Good morning, and thank you for joining us for Ceres' second set of interim results for the 12 months ended 30th of June, following our change of year-end to 31st of December. For those of you who don't know me, my name's Elizabeth, and while much of our week remains virtual, I'm pleased to say we have our Chief Executive, Phil Caldwell, and CFO, Richard Preston, here together. They're going to run through the results, and we'd be pleased to take any questions you may have at the end of the presentation. You can submit these via the conference call or the webcast. Following the meeting, if you have any questions or follow-ups, please do not hesitate to get in touch with a member of the IR team on investors@cerespower.com. Without further ado, I'll hand over to Phil.
Okay. Thank you, Elizabeth, and thank you everybody for joining this morning. The story of these results, I think they're a solid set of results driven by continuing commercial progress with our key partners despite the challenging times of COVID. We've progressed on all major contracts, and that's driven top-line revenue to increase by just over 20% to around GBP 20 million, just under. We're having success with our asset-light licensing model, which gives us sector-leading margins, again, above 70%, we're very pleased with that. First and foremost, it's a huge thank you to the team at Ceres and also the support of our partners and suppliers that we've managed to sustain performance throughout this period, and not just sustain performance, but continue to ramp up production and grow as an organization.
During this period, we've also been busy investing for the future growth, so we're investing in core technology. We're expanding into new areas such as electrolysis for hydrogen. We're seeing more and more customer demand for higher power systems, and we've started to invest in core technology with a further investment of GBP 5 million into the solid oxide electrolysis side of the business. As I mentioned earlier, our strategy is one of licensing and really the target we have for this company is to embed our clean energy technology into world-leading companies and their products. What we're seeing coming out of COVID is huge stimulus packages globally from countries like China, Korea, Germany, and the EU, which is really starting to drive demand further for our technologies and gives us real confidence in investment for growth in the future.
Just quickly, I'd like to highlight some of the key progress that we've made with partnerships in the past 12 months. We have four partners at the license stage now, Bosch, Weichai, Doosan, and Miura. Bosch is our first manufacturing partner that's taken a license to manufacture our cells and stacks, and has successfully done so this year in Germany. That's a real first for the company. Bosch have also developed prototype systems which are now on trial at different use cases and different applications within Bosch, and that's now at five locations. We saw earlier in the year, they've increased their investment further in the company, and we'll talk about that in a minute.
At Weichai, we've continued the development of the 30 kW range extender with Weichai, having completed the first prototype back end of last year, we've now moved on towards building that into a small fleet of buses this year. We have had some headwinds with COVID around completion of the fleet trials, there's been some delay now pushing back this formation of the JV into the first half of next year. Actually, the progress that the team has made is significant, and again, we're very proud of the work that both we've been able to do and the Weichai team has been able to sustain during this time. Doosan. Doosan are one of the leaders in stationary power globally, the Korean government has large ambition for deployment of renewable energy and clean energy technologies.
We've formed a relationship with Doosan approximately a year ago, and we're making good progress on the CHP development that we announced then. As we said before, we're hoping to expand our relationship with Doosan into other applications in the future. With Miura in Japan, we now have the units on sale through Miura in commercial products. The first units have been in operation now for over a year, delivering 90% efficiency, lowering the carbon footprint, and Miura are looking at expanding the support team to that to enable further deployment. That's low volume to begin with, but it's been successful one year in, and we're very pleased to be selling service technology into Japan. That's a high level of where we are with key licensee partners. Just a few more illustrations.
Here you can see, next slide, Bosch have now developed this hydrogen-compatible 10 kW system, which can run on natural gas, biogas, and blends of hydrogen, and are using that in deployment in different locations within the Bosch Group. Bosch had come out and said in their annual reports that the market size for this is estimated to be EUR 20 billion by 2030. As a result of significant progress that we've made, they've increased investments in Ceres by GBP 38 million, taking their investment up to 18% earlier this year. With Weichai, as I mentioned, here's some pictures of the team working in Shandong province. We're making good progress with the 30 kW range extender for the electric buses, and also developing the capabilities at Weichai.
Really, we're working towards the joint venture, which would provide a stage path to providing high volume manufacturing for the markets of buses, commercial vehicles, and other applications. Despite what's been happening with COVID, we're pleased to say we're making progress with Weichai. Again, when Bosch increased their stake earlier this year, Weichai also exercised their non-dilution rights, and put a further GBP 11 million to sustain their position in Ceres at 20%. Good, strong progress with those two partners. That's really driven the financial performance for the period. I'll now hand over to Richard to give you some more detail on the finances. Richard?
Thank you, Phil. I think Phil has mentioned some of the highlights, and I'll just touch on these, again, with some of our key messaging. As you said, we've had really solid set of results. Revenue up just over 20%, and maintaining really excellent margins, gross margins. Clearly, we've maintained a significant and healthy order book and pipelines, just under GBP 70 million. This will naturally flex up and down as you get new orders, but it's something that's still pretty good. Otherwise, from a cash perspective, we're extremely pleased to have GBP 108 million of cash on the balance sheet, having raised GBP 49 million in the last six months from strategic partners. In terms of revenue growth, we've maintained decent licenses during the year. I think as we've said before, these will naturally flex depending on revenue recognition and customers coming in.
It's still a decent proportion, and that's driving the high gross margins that you can see. Again, we can see that our gross margin at an absolute level has moved on significantly over the last few years from where it was. We maintain investment in the company. Really the messages on investment in the company are very similar to those we said six months ago. We're investing into the future. We think there's a lot of value that we can get through putting this investment in there. We're sizing the company so that we can reach these opportunities. That's why our cash OpEx is increasing and our adjusted EBITDA is fairly flat for the period compared to last year.
In terms of cash, again, really the point to note here is the cash we have on the balance sheets is very significant compared to our operating cash flows, which are a few percent of the balance we've got. Again, this puts us in a really healthy position going forwards. Of the cash flow in the year, we've invested something like GBP 8 million in CapEx and in capitalized development. The CapEx is principally finishing off our manufacturing facility in Redhill and increasing our test capacity, and a few odds and sods. That's really what's driving that. We've talked about the cash position already. Let me hand over back to Phil to talk about the business strategy.
Thanks, Richard. For those of you that know us, the business strategy hasn't really changed. We are growing, we are expanding as a company. What we're seeing and encouraged by is, despite COVID, many global economies are putting in green stimuli packages. We're seeing that in all our key markets, really. If you think about China, just this past week, they've set out the target of being carbon neutral by 2060 and peak carbon by 2030, which is pretty significant given that China's dominance really of the carbon impact and agenda globally. We're seeing more and more stimuli packages in China. Korea has committed something like KRW 70 trillion , GBP 46 billion of green funding. Again, targeting to drive economic growth.
Specifically, they have pretty ambitious targets for fuel cell power generation of 15 GW by 2040, including 2 GW for stationary fuel cells in buildings. You're starting to see quite granular policies coming out, stimuli packages and specifics on targets. Japan remains committed to a hydrogen future and is a leader in the space, we're pleased to say we have a number of partners in Japan and further in the pipeline. In Europe, EU has come out and announced funding, huge funding for green projects to 2027. This statement that all EU budgets must do no harm to the goal to become climate neutral by 2050. Germany is probably at the forefront of that and has announced EUR 9 billion in stimuli for hydrogen technologies, again, links with fuel cells as a path to decarbonization.
We're seeing big stimulus packages coming through, not just in Asia but in Europe. In the U.S., it's a wait and see, but again, on the Democratic side, there's big ambition towards decarbonization, depending on the outcome of the U.S. elections. All of that is strong pull for the kind of technologies that Ceres has. Also it plays into continuing with the ESG agenda, really. That's something that we take seriously at Ceres, given our purpose. Like I mentioned, most of the major governments globally have committed to green initiatives, and we're pleased to say that we have pretty strategic partnerships in all of these areas that we just highlighted. At Ceres, we believe we're a big part of making an impact, not just in the U.K., but globally on the clean energy agenda.
As I mentioned at the start of the presentation, looking after people in this time is important. I'm pleased to say that at Ceres, we haven't had to make use of any of the government's support or furlough schemes. In fact, we've actually continued to grow and we've recruited throughout this period. We're a growth story at a time when there is a lot of difficulty around. Again, the commitment and resilience of our people is fantastic, and big thank you to them. We've had to adjust in new ways of working, but during this period we've actually brought up new production. We've managed to continue to work with partners globally. It's very impressive what the team at Ceres has done that underpins these results that we have today. Then on the governance side, we're continuing to get more and more stringent on governance.
We've appointed a new chair this year with Warren Finegold, we're seeing some new members join the PLC board. We have more and more scrutiny as we become a larger company on risk and on maturing the business to mitigate risks and to have very strong governance. It's a big area of focus for the company. We've talked in these results about investment for growth. The way we see this strategically and as a board is, Ceres is one of the few organizations globally with technologies that can have a major impact on clean energy. We've established ourselves with a very strong reputation in solid oxide fuel cells for power generation.
Our heritage, we've been coming up in power from single kilowatts to tens of kilowatts, and we're investing now to look to going into hundreds of kilowatts type applications to start to address power systems for getting up towards utility scale. We see the residential and commercial sector as just one part of the challenge that we face for decarbonization. When you think about global demand for energy, we have to also think about how can we decarbonize transportation, how can we decarbonize industry? That's why we're starting to invest in higher power systems with some of the work we're doing with Weichai around the 30 kW, potentially looking to increase that further in the future because we see big market opportunities for other applications like trucks, like rail, potentially in e-fuels in the future.
On the SOEC side, which is the electrolysis side, we've committed initial funding for further development of the electrolysis side based on the fact that we've made very significant progress in the past 12 months with encouraging results on the initial work that we've done on electrolysis. We see a huge market opportunity here for hydrogen and e-fuels, particularly to decarbonize areas of industry such as steel, cement, ammonia production, et cetera. We see that as a future value creation driver for the business. That's where we're seeing the business, and as we said, we're extremely well capitalized. We've got one of the best teams globally, and we think there's huge value creation to be made by going into these areas. It fits with our purpose of providing clean energy globally.
As we talk about scaling of the business, I've already mentioned this, but there's two ways we see the business. One is to sign more manufacturing licensing partners with global reach, and the other is moving into more and more diversification of the end applications. You can see on the right, this is where we are today with the dots, but you can see where we're starting to look at going in terms of future progress into other markets. As previously mentioned, we're exploring ways of how we partner potentially with engineering partners to actually take us into these new areas, and commercially, how we secure further demand, which will then drive capacity for manufacturing licensees as well. Just a quick one in terms of a reminder for those of you that might not know the company that well.
The partnership progression tends to go through joint product development into licensing. Then we get royalties per unit sold. We've had six partners currently at the joint development stage, Weichai, Doosan, Bosch, Cummins, Honda and Miura, of which four have progressed into licensing and one has progressed into product sales. We continue to work with Honda. We're looking to bring that relationship forward. With Cummins we're coming to the end of the current development program with them. We don't currently have a follow-on at that point beyond that. What you can see is this is like a pipeline. We have more people at the earlier stage. Then as we progress, we expect to go from joint program into further license deals.
What that's driving in the past few years is the move in the revenue mix towards higher margin licensing business. Really in the next three to four years, we expect our partners to come on stream with investments in mass manufacturing production. That's really what will take us through to royalties, where the business really scales into a high margin licensing business. In the near term, we're still able to command a high growth, high margin business based on the engineering services that we provide early stage supply to customers and upfront license fees, which obviously are very valuable to the company in this next, say, three-year period. Just to summarize, as I've said, the whole climate action emergency that we've got currently hasn't gone away, and it is driving demand for these type of technologies globally.
It's fair to say the company's probably never been busier, and we're not short of opportunities. On some of our key partners, we're coming to critical stages, I would say, in the next six months or so in terms of making good progress onto next steps. Bosch, we're due to finish the initial phase of our collaboration towards the end of this year, and we expect to move into the next stages with them. Weichai, we're now getting the five buses built and into trials in China, and we expect to again make progress into JV next year. Miura first commercial units are running well, and we're looking to support Miura as they continue to make commercial sales. With Doosan we're only a year into that relationship, but that's going well and we're hoping that we can continue to grow that relationship.
