Ceres Power, a small cap investing in energy efficient boilers, warmed investors this morning by saying that it had found a solution to an ongoing problem with its fuel cell boiler.
Ceres said it had solved a boiler tuning/calibration issue and was making "good progress" on other issues it found in field trials.
The shares were up 25%, to 30p, on the back of the news.
Philip Sparks from Evolution Securities poured some cold water on the news, however.
If Ceres' CHP devices eventually reaches consumers as a commercial proposition, the upside potential for the shares is vast. However, development delays make it increasingly likely that Ceres will have to raise additional funding within the next 18 months. If the device is still unproven by then, today's shareholders might have to suffer another round of dilution.
Ceres installed five test units in consumers' homes earlier this year. The boiler and fuel cell systems each experience teething problems that were not experienced in clean laboratory conditions. The company believes that "minor hardware modifications and optimisation of the product's operating strategy" should resolve these issues in the next phase of the programme, but it acknowledges that "there is now an increased level of risk in our go-to-market programme."
The prospect of further delays in the test programme will rattle nerves. On the plus side, if Ceres Power can resolve these issues before the FY11 results, it will have gone a long way to proving the capabilities of its product.
