Ballard Power’s (TSX:BLD) attempts to crack the potentially lucrative Chinese market for hydrogen fuel cell buses and backup power were dealt a serious blow after the company today announced that its Chinese partner, Azure Hydrogen Energy Science and Technology, had breached previously announced contracts.
The Vancouver-based cleantech says it will terminate contracts related to the assembly of its FCvelocity-HD7 Bus power modules in China and its ElectraGen telecom backup power systems in China that were intended for the Chinese market.
“While we are clearly disappointed with this outcome with Azure and the negative impact on our 2014 financial results, we remain confident in the long-term attractiveness of the Chinese market for our fuel cell solutions,” said CEO Randy MacEwen.
The market for fuel cells in mostly concentrated in the U.S., Korea and Japan, but a recent study by ReportsnReports says 2015 will mark the first year of a long-term maturation process for the solution, which will result in mainstream popularization by 2025.
Ballard says the dustup with Azure could result in potential legal action and will mean it does not meet its financial targets for fiscal 2014. Instead of revenue of more than $3-million from Azure contracts, the company says it will record an impairment of about $4.5-million due to outstanding receivables owed by Azure. Management says it will provide more detail on a conference call in late February.
At press time, shares of Ballard on the TSX were down 8.9% to $2.16.