We expect to announce further partnerships in 2020. The core business and investment in the strategy, like I mentioned, we've been growing. We've got a world-class team of scientists and engineers. We're starting to diversify and look into developments of new technology, not just the core fuel cell power system technology, but also on the electrolysis side. To support that, we're investing in R&D test and manufacturing capability to underpin that. We continue to invest in the core business to mature the technology that we have and expand it into further applications. Overall, we're extremely pleased with the progress in the past year. We've got a high margin, clean energy technology business that's very well backed and is well-positioned for growth. With that, I'll hand you over to Elizabeth, and we can take any questions.
If you would like to ask question, please press star one on your telephone keypad. Please ensure your line is unmuted locally, as you will be advised when to ask your question. You can also submit a question at the box option on the webcast. To We do currently have a couple of questions in the queue. The first question comes from the line of Lacie Midgley from Panmure Gordon. Please go ahead.
Morning, Phil, Richard. Thank you for the presentation. Really useful. I've got a couple of questions on two areas, really. I'll split them up, I think will be easier. On electrolysis, obviously, a lot of development in solid oxide markets, particularly this year. A lot of companies now pursuing that. Much of the debate centered around efficiency versus flexibility between solid oxide and PEM. I'll just be interested really to get your thoughts, sort of high-level thoughts on what you think the main advantages of solid oxide has over PEM and alkaline. I mean, is it purely an efficiency benefit? Do you think there's more to it? Just some color on that from both would be really helpful at first. Secondly, on electrolysis. Just some initial thoughts on what the total required investment will be to commercialize and what you expect that to be.
I know it's early days, but an idea would be useful. Lastly, the business model. In electrolysis, will it work the same as the fuel cell licensing model, or do you think it will require a different approach? That's the first few on electrolysis. I'll let you do those first.
Okay. To answer the first question, the way we see it is we're not looking necessarily to compete head-on with PEM technology. I think you've answered the question yourself. The big promise, the big advantage of solid oxide is really efficiency. Efficiency is important because when you start to look at the cost of hydrogen in the future, it's dominated by the energy cost that you're putting in, so therefore, the efficiency is going to have a big impact on that cost of hydrogen. There are other benefits. All these technologies have strengths and weaknesses. The other big attraction for solid oxide is because of the operating temperature, we believe there's compatibility with some industrial processes where with closer thermal integration, there can be further efficiency gains as well. When we're looking at this, we're not necessarily targeting all markets with the electrolysis.
We're thinking industrial applications are the sweet spot for solid oxide, particularly around applications like steel refineries, those kind of higher temperature type processes. That's how we see the positioning of the technology. In terms of the investment required, our view what we've done this year really is the seed funding. I think if you look at how we've managed our business, we've leveraged sometimes partnerships to fund core technology, and sometimes we're putting in our own capital. I think we're in a position now where we can put in our own capital to accelerate development where we need to. I can't give you numbers today, but if we're continuing to be successful in electrolysis, which we believe we will be, we believe this part of the business can be as significant as the core fuel cell business, so therefore, why wouldn't we invest?
That's definitely on a staged approach the way we think about this. In terms of the business model, I think that's a good question. We believe that the licensing model works well for us, and it's about having the right partners in that value chain. It is a whole different area of potential end users and customers. We're moving from the power side to the fuel side. It will really, I think, depend on the partnerships we form and how the business model applies to that. Again, I think one thing for sure is we'll be looking to do this in partnership or in collaboration with companies with, A, with market access and, B, with the balance sheet strength that you need to really take these technologies through at scale.
I think the one thing that you see on this whole clean energy challenge is the size and the scale that you need. What works well for Ceres is we're able to leverage our partners significantly and go after application of these technologies globally, which we couldn't do if we didn't have this partnering business model. We will definitely pursue a partnering business model going forward for electrolysis.
Thank you. Really helpful. I've just two follow-ups just in partnerships, if that's okay, just really quickly. To Doosan, I think you gave a good update in the statement and the presentation. I just wonder, what do you think or do you expect to be the next milestone and like some timing of that? On Cummins, just to clarify, you said there's no plans for further collaboration at this time. I just wanted to check, does that mean on the current data center program or more generally outside of that? I think it's the first that
Yeah, look, I can only say what we can put in the public domain. With Cummins, we're coming to the end of the program that we have with them and the U.S. Department of Energy. I think it's going to be a successful outcome. From where we are today, we haven't got next steps with them at this point. I think that's a pretty clear statement of where we are now. With Doosan, we're very pleased with the progress that we've made in the past year, and I think when we formed the partnership, we always felt that this one had greater potential. Our view on that hasn't changed, and our working relationship is good, and we'll update you when we've got more to say on that.
