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ITM Power driving forward

As the move towards alternative fuels for vehicles gathers pace, news last month of the opening of the first 'under the canopy' hydrogen refuelling station at Beaconsfield Services on the M40 deserved a bit of a fanfare

Hydrogen refuelling
The Beaconsfield launch came a day after a consortium of companies, including ITM Power, won £8.8mln in funding from the Department for Transport

Thanks to Tesla and co, electric cars have got a lot of publicity but electricity is not the only alternative fuel for cars.

It may not even be the best, as anyone who has sat at a motorway service station refuelling for 20 minutes might testify.

Some would say the way forward is hydrogen. The trick is reaching a point where owning a car that runs on hydrogen is a truly viable option, As such, the opening in March of the first 'under the canopy' hydrogen refuelling station, at Beaconsfield Services on the M40, deserved a bit of a fanfare.

The new hydrogen refuelling station, situated at one of the busiest service stations in the UK, will be fully owned and operated by ITM Power PLC (LON:ITM) and has been developed in partnership with oil giant Royal Dutch Shell PLC (LON:RDSA).

READ ITM Power and Shell open first 'under the canopy' hydrogen refuelling station at Beaconsfield Services

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, ITM Power said in its launch statement.

Hydrogen is generated on-site using an electrolyser that requires only water and electricity to generate the gas, which can help reduce emissions and address air pollution while offering convenience for motorists, the firm said.

Graham Cooley, CEO of ITM Power, said: “This shows a big step forward in offering Shell customers a clean, green fuel, which is generated on-site, eliminating fuel deliveries.”

The Beaconsfield launch came a day after a consortium of companies, including ITM Power, won £8.8mln in funding from the Department for Transport for refuelling infrastructure.

ITