously picked AFC in the end to move forward with for that JDA.’

What convinced them?

‘Number one, the capabilities of the technology. Would the technology be one that would be able to manufacture a system that would be a commercially viable and operating system? A lot of companies develop technologies in the lab or very small pilot scale. Companies need to take a view whether it would have a commercial model that would actually work and operate in the market.’

The interest level, Nick said, has been remarkable:

‘Over the last few months, it’s been particularly notable - the interest level in the cracker is very, very significant and growing all the time. We get a lot of approaches from people who have been thinking about or using electrolysers in the UK, who have not yet seen subsidies being forthcoming, and are starting to think, “Maybe we need to have a look at that cracker.”’

Komatsu validates that interest.

5 March: Show, Don’t Tell

AFC has now invited retail investors to an equipment demonstration day at Dunsfold Aerodrome.

The agenda:

• LC30 30kW generator powering construction site cabin setup

• LC30 powering electric vehicle charging

• 200kW fuel cell generator charging electric excavators

• Hydrogen production from ammonia cracker (live demonstration)

• Hydrogen storage vessel fill

This is the Speedy Hydrogen Solutions joint venture in action. AFC’s fuel cell technology combined with Speedy’s nationwide logistics and market expertise, delivering ‘a complete, zero-emission power ecosystem tailored specifically for construction sites.’

No new material disclosures will be made.

So this isn’t a pitch event. This is a working demonstration.

The generators will be operating. The cracker will be producing hydrogen. The applications - site cabins, EV charging, excavator charging - will be live.

Show, don’t tell.

I like this.

A lot.

Because hydrogen companies have spent two decades telling investors what they’re going to do.

AFC is showing what they can do today.

When I asked John about the decision to pause the original Speedy deployments to achieve the cost reduction, he explained the thinking:

‘We explained to them clearly what we were doing. We have now delivered that first unit, as you saw, on time, under budget. And so we’re now going to be having a capability in the not too distant future of producing more and more units of that particular model. And therefore, we can hopefully very quickly get to an unpausing of the situation and move forward with that joint venture.’

Nick added context on why this matters:

‘We did pause the production of more of the old units to Speedy. But quite simply, that unit was too expensive. It used an older technology, an air-cooled stack. There were 12 stacks and modules in that system, each module had balance of plant and fans and control systems and software systems - we had 12 of them sitting in a chassis. And that system, frankly, was very, very expensive.’

The hydrogen costs were equally prohibitive:

‘The hydrogen that was being used with that system was being sourced from the open market in bottles, and bottled hydrogen delivered to a site in the UK can cost anything from £30 up to £60, £70 pounds and more. So when you have a very expensive generator and very expensive hydrogen, you’re asking companies to pay many, many multiples both for hiring a genset and the fuel.’

That doesn’t work. No matter how good your technology, if the total cost of ownership is 3x diesel, construction companies won’t adopt it.

Would you?

The demonstration will show the solution: lower-cost generators powered by lower-cost hydrogen. If investors have been invited to spectate, then you can be pretty damn sure it works.

Why UK Hydrogen Has Failed Before (And Why That Creates AFC’s Opportunity)

Before we revisit the investment thesis, you need to understand why hundreds of billions of dollars in hydrogen investment has failed to create a functioning market.

AFC’s opportunity exists precisely because the conventional approach doesn’t work.

Nick Walker has been following hydrogen for 25 years. As an investment analyst, he’s covered almost 60 fuel cell and electrolyser companies globally, written thematic research on hydrogen policy across UK, EU, US, Japan and Korea, and watched multiple boom-bust cycles.

His perspective is essential to understanding the landscape.

The Hope Cycle (2019-2021)

‘It really started in 2019 when Theresa May legislated for the Net Zero 2050 legislation,’ Nick explained. ‘We were one of the first industrialised countries to legislate for that. And this really sparked the ignition of hope in this market.’