I think you appreciate with the business model we have, we always have to respect the confidentiality of our partners. We tend to announce things when we've got things to say. Right now, things are progressing well with our partners.
Understood. Thank you.
The next question comes from the line of Adam Collins from Liberum. Please go ahead.
Yes. Good morning, everybody. A couple of questions from me, please. First of all, in the statement, there's a very enticing paragraph which says you're intending to form a strategic relationship with a global engineering consultancy, which will increase your ability to scale the business. Could you talk a little bit more about that? You touched on the potential for partnerships around SOEC. Does this also take in power? Any more color you could provide on the strategy around that. The second question is in relation to the manufacturing JV in Shandong with Weichai, which is going to happen first half of next year. What can you tell us at this stage in terms of the way that might develop thereafter? What kind of investment might you need to put in? What might be the timelines in terms of taking that business to first production?
Yeah, sure. I think in terms of the first question, when you look at the strategy for the company and you see where we see the business in terms of revenue projections going out and getting towards licenses and royalties, the thing that makes this company a global success is really increasing our number of licensee partners. As we get further in with the engineering programs, very often a bottleneck for us is how do we originate more and more license deals, more and more partnerships. Short of organic growth, and we have grown significantly in the past year, we're now thinking, okay, we may be missing opportunities where people can be bringing us applications and also help us to initiate that through the engineering. That's really what's behind that.
We've been exploring that as a strategy for the past year, and I think we're confident that's the way forward, and I think we'll have more to say on that in the near future. That's what's behind it. It's particularly focused on the power side at this point, because for electrolysis, we're at an earlier stage in its commercialization. It's really growing the core power business at pace and at scale. I think your next question was about the Weichai JV, and in terms of timing and scale, as well as what we're doing on the technology development and the field trials. We also are in discussions around the business plan with that, the business plan that underpins that. What we've said on record previously is, we're committed to putting in a minimum of around GBP 9 million or so in this first stage.
We think it will probably be more than that, depending on the strength of the business plan. Obviously, it's going to be of a scale that's appropriate to the ambition of the business plan and also consistent with Ceres in terms of our role in that versus Weichai as the number three commercial vehicle manufacturer in the world with considerable balance sheet and considerable capability. We'll have more to say on that, I think, again, when we get further through the business planning stage that we're currently in at the moment.
Okay. Thanks a lot.
We also have a couple of questions that have come through on the webcast. We'll try and get to as many as we can. Probably first off, Richard, one for you. Adam Forsyth at Longspur asks, "Is it possible for us to give a bit more color around the revenue mix and its impact on gross margin? There was a big increase in engineering hardware, but a fall in licensed income, which might have suggested a lower gross margin than achieved. Are you seeing margin expansion or better pricing on the engineering side?
Yeah, let me try and answer that one. You're right, the mix has changed from the previous year. We've got slightly less licensed revenue than we had as a proportion in 2019, 2020 compared to 2018, 2019. There's a couple of drivers going on here. Clearly, license revenue is very high margin. What you've also got within engineering services, we've got an increase in output from our factory in Redhill. A year ago, it didn't exist. It wasn't manufacturing. For the last six months, we've just begun to manufacture out of that. That's clearly a little lower margin than engineering services. What you find is you've got two different drivers. Engineering services is still providing a decent margin. License revenues are very high margin. Then what you got is, and that tends to be lumpy.
Overlaying it, you've got an increasing volume of output from our Redhill facility, which will depress margins slightly. Nonetheless, you can see that we're, on average, maintaining very high gross margins.
Another question from Adam, just asking why the drop in commercial costs in Note 4 .
This tends to be lumpy, again, and it depends on the deals that we've done in the period. What you find is there are some deal-related costs in the last year, which aren't repeated this year. That's broadly what's driving it.
Okay, great. Probably one for Phil comes from Marc Elliott at Investec. On the fuel cell scale-up, the profile is well explained, i.e., moving up into hundreds of kilowatts. In the context of electrolyzers, how should we think about this and the path to develop commercial systems that would likely need to start out at megawatt scale? Any other insights on the development pathway would be useful.
