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Ballard Power Systems Inc. (USA) (NASDAQ:BLDP) has announced the signing of a definitive agreement with China’s Guangdong National Synergy Hydrogen Power Technology company, for the establishment of a fuel cell stack production operation in the city of Yunfu. The signed deal is worth at least $168 million over the course of five years.

Ballard will receive $18.4 million in Technology revenue for technology transfer service, training and commissioning support, product equipment specification and procurement services all in relation to the establishment of the production line in Yunfu. China’s Guangdong Nation Synergy, Hydrogen Power Technology Co, will manufacture fell-cell stacks using Ballard’s technology. The China-based company will own 90% of joint ventures that will be formed while Ballard will own 10%. When the factory is commissioned next year, Ballard is expected to earn $150 million in sales of products through a take-or-pay contract that ends in 2021.

 The signing of this deal shows a growing interest in fuel cells, which produce electricity through a chemical reaction and have low carbon emission.Synergy plans to use the fuel cell stacks for low population buses in highly populated areas in China, the world’s biggest producer of greenhouse gasses. Synergy Chairman Frank Ma noted in a statement that the deal is transformational regarding positioning fuel cell as a compelling solution for clean energy commercial vehicles and buses in China.

Randy MacEwen, Ballard’s President, and CEO noted that there is unprecedented market interest for cell buses and commercial vehicles in China – the largest market in the world. With Ballard’s leading brand, technology, and field experience, the company is uniquely positioned to address the market for fuel cell buses and commercial vehicles with Synergy. MacEwen further noted that their business strategy in China is simple; they will engage strong Chines partners to localize fuel cell production in China with the aim of reducing cost, avoiding capital investment, drive scale, mitigate market risk and protect their core intellectual property.

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