The results were spectacular:

‘ITM and Ceres, in particular, were trading around about 90 million market cap, roughly speaking. They topped out at around 3 billion and 2.5 billion respectively in 2021 when they peaked. So you literally went from 90 to 70 - that was the hope value of this legislation having been passed.’

Simultaneously, major agencies published bullish projections.

For example, the IEA, IRENA, Argus, Bloomberg New Energy Finance - they started to put out projections for how much hydrogen might be used and produced by 2050. Some of the highest ones got up to around 600 million tonnes of hydrogen being in use by 2050, from around 90 million tonnes in 2022.

What followed was a brutal reality check.

Nick noted that ‘What we’ve seen over the post-2021 period is a much more pragmatic approach, a revision of forecasts. It’s been much more difficult, more costly. Those forecasts have now been revised down to around 300-350 million tonnes by 2050. Almost a halving.’

The reason is easy to understand:

Mathematics.

The UK has the highest industrial power costs in the world. Parts of Northern Europe also have quite high power costs. This is fundamentally the reason why it’s been very difficult to produce hydrogen or get projects to FID.

The demand hasn’t been there because the costs are too high.

You will understand this if you’ve opened an energy bill recently.

Nick advises that ‘there’s now about $110 billion in post-FID investment in the hydrogen market globally. But approximately 30% of that is in China. Around 22-23% is in North America, and most of that investment is actually going into blue ammonia production, carbon capture and storage. And 17% of the investment has been committed in Europe.’

The actual operational capacity reveals the gap between promise and reality:

• China: 3.5-3.6 gigawatts of green hydrogen production

• Europe: around 580 megawatts

• UK: only 25-30 megawatts

The UK is now well behind the curve. And that’s unlikely to change unless power costs come down.

Nick’s explanation is damning:

‘If you look at the cost of producing hydrogen from electrolysis before subsidies, it’s around 8 to 10 times the cost of natural gas in the UK and Europe. People just aren’t going to buy it at that level. We’ve seen lots of big industrial companies make that very point at hydrogen conferences over the years.'

For production of hydrogen from electrolysis, around 70% of the cost of producing hydrogen is the power. And the cost of power, which is the primary cost, is not going to be impacted by hydrogen subsidies at all.’

He contrasted this with renewable energy:

‘People often talk about the success of the subsidy regime in the offshore wind sector and how the cost of manufacturing wind turbines has come down. Obviously they’ve grown in size substantially, but also they’re built now at significant scale. You get the economies of scale from manufacturing.’

Hydrogen is different:

‘The subsidies that are being put in are obviously going to help build things, but actually to run things becomes quite challenging. The cost of power - nobody is reducing the cost of power. There’s an argument to say the cost of power in the UK could be moving up because of investment going into the grid system, investment in things like Hinkley Point C, curtailment of offshore wind - a billion pounds a year wasted.’

The fundamental problem remains that hydrogen subsidies themselves are not affecting economies of scale through mass manufacturing, and therefore unit costs are not coming down.

In other words, the cost of power, which is the primary cost of producing hydrogen from electrolysis, is not going to be impacted by hydrogen subsidies.

You can throw billions at electrolysis projects.

If the electricity costs 25-30 pence per kWh and you need 50-55 kWh to produce one kilogram of hydrogen, the economics don’t work.

No amount of subsidy changes that underlying reality.

The Subsidy Mirage

Nick’s assessment of UK hydrogen subsidies actually sounded faintly scathing.

‘In the UK, the HAR system has very much been focused on an OPEX subsidy - helping to subsidise the cost of power. But none of the HAR subsidies have actually, as yet, started to be paid out. So we haven’t actually seen the effect of what the subsidies could have. There are a lot of promises made, a lot of delays.’

He’s equally sceptical about European approaches.

‘In Europe, you’ve seen a lot of capex subsidies through the IPCEI system and quite thin OPEX subsidies through the European Hydrogen Bank at around 80-90 euro cents per kilo. That hasn’t really helped either. It’s helped potentially to build things, but actually to run things becomes quite challenging.’