I think what we've been doing is really on the core technology side, so at the R&D level to begin with. I think what's logical is we start to have to build out in the same way we did with power systems, we'll have to move into prototype systems of sufficient scale. There is an increase, if you like, in power running in electrolysis compared to into power generation. What we anticipate is doing proof points at the appropriate scale, which obviously needs to start to address megawatt type applications to begin with in the future. We will have more to say on that, I think, towards the end of this year when we complete the phase that we're in on the core development side with electrolysis.
Some questions through from Anne Crowe at Edison. She asks, "If fuel cells are going to be part of fully green economy, then gas they run off needs to be created in an environmentally friendly way. At the moment, using electricity from wind or solar to generate hydrogen via an electrolyzer. However, the efficiency of this is substantially less than using batteries," Anne says, "Do you think this will hold back deployment of fuel cells?
Well, I think there's two parts to that question because, if you look at deployment of hydrogen, obviously we need further penetration of green hydrogen through electrolysis in the future, and I think if you look at any of the Hydrogen Council work, today only about 2% of hydrogen production is coming through green hydrogen. There's obviously historically been a cost disadvantage to green hydrogen, but as we move into higher efficiency electrolysis, we're confident that you can get towards the right levels of hydrogen costs that you need to make it viable. In terms of deployment of fuel cells, if you're developing hydrogen, such as blue hydrogen with CCS, then you can still use that hydrogen to run fuel cells. You can use green hydrogen, or you can use biogas in current systems we have or natural gas today for a lower carbon solution.
In many ways, we're fuel agnostic. I think Anne's question probably speaks more towards what's the potential rollout of hydrogen in the future rather than fuel cells, because you already have significant deployment of stationary fuel cells globally today. I think it's more around what's the pathway for the rollout of hydrogen in the future? Obviously that pathway helps commercialization of fuel cells, but I don't think it prevents it.
Yeah. We have a few more questions on the line around the deployment of SOEC. I think to reiterate Phil's point, we will be coming back to give more granularity on this slightly later in the year.
Yeah.
If we can address it that way, that would be great. Another question comes through from Michael Law. "What are the opportunities in the U.K.? Most of the activity seems to be overseas based.
Yeah, I think it's a function of our business model, really, that we work with the world's leading power system and automotive companies. Today they tend to be in some of the geographies that we're in today. The way we see it is, in the same way it's been in the news recently, Arm became probably one of the largest tech companies in the U.K., predominantly developing technology in the U.K. that was used globally. That's the way we envisage the future for Ceres. In terms of applications in the U.K., if we have the right partnerships, we will obviously look to form partnerships in the U.K. Similarly with deployment. I wouldn't confuse the two in terms of deployment of this technology versus where our partners lie because most of our partners are Fortune 500 companies that tend not to be based in the U.K.
It's a function of where those businesses are located.
Great. A question through from Nicholas Percy Davies, who says, "Morning, Phil and Richard. Were you surprised that IP Group decided to all but exit their holding in the business?
No. I think with IP Group, it's a case of they back early stage technology businesses and backed Ceres at a key point for the last eight years, through from stepping in when very few investors actually backed the company in the low millions and taking it up to the valuation that we have today. I think as the strategic partners and as a company grows in size, the investor base has evolved significantly. That transition, it felt like the right time for IP Group and I think for Ceres as well, to transition it towards an institutional investor base that is appropriate to the size of where Ceres is today and where we're going globally. I think what's also been positive over the past few months is as IP Group have diversified, we've attracted investment from U.S. and German institutional investors.
Our geographic reach of investors has also spread as well. It's actually provided some liquidity, I think, for new investors to come in and back the company, which has been very pleasing.
Great. We have quite a few questions actually through from Anthony Plosker at Berenberg. See if I can run through these. On Miura, he says, "Seems very encouraging. Can we have a little bit more color on the expansion opportunity? If Miura did want to ramp up quickly, would we be supply constrained?" I guess linked to that, we're increasing capacity, we've announced from 2 MW- 3 MW at Red hill. Could we expect further investments around that?
Do you mean beyond the 3 MW?
Yeah.
