Centrica CHP programme update

Ceres Power Holdings plc
25 May 2006




                            Ceres Power Holdings plc
                    ('Ceres Power', 'Ceres' or the 'Company')
                                        
            Ceres Power announces wall-mountable system design under
                            British Gas CHP programme

Ceres Power, the AIM-quoted fuel cell group, today announces that it has 
successfully  achieved a significant milestone in the design of its Combined 
Heat and Power (CHP) product as part of the £2.7 million programme with Centrica
trading as British Gas).  Design work by Ceres engineers has established that 
the complete CHP system will be sufficiently compact and lightweight to be 
wall-mountable.  This feature is a pre-requisite for installation into the 
majority of new or existing UK homes as a replacement for standard gas boilers.

Achievement of this system innovation has been enabled by the compact, 
lightweight 1kW Ceres fuel cell stack, announced in March 2006, which is the 
undamental building block of Ceres' micropower generation products.

Under the contract with British Gas, Ceres is designing, building and evaluating
fuel cell CHP units capable of delivering electricity, heating and hot water for
the home, substantially reducing domestic energy costs and CO2 emissions. 
Today's announcement represents the achievement of a major objective under the 
programme, and progresses plans with British Gas to introduce Ceres' fuel cells 
into UK homes.

As well as size and weight, a key factor for mass market take-up is production 
cost. Ceres anticipates an attractive bill of materials cost for the entire 
system, based on the Company's evaluation of key system components including 
control electronics, air and fuel delivery hardware, in its test facility.  
By virtue of its unique technology operating at lower temperatures, Ceres is 
able to use standard, low cost materials for its fuel cell and balance of plant.

Peter Bance, CEO of Ceres Power, comments:

'We are very pleased with the rapid progress made in this joint programme with 
British Gas, indicating that our technology is able to meet the requirements of
the mass market.  In particular, the fact that our system design is similar in 
size to conventional wall-mounted boilers is a significant differentiator, 
making our product highly applicable not just to the UK market, but to other 
key geographies such as Europe and Japan.'

For further information contact:

Peter Bance, Chief Executive, Ceres Power:   [phone]

Patrick d'Ancona / Charlotte Kirkham         [phone]
M: Communications



About Ceres Power

Ceres is a successful AIM-listed fuel cell business developing a range of 
global market applications including residential combined heat and power, 
on-site / back-up generators and auxiliary power units for transport.  
Critically, the technology uses low cost materials and existing mass-production 
techniques.  And unlike many fuel cells, the Ceres cell can run on widely 
available fuels like natural gas, LPG and biofuels as well as on hydrogen.

Since its formation in 2001, the Company has received major recognition for 
its technology and business credentials.

Ceres won the prestigious 2003 Carbon Trust Innovation Award for the UK's green
technology with the best commercial potential.

More recently, Ceres secured a top industrial accolade by winning the Institute
of Materials, Minerals and Mining's Gold Medal for 2005.

In January 2006, Ceres Power was selected as the only fuel cell company in the 
government's new Energy Research Partnership, contributing directly to national
energy policy.

Ceres Power has raised over £25 million of funding through two rounds of 
private equity and its AIM IPO in November 2004.  The company enjoys the 
support of many blue chip City institutions as financial backers including 
Fidelity, Morley and JP Morgan.

About Ceres Power's Technology

Ceres fuel cell stacks are comprised of multiple fuel cells layered on top of 
one another, each made from stainless steel with tiny amounts of ceramic 
coating.  The cells combine fuel and air to create electricity and heat via a 
quiet, solid state electrochemical process similar to a battery.  As this 
process does not involve combustion, unlike an engine or burner, it is highly 
efficient and environmentally friendly.

Ceres has developed a unique adaptation of Solid Oxide Fuel Cell (SOFC) 
technology, able to operate at temperatures substantially lower than 
conventional designs which run at 800 - 1000 degrees C.  By using a new 
generation of ceramic materials known as CGO (cerium gadolinium oxide) 
instead of the industry standard YSZ (yttria stabilised zirconia), operation 
at 500 - 600 degrees becomes possible.  This in turn allows use of conventional
stainless steel as the cell substrate, separating the functions of mechanical 
support from electrochemistry.

The electrochemical layers can then be made extremely thin and optimised for 
maximum performance, resulting in world-beating power density levels, whilst 
the stack material costs are radically reduced. The efficiency of converting 
fuel into electricity and heat is therefore very high and this efficiency is 
maintained across a wide part-load range. In addition, the heat-to-power ratio 
is approximately one-to-one making the technology ideal for applications such 
as CHP, where levels of electrical output need to be maintained even where heat
demand is modest.

In contrast to totally ceramic cells, these metal-supported cells are 
mechanically highly robust and can be easily sealed (e.g. through welding) 
and have thermal expansion coefficients well matched to their ceramic coatings.
This allows great resistance to thermal shock, permitting rapid start-up times 
and the potential for thousands of ON / OFF cycles for everyday usability.  
In addition, the technology retains the fuel flexibility of SOFC, and has proven 
ability to run highly efficiently on commercially available fuels such as 
natural gas, LPG and biofuels.

In conjunction with the Ceres Stack programme, the Company has been developing 
the non fuel cell elements within the complete product, known as the balance 
of plant ('BOP'), as part of its systems integration activities aimed at 
delivering products for specific customers.  Because of the unique attributes 
of the technology, Ceres Power has been able to dramatically reduce the time 
and cost of BOP development and systems integration by utilising mature 
component supply chains and ordinary, low cost materials. Unlike other fuel 
cell designs which operate at more extreme temperatures, time-consuming and 
expensive bespoke solutions for BOP components are not required.





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