The result?

For every project that reaches FID, perhaps six don’t.

This then does not look like a good investment for funds with the firepower to spread capital across risk investments.

And increasingly, companies are looking for alternatives.

‘We get a lot of approaches from people who have been thinking about or using electrolysers in the UK, who have not yet seen subsidies being forthcoming, and are starting to think, “Okay, well, this cracker we’ve announced, the HY-5 cracker, the bigger cracker joint development agreement - maybe we need to have a look at that cracker and learn about what it’s about.”’

The interest in AFC’s technology is clearly driven by frustration with the conventional approach. Commercially viable hydrogen delivered to customers with no subsidy - in an environment where subsidies that have been left unpaid and may not exist over the longer term - is going to attract interest.

The Infrastructure Problem

Beyond cost, there’s the infrastructure challenge.

Consider Nick on the topic:

‘Pipeline projects have been talked about, but they just haven’t been built yet. The EU hydrogen backbone is meant to be 50,000 kilometres, which is 40% of today’s EU transmission network length. But there’s only 3-4% of that that’s reached FID. Similarly in the UK, Project Union - there’s been very small-scale industrial pilot lines. Everything’s pre-FID because the cost of hydrogen is a problem.’

John was equally blunt about UK grid constraints: ‘If you wanted to get a two-megawatt grid connection, for example, you’re probably waiting for over a decade in this country. The infrastructure does not exist.’

This creates a circular problem: you need hydrogen demand to justify building pipelines, but you can’t get demand without affordable hydrogen, and you can’t get affordable hydrogen without infrastructure to transport it.

AFC’s solution bypasses the issue in a way others simply don’t.

The Ammonia Advantage

Per Nick:

‘Ammonia is 17.6% hydrogen by weight. It’s already produced at scale - 180 million tonnes annually worldwide. It has established global supply chains, can be transported in ordinary tanks at modest pressures, and has been used industrially for a century. The infrastructure exists, the logistics are solved, and the costs are known.’

The business model is simple.

Import ammonia from places like Neom and many others that are being developed at scale between 2027 and 2030.

They can produce at a much, much lower cost because renewable power in those countries is much cheaper than in the UK.

Then turn the hydrogen into ammonia, put it on a boat, then transport it to the customer’s site and crack it.

John expanded:

‘Ammonia is the second most commonly traded chemical on Earth. It is a commodity. It just hasn’t been looked at and utilised for hydrogen in this way.’

And the cracking itself requires minimal power.

The system requires 9.5 kilowatt hours per kilogram. Compare that to ITM Power’s Neptune 5 system - they published a figure of 55 kilowatt hours per kilogram.

It’s approximately one-sixth the amount of power to produce a kilo of hydrogen from the AFC system compared to electrolyser systems.

In a market where 70% of production cost is power, that’s transformative.

Why Large Crackers Aren’t the Answer

I did press Nick on why established players like Topsoe, KBR and Casale haven’t filled this gap. His reply:

‘There are companies who build very large, what I call stick-built ammonia crackers. They’ve been used in various chemical processes for many years. But these are very large construction projects. They take many years to build. They cost hundreds of millions, if not billions of dollars.’

The application is clearly different - these crackers are going to be built at ports, and there’s import terminals to store the ammonia coming off ships. Crackers are being built relatively close to those import terminal tanks, and they’re going to crack the ammonia into hydrogen for use close to those ports.

That’s fine for port infrastructure.

But most potential hydrogen users aren’t located at ports.

Nick advises that ‘where we see the opportunity for AFC Energy is in what we call the decentralised cracker market. Our systems are small, they’re compact, they’re containerised, and you can transport them on the back of a low-loader lorry and put them down on a customer’s site. They’re distributed technology, not centralised.’

This matters because building pipeline networks (like the EU hydrogen backbone) will take decades. Once the full network is built, there’s going to be full distribution, similar to natural gas. But in the interim (assuming the cost is viable in a market that doesn’t yet have the hydrogen to fill those pipelines), AFC can shine.