Yeah. Look, I think with that, our model is really to get partners into mass production, because we don't want to turn into a mass producer by default. Obviously the more lucrative side of our business is developing the core technology. If it's necessary to create more value in the future, then we'll look at it on a business case the same as any other company would do so. In relation to our work with Miura, we're not really capacity constrained. That's going to be quite a modest ramp up and very specific to a single market in Japan. We're not concerned by that at this point.
He also asks, "Quite a bit of recent news flow from competitors around partnerships and developments of PEM fuel cells for shipping and civil aerospace sectors. Please could you run through the potential merits of solid oxide in those markets, particularly shipping?
Gosh, that's quite a long question. Well, let me start with the simple one. I don't really see any role for solid oxide in civil aviation at small scale. Where solid oxide really plays is in high efficiency, long duration type power applications. For stop-start type applications, PEM is often a better technology choice. It's not without its challenges, and I've worked on I was part of the first project in Intelligent Energy years ago on Boeing, having a light aircraft, et cetera. I think the way we see the aviation side, it's more interesting to how do we decarbonize fuels and synthetic fuels in the future. I think that's what we see as the future there. In terms of shipping, that's another broad topic as well, because you have all kinds of different potential fuels coming in.
You could use solid oxide as auxiliary power units when shipping's in port all the way through, depending on the size of the vessel, through to primary propulsion. Also there's interest in things like ammonia as well, and that's a different topic that I don't think we really have time to get into on this call today. Look, I think decarbonization in all these sectors is a big challenge. I don't think that all of these technologies will necessarily win in all sectors, but it's going to require whole different approaches and different technologies applied in different ways to actually decarbonize. I think, solid oxide has a strong role to play. PEM has a strong role to play. Synthetic fuels will have a strong role to play. Batteries will have a strong role to play.
It's going to be a combination of all of the above.
Great. Probably just the last one for you, Richard, do you mind reminding us of the likely phasing delivery of the order book and pipeline?
Yeah, certainly. Maybe just as a reminder of how we define order book and pipeline. Order book's the contracted commercial revenue, and there's really no milestones associated with that, no difficult milestones. It's just something that we have to deliver on. Order book tends to be shorter term. At the moment it's maybe a year, 18 months, maybe two years. Pipeline is something that is contracted. It's not sort of in the ether. We've got this contracted, but it's contingent on some things that are maybe us delivering something or maybe on options, maybe not under the control of Ceres. Pipeline tends to be slightly longer term. I would say this is probably from six months, going out to probably three or four years. That's probably where we are.
Great. A couple of follow-up questions from Adam Collins at Liberum. Just a question on Bosch. He mentions that the Bosch CEO recently mentioned CHP in relation to Ceres for the first time, and we obviously have a new Bosch non-executive on the board with a background in heating markets. Is this a new focus?
I'm not quite sure I understand fully the question. Is it a new focus for Bosch? I think Bosch have started to publicize what they're doing on the stationary power side, and I think that the number that was quoted is a Bosch number there about the size of the market by 2030. I think Mr. Uwe Glock, who joined the board, is very experienced in European heating markets, having run Bosch Thermotechnik and Worcester Bosch, et cetera, as a subsidiary. I don't think it's a change of strategy. I think it's part of, I think, Bosch's commitment towards their decarbonization agenda in the future. Hopefully, we'll have more progress coming forward from Bosch. A lot of what we do, in some ways, we rely on our partners to promote and inform people on the progress that they've made.
I think hopefully, we'll hear more from our partners in the coming months as we're getting to that stage where we're moving from product development into deployment now.
Not focused on it right now. It could be something.
Great. Okay. I think we've gone through a broad range of questions. There's a couple that are fairly similar, so we'll make sure to drop a note back to everybody directly. As I mentioned, we're available for any follow-up on investors@cerespower.com. Otherwise, I hand back to Phil to close out.
Yeah. Well, thank you everybody for your continued interest in the company. I think, the level of questions we're getting, we could probably spend an hour or two talking about the merits of various approaches for decarbonization. I think it just shows you how important a topic this is right now, and it kind of highlights, I suppose, some of the conversations that Ceres is in every day with a growing number of partners. We're very focused on delivering the partnerships we have and continuing to grow the business and invest in the right areas for the future. We'll hopefully be talking to you all again in the near future with new news on partnerships. For today, thank you for your time.