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ITM Power PLC

ITM Power making headway in the drive for clean fuel

Snapshot

  • Developing hydrogen clean fuel stations for vehicles
  • Power-to-gas storage for surplus renewable energy
  • Renewable chemistry reducing dependence on fossil fuels
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Quick facts: ITM Power PLC

Price: 50.35 GBX

Market: AIM
Market Cap: £163.71 m
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Power-to-Gas is now demonstrating real traction around the world and we remain very well placed to benefit from this development.

Dr Graham Cooley, chief executive

What ITM Power does:

ITM Power PLC (LON:ITM) manufactures integrated hydrogen energy solutions to enhance the use of renewable energy that would otherwise be wasted.

The AIM-listed company’s power-to-gas business provides PEM (proton exchange membrane) storage systems that allow customers to convert excess electrical energy into hydrogen for injection into the gas grid or storage for vehicles.

The group's clean fuels solutions come in the form of modular hydrogen stations to recharge fuel cell vehicles. Hydrogen-powered cars are seen as being far better for the environment in terms of emissions than those running on petrol, as when you burn hydrogen, it produces steam, meaning only water is the by-product.

 

How it is doing:

ITM Power’s results for the year to the end April 2019 revealed that sales revenue rose 40% to £4.6mln from £3.3mln and showed the group has significantly strengthened its capability to deliver larger industrial-scale projects.

READ: Climate report augurs well for hydrogen trailblazers

The pre-tax loss widened to £9.32mln from a loss of £6.48mln the year before, partly reflecting the impact of producing first-of-a-kind large scale plant then installing it in new and varied situations.

The group also saw increased costs of recruitment in the year as it continued to grow in preparation for delivery of its order book.

Another cost that is not expected to occur in future years was an impairment relating to a historic prepayment, having reached a commercial agreement with the supplier.

Inflexion points:

  • In February, ITM Power revealed it is part of a consortium that has received funding from the UK’s Office for Low Emission Vehicles (OLEV) to develop a refuelling station for fuel-cell electric vehicles.
  • The firm said OLEV had awarded the consortium £3.1mln in funding to deliver a 0.5 megawatt (MW) refuelling station and 51 fuel cell electric vehicles.
  • ITM said it would receive £1.8mln of this funding for the refuelling station, which would be delivered in the next 12 months.
  • Shell Beaconsfield will be the first site in the UK to bring hydrogen under the same canopy as petrol and diesel, providing drivers with a range of fuel choices to co-exist with traditional transport fuels.
  • In May a report from the Committee on Climate Change (CCC), an advisory committee to the government highlighted the importance of hydrogen in enabling the UK to end its contribution to global warming within 30 years.
  • In July, ITM signed an agreement for new premises in Sheffield which will become its global manufacturing headquarters, expecting to enter into a lease agreement for the building at completion of the build, expected in the fourth quarter.
  • In October, the group formed a joint venture with German industrial gases and engineering giant Linde to green hydrogen to large scale industrial projects. Linde also took a 20% stake in the company

READ: ITM Power chief hails ground-breaking hydrogen pilot study

ITM Power is also supplying the electrolyser system at the heart of the 12-month HyDeploy project that begins this year.

Backed by regulator Ofgem's Network Innovation Competition, it is being led by gas network Cadent in partnership with Northern Gas Networks, Keele University and a consortium of technical experts.

Hydrogen will be pumped into the Keele University gas system serving 17 faculty buildings and 100 domestic properties.

Further afield, in December 2018, ITM Power revealed an expansion in Germany where its subsidiary has signed a lease on new larger premises in Hungen, north of Frankfurt to accommodate both business development staff and technical support personnel.

The ITM Power GmbH business is involved with a number of key projects including a 10MW green hydrogen refinery project with Shell, a power-to-gas PEM electrolyser system being operated by Innogy, and an electrolyser system supplied to ZEAG Energie. It also supports three other plants in Germany and Holland.

On 19 March, the company named Toyota Australia as the first of those customers and said further details of the other three sales will be released in due course.

 

What the boss says – Dr Graham Cooley, CEO:

"The major strategic investment from Linde cements a five-year relationship between us and provides ITM Power with a world-leading partner that brings deep expertise in engineering, procurement and construction and a global customer base,” said Graham Cooley, the chief executive officer of ITM.

“The joint venture will enable us to focus on our core competency of the development and sale of electrolysers, and with Linde as our partner to deliver green hydrogen at scale, The successful fundraising provides the financial resources to exploit this exciting opportunity to the full,” he added.

 

Blue Sky:

Research house First Berlin pointed out in February that ITM's high order backlog and rising tender opportunity pipeline has put the company on course to break even by 2022.

Over the next three years, the research house is forecasting ITM’s revenues to rise to £28.7mln from £3.3mln in 2018, which should pave the way for ITM to break-even at the underlying earnings (EBIT) level in 2022.

First Berlin said it had concluded that ITM Power looks set to be a prime beneficiary of rising demand for green/low carbon hydrogen.

It noted that the Hydrogen Council expects demand to grow around tenfold from 2015 to 2050, which corresponds to compound annual growth of almost 7%.

“Hydrogen is an excellent all-round fuel and suitable for all three energy applications: power, heat, and mobility,” First Berlin pointed out.

“Furthermore, it is needed as feedstock in the chemicals and refining industries,” it added.

First Berlin initiated coverage on ITM Power with a ‘buy’ rating and 43p price target, compared with the 20.40p a share at which the group is currently trading, giving it a market cap of around £67mln.

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Investor Update: ITM Power announces major strategic investment and £52mln...

Headlines from the Proactive UK newsroom. ITM Power (LON:ITM) has brought in a big partner as part of a major fundraise. German group Linde is subscribing for £38mln and will establish a joint venture with ITM to work on large scale industrial projects. ITM will raise a further £14mln through...

1 week, 4 days ago

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