AFC’s positioning: ‘We see the opportunity to put these compact and scalable modular systems on company sites or for use in transportation or other applications being there for quite some time.’

Twenty years is quite some time indeed.

AFC’s Technology Moat: Why The IP Matters

Understanding why AFC’s technology is defensible requires going deeper than marketing claims.

Both John and Nick were candid about what creates competitive advantage and what doesn’t.

The Reactor Technology

‘There’s a lot of IP around our technology and the reactor technology that’s been developed by our CTO, Dr Mike Rendall and his engineering teams,’ Nick explained. ‘There’s a lot of patents that have been filed around that technology.’

But what specifically makes it valuable?

‘One of the key elements is that the system has a very, very low power requirement. There’s a very, very high level of thermal capability to keep that system operating at the right temperature to crack ammonia and produce hydrogen. The thermal capability and the ability to recycle heat that’s used in the system to keep it to the right temperature with a minimal power input requirement - that is one of the key advantages.’

This is a massive hint.

John was more blunt about the source of value:

‘If you look at the make or break of the hydrogen sector, it’s going to be around producing hydrogen at a cost that is commercially viable for customers to buy. And so if you look at where the most significant amount of IP sits within the company today, it’s within the cracker, because that is the core and fundamental part that’s really important for us.’

The cracker enables everything else.

Even if AFC had a low-cost generator (which they now have) but are still having to source hydrogen from the market as much as >£60 pounds per kilo, that still doesn’t make an economically viable business.

The combination of low-cost hydrogen provision without subsidy through the cracker technology and the low-cost hydrogen generator are what makes the magic.

Why is This Cracker Different

Nick outlined the specific advantages:

1. Energy Efficiency: ‘Our new generation architecture achieves significantly more efficiency than the 50-55 kWh per kilogram consumed by electrolysers. This is independently verifiable, demonstrated technology that’s been validated at the UK National Physical Laboratory.’

2. Thermal Management: ‘A lot of the secret sauce is around the very, very high-quality thermal dynamics in that system that enables the system to maintain heat, to be able to crack with very, very low power input on an ongoing basis.’

3. Durability: ‘Choice of materials is critical. Ammonia is a very corrosive substance. To have a choice of materials that would enable a system to operate for an 8 to 10-year life and not need to replace lots of parts during that period is critical.’

4. Catalysis: ‘Obviously the catalysis technology inside that’s actually cracking the ammonia into hydrogen and nitrogen - the quality of that and the performance of that is key.’

5. Modularity: ‘The HY-5 comes as a plug-and-play containerised module. No site construction or complex installation required. Deploy it, connect your ammonia supply, and start producing hydrogen. When you’re done, move it to the next location.’

John emphasised the trailblazer advantage:

‘We produced the world’s first decentralised pilot small-scale cracking plant - basically a chemical plant of which the reactor is the size of a fire extinguisher. We do have a relative degree of first-movement advantage in that.’

S&P 500 Validation

The ‘mystery’ S&P 500 partner’s due diligence process also independently validates the technology position.

Consider Nick’s comment:

‘My understanding is that that S&P company looked at a number of companies around the world that are developing the compact type of ammonia cracker technology and did quite a significant number of months of due diligence.’

What convinced them?

Most importantly, the capabilities of the technology.

Would the technology be one that would be able to manufacture a system that would be a commercially viable and operating system?

We’ve all seen lots of companies develop technologies in the lab or on a very small pilot scale. Companies need to know whether a commercial model is possible that would actually work and operate in the market.

In the end:

‘They believed that our approach was the most innovative, most suitable for scaling, and because of the efficiency, the lowest cost per molecule.’

The IP protection was also specifically validated.

To sum up, a major global industrial player conducted months of due diligence, analysed the competitive landscape, then assessed the IP position and concluded AFC’s technology was worth partnering with.

What About Competition?

