Ceres Power (LON: CWR) (OTCPK: CPWHF) shares are down 11% in London this morning. CWR shares have fallen on the back of a corporate announcement - that there are to be delays in China. This is unfortunate and all that but such things happen. That's one way of reading the news at least. Another is that delays will mean opportunity missed. Or even, it's possible to note a little detail here and think that overall the news is good.
The actual announcement from Ceres Power: “Bosch and Weichai have reconfirmed to Ceres their commitment to the China JVs and are targeting signature this year. However, given the continued delay which is not within Ceres' control, and the time required post signature for regulatory clearances, we are taking a prudent view that the revenue associated with the JVs is now unlikely to be recognised this year. This reduces our expectation for 2023 by an estimated net £15m (compared with current market consensus[1]), by moving revenue associated with the China JVs to 2024, partially offset by the anticipation of additional licence fee revenue from new contract wins this year.” That's the meat of the announcement that is. The rest of it is the usual trading announcement indicating that matters are proceeding as earlier announced.
Ceres Power share price from London Stock Exchange
Now we like the whole Ceres Power story. We know enough about climate change, fuel cells, hydrogen and all that to think that it's an obvious part of the solution to the problem. But we're also well aware that there's considerable political pressure and direction of the technological paths. The real use of a fuel cell is as a battery in the system. When electricity is oversupplied then use it to produce something that can be stored - H2, ammonia, CH4, whatever. Then store that for use through a fuel cell when the wind stops blowing at night. There's an obviously useful role here, even if that's all it is. But given political desires to subsidise lithium battery gigafactories will that niche be available?
It's possible to go on in the same vein about other fuel cell usages. There is a use case - but is politics listening?
And that's what worries us about Ceres Power. That we do grasp the point, the basics of the technology and so on. But if everything else is getting subsidised to the hilt then are we going to see a level playing field here?
We can even see modest subsidy going to some fuel cell projects - as with Bosch. But technological adoption being based upon political decisions? That's a political risk we're uncomfortable with.
