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Rolls-Royce considers options to take 'green' fuel cell commercial

Rolls-Royce, one of the world's leading aerospace engineers, is looking at how to commercialise its new revolutionary "fuel cell business", which analysts say is worth at least £200m.

Field tests of the solid-oxide fuel cell are due to start at Holywell Park, the business estate where Rolls-Royce Energy produces the ceramic components used in the cells.

Sir John Rose, the chief executive of the Derby-based group, is considering whether to bring in outside partners to invest in the cell, known as the SOFC, to help take the technology to the next stage. Another option is selling a share of the business. But floating it off as a separate company is not a viable option.

If testing goes according to plan, Rolls-Royce believes the generators will be ready for commercial sale in 2010. Its scientists believe the fuel cell is one of the lowest-cost and most efficient of all the latest technologies and is being designed for stationary power generation for hospitals, universities and small factories. But the generators can be adap-ted for bigger-scale transport, military and marine applications.

Rolls-Royce says the SOFC hybrid is "clean, quiet, compact, highly fuel efficient and competitive" and it does not emit any noxious gases.

Analysts estimate that the power generation market is potentially worth $50bn, and that Rolls-Royce's new technology is well-placed to take a big slice of this market.

Rolls-Royce, whose full-year figures on Thursday are expec-ted to show a healthy profit rise, declined to comment on the latest developments. But a source close to the company said: "The fuel cell business is very exciting. We have shown that it works at the capacity we had hoped. The question now is, how we take it forward and how we commercialise it on an industrial scale, possibly with outside partners."

Rolls-Royce teamed up with the EnerTek consortium, linked to the Singapore government, in 2005 and the two committed £55m with Rolls-Royce investing £20m a year.

Fuel cells work by combining streams of hydrogen and oxygen to produce electricity through electrochemical reactions similar to a conventional battery – the only byproduct is water.