I asked John directly about the risk of competitors replicating AFC’s approach.

His answer was instructive:

‘The first point I’d make is we welcome that because that creates more of a market and a commodity business in itself is not a bad business as long as you can differentiate yourself. I point to the Bulgin business that Carl and I built. It was a 2-3% operating margin business when we sold it the final time to a 40% operating margin business. We sold the same types of products as everybody else. We just did it in a very different way.’

He sees the defensibility in the end-to-end solution:

‘If you look at the two sides of our business, we’ve got the fuel cells and we’ve got our ability to produce low-cost hydrogen. It’s the end-to-end solution where we believe we are unique. Somebody can come in and produce a low-cost fuel cell generator, but ultimately they need hydrogen for it. If they want to buy hydrogen from us, that’s absolutely fine. We’ll provide the hydrogen.’

And even if competitors match the generator cost:

‘The actual capital cost of the fuel cell, if you look at it over the lifespan of a generator, is a small proportion of that cost. So even if somebody came in, a Chinese competitor was half the cost, unless they can produce hydrogen or provide hydrogen at a very, very competitive price point, then that model doesn’t work.’

On the cracker side, the protective moat is clearly IP driven. Are there risks of IP infringement?

Yes, of course. But AFC’s focus is on the design of its individual reactors where the chemical reaction takes place.

Operational Knowledge as Moat

Nick pointed out another advantage that doesn’t appear on patent filings:

‘With those deployments of generators, we’ve learned little things. What do the risk assessments need to look like? Site layouts, where can we be ultra-competitive, where are we less competitive? For ATEX reasons, for explosive risk reasons, there are certain distances between fuel cells and let-down stations and hydrogen that need to be maintained. Understanding that, understanding the supply chain of hydrogen, how do we get hydrogen to site, what does it need to look like - MCP, little gas bottles, tube trailer - what are the consumption rates for different types of deployments?’

This tacit knowledge accumulates.

‘It’s understanding all of that that puts us in a very good position because somebody’s going to have to learn all of that. We’ve got telemetry on our units. We understand what the consumption is. If we’re powering a welfare station in the middle of winter, we know what the draw is from that. So we’re building a lot of inherent knowledge which protects the position.’

You can’t patent knowing how much hydrogen a construction welfare cabin uses in February in Yorkshire.

But that knowledge matters when you’re quoting projects and designing systems.

And it also very much matters when getting a potential client YES.

IP Protection Strategy

John was clear about the strategy:

‘We’ve filed PCT patent applications covering core technology with additional batches following in 2025…The IP that resides around the reactor will always be kept in-house. That’s the key part of our secret sauce. It’s not something I could ever see we’ll likely outsource. That key piece of technology will be made in-house because that is very valuable to us.’

This is smart.

You can outsource fuel cell packaging to Volex.

You can partner with ICL for ammonia supply.

You can work with Speedy for distribution.

But the core reactor technology - the thing that enables the whole business model - stays proprietary.

What This Means for the Investment Thesis

My original thesis rested on three critical assumptions:

1. The technology would work at commercial scale

The LC30 is operational. The cracker has been running for 18+ months at the pilot site. The Hy-5 (500kg/day) units are moving to deployment at end of 2026. The larger industrial crackers are under development with both the S&P 500 partner and now Komatsu.

2. The cost reductions would be achieved

85% reduction in fuel cell generator costs.

Achieved. On schedule.

Below budget.

9.5 kWh/kg energy consumption for ammonia cracking versus 50-55 kWh/kg for electrolysis. That’s one-sixth the power cost to produce the same hydrogen.

£10/kg hydrogen price point under fuel-as-a-service model. This compares to £30-60+ for bottled hydrogen in the UK market today.

Nick explained how they arrived at £10/kg: ‘If you look at the cost of producing hydrogen from ammonia based on a spot rate for the price of ammonia - $400 a tonne, for example - that translates to about £1.60 a kilo, just the raw material cost. And then with our 9.5 kilowatts, if we assume 25 pence a kilowatt hour, you’re looking at about £2.50. So you get to around £4 a kilo, and then you’ve got your depreciation and amortisation and service costs.’

That makes £10/kg not just doable but highly profitable.

The economics work. And yes, without subsidies.

3. Strategic partners would validate the approach

• S&P 500 industrial company: signed JDA, reimbursing development costs, targeting material revenues from 2027.

• Komatsu: US$43 billion market cap, signed JDA worth $2 million, publicly stating AFC’s technology plays an important role in their decarbonisation strategy. If successful, many further millions will follow.

• Volex: £700+ million revenue manufacturing partner, contracted to produce fuel cell generators at scale.

• Speedy Hire: joint venture for UK construction market, demonstration day scheduled for March 5th.

• ICL: joint venture for hydrogen production and sales, pilot plant operational, Hy-5 units deploying in 2026.

• TAMGO: exclusive distribution across 17 MENA countries, first generator sale to Aramco completed.

The validation is only increasing.

Revenue Pathway Remains Intact

My original targets:

2026: £10-20 million revenue

• Hy-5 units begin deployment under FaaS model

• ICL JV commences hydrogen production

• Next-gen fuel cells deployed through Speedy

• Initial revenues from emerging opportunities (now including Komatsu)

2027: £50-100 million revenue

• Material revenues from S&P 500 partner relationship (industrial crackers)

• Volume fuel cell deployments with Volex manufacturing

• International expansion through TAMGO

• Multiple verticals showing traction

2028: £150-250 million revenue

• Dominant position in portable ammonia cracking

• Significant UK market share in hydrogen fuel cell generators

• Proven business model with strong unit economics

• International expansion bearing fruit

Let me walk through why these targets remain achievable based on what John and Nick told me.

2026: The Foundation Year

The HY-5 economics are critical to understand.

Each unit producing 500kg per day at £10 per kilogram generates £5,000 daily or £1.825 million annually at full utilisation. At 70% utilisation, that’s £1.28 million per unit per year.

Nick confirmed the £10/kg pricing is commercially viable.

Deploying just 10 HY-5 units in 2026 would generate £12.8 million in annual hydrogen revenue at 70% utilisation. That’s not aggressive for a product launching with multiple partnerships already in place.

The ICL joint venture adds another revenue stream.

‘The intention is to put ammonia crackers onto ICL sites,’ Nick explained. ‘They can import ammonia, we’ll crack ammonia, and then the joint venture will sell hydrogen to the market at £10 per kilo with an as-a-service model.’

The pilot plant can produce 400kg per day. At 70% utilisation and £10/kg, that’s approximately £1 million annually from a single site. As HY-5 units deploy to the JV, revenue scales.

The LC30 fuel cells through Speedy represent another stream. John was clear about the model: ‘The economics of our business and business model stack up. What we need to do is prove that there is a market for our product set.’

And now there’s Komatsu. The JDA itself is worth approximately $2 million but if successful and it progresses to commercial deployment, that’s heavy industrial equipment as a vertical.

£10-20 million in 2026 requires execution, but the building blocks are in place.

2027: Material Revenues From Industrial Crackers

This is where the S&P 500 partnership becomes transformative.

John walked me through the potential scale:

‘If you look at the cost of an electrolyser, it’s around a million per megawatt or thereabouts. A four-ton-per-day cracker, which is what we are looking to develop for this partner, equates to around about 10 megawatts. So if you use that rule of thumb and you put that across multiple systems per year, then you kind of get an answer.’

Let’s do that maths. If an industrial cracker sells for £8-10 million (using the electrolyser comparison as a rough guide), and AFC delivers 5-10 units in 2027, that’s £40-100 million in revenue from that partnership alone.

John did caution, to his credit when asked about the many millions in profit to come:

‘That’s not a forecast. We need to be grounded. We’ve yet to kick off the second phase of this program. There’s a way to go. But potentially it’s the latter, not the former.’

But that sounds like a forecast to me. Just one that can get through compliance.

The fuel cell generator volume matters too. Nick outlined the supply chain:

‘We’re working with Illuming Power in Canada to source a fuel cell from the market that already exists. Illuming Power helps to package that, and then we’re working with Volex, the contract manufacturer, as a mass market producer of those units. So we don’t see a lot of bottlenecks in that supply chain.’

At what scale?

Volex is a very significant operation with a number of plants around the world that can manufacture those systems.

Supply will simply be led by customer demand.

And happy customers beget more customers.

If Speedy deploys 500 units in 2027 (modest for a nationwide construction equipment rental company if the economics work), and each unit generates £15-20K in rental revenue annually (conservative compared to diesel genset rental rates), that’s £7.5-10 million in revenue to the JV, of which AFC captures its share plus hydrogen supply.

TAMGO in the MENA region adds international dimension. TAMGO is developing a commercial pipeline including tenders for zero-emission hybrid systems comprising generators, BESS and solar arrays.

Add it all up:

• S&P 500 industrial crackers: £40-100 million potential

• Fuel cell volumes through Speedy and direct sales: £10-25 million

• HY-5 deployments scaling: £20-40 million

• ICL JV hydrogen sales: £5-10 million

• International (TAMGO, others): £5-15 million

• Komatsu and emerging opportunities: variable

The £50-100 million target for 2027 is achievable if multiple revenue streams contribute.

2028: Proving The Business Model

By 2028, the question becomes one of scale.

If the technology performs, if customers adopt and if unit economics prove out in real deployments (yes a lot of IFs, but you’re investing risk capital here) then 2028 becomes about manufacturing capacity and working capital rather than product-market fit.

John’s background becomes relevant here.

‘At EKT, we had 17 small businesses that had limited strategic fit. There were businesses that needed to be turned around, businesses that needed to be shut. But within there was inherent value and opportunity to grow. We were able to take it from £7 million market cap to over £100 million.’

That’s a 14x return scaling industrial businesses.

The skills are clearly transferable: supply chain management, manufacturing partnerships, commercial focus and capital discipline.

‘Business is all about people,’ John emphasised. ‘People make a business a success or failure. If you make a business as simple as possible, it’s very easy for people to understand their role. You’ve got to have people that believe in the story.’

Agreed John.

Belief is important to employees, customers and investors.

Sentiment matters.

By 2028, if the story is playing out - if HY-5 units are operating reliably, if industrial crackers are being delivered and if fuel cells are displacing diesel gensets - then scaling becomes a execution challenge rather than a technology risk.

£150-250 million in revenue implies:

• 100-150 HY-5 units deployed (£128-192 million at 70% utilisation)

• 20-30 large industrial crackers sold (£160-300 million assuming £8-10 million per unit, though not all revenue recognises in single year)

• 1,000-2,000 fuel cell generators in market (£50-150 million cumulative revenue impact)

• JV and recurring revenues (£20-50 million)

Is that achievable?

It requires strong execution, customer adoption, manufacturing scale-up and working capital.

But it’s achievable.

The Komatsu JDA adds another dimension.

‘Successful operational delivery of an operational diesel engine under the JDA will demonstrate that an internal combustion engine can be run on liquid ammonia with minimal changes necessary, thereby introducing AFC Energy’s technology into a further vertical with a significant addressable market.’

Heavy equipment manufacturers globally represent tens of billions in annual market value. If ammonia-fueled engines become a decarbonisation pathway, that market alone could support AFC’s 2028 revenue targets.

Hence the share price movement.

Unit Economics Must Work Though

All of this depends on the fundamental economics being sound.

Nick was emphatic about this:

‘When John and Karl came into the business and did a review of operations and capabilities, one of the first things they basically made an announcement of is that we need to have equipment that we develop and build and sell that’s going to be commercially viable in its use with our customers. That’s absolutely fundamental because we do not want to rely on subsidies.’

Why?

Let’s really hammer this point home.

Both John and Nick repeated this again and again.

Subsidies in the UK and the hydrogen sector in general have not been forthcoming after five years of a subsidy system that has made promises but not delivered.

An unpaid invoice doesn’t buy the groceries.

John put it directly:

‘With our fuel cell generators, they’re cash flow positive when we sell them. The economics of our business and business model stack up. What we need to do is prove that there is a market for our product set.’

That’s the right focus.

The Asymmetry is Compelling

At roughly £145 million market cap today (up from £100 million when I wrote the original piece), AFC is still priced for modest success at best.

The market is assuming that:

• Technology performs but doesn’t dominate

• Partnerships deliver incremental revenue but nothing transformative

• Scale-up happens but slowly

• Competition limits margin expansion

If any of the following occur in 2026-2027:

• Hy-5 deployments scale up

• Speedy JV scales post-demonstration day

• S&P 500 JDA advances to Phase 2 with large-scale cracker orders

• Komatsu JDA succeeds and progresses to commercial discussions

• ICL JV demonstrates profitable hydrogen production at scale

• International expansion (TAMGO or new partnerships) shows traction

...then the valuation re-rates.

Substantially.

And strategic acquirers start to take notice.

The Bottom Line

Two months ago, I argued AFC Energy was a 10x opportunity if execution succeeded.

Since then:

• LC30 generator delivered on time, under budget, exceeding cost reduction targets

• Komatsu ($43 billion market cap) signed JDA for ammonia-fueled engines

• Retail investor demonstration day scheduled for 5 March with live equipment operations

This is a story of commercial products, industrial partnerships and public demonstrations.

AKA getting people to believe in the story.

When I asked John about his approach to running AFC, his answer revealed a lot about why execution is happening:

‘Leadership is about being able to deal with huge amounts of ambiguity because you need the ambiguity to retain agility and be able to react. You’ve got to have that when you’re developing a market that doesn’t exist.

Business is all about people. If you make a business as simple as possible, it’s very easy for people to understand. It’s very easy for people to understand what their role in that business is. You’ve got to have the right people. You’ve got to have people that believe in the story, in the narrative that the leadership is pushing.’

He’s also clear about what matters:

‘The most important thing in any business is that you understand the market and then develop a product for that market, not develop a product and then try and find a market for it. That’s very, very difficult.’

And on capital allocation?

‘I run the business as if it’s our own money. And to an extent we are - we’re shareholders in the business. We bought a reasonable amount of shares each when we joined.’

This matters. Management with skin in the game, that understands market fit and executes on schedule and below budget.

The thesis is playing out.

I’m not suggesting you mortgage the house and go all-in. This remains a high-risk, high-reward opportunity appropriate only for investors with proper risk tolerance and portfolio diversification.

But if you believed the thesis in December, the evidence since then strengthens it.

If you didn’t believe it then, the developments since - and particularly the conversations with Wilson and Walker - might warrant a fresh look.

As for me? Live demonstrations of working equipment tell you more than any analyst report or management presentation ever could.

And with Komatsu and an S&P 500 company both validating the technology, and Volex geared up for volume manufacturing, and Speedy ready to deploy across UK construction sites and the ICL JV producing hydrogen for sale in 2026…

Well, our new £145 million market cap might look rather silly in retrospect.

The downside from here is still capped at 100%. The upside if execution continues?

5-10x or more by end of 2028 remains entirely plausible.

As ever, this is not investment advice.

But sometimes you find companies at that perfect inflection point.

You also sometimes get the chance to sit down with that management team and hear directly how they think, what drives their decisions and whether they actually understand the market they’re trying to serve.

I’ve now done both with AFC Energy.

The conversations with John Wilson and Nick Walker gave me more confidence in the thesis, not less.

These people are experienced operators who’ve scaled industrial manufacturing businesses before, who understand unit economics, who are realistic about what works and what doesn’t.

I’ll see you on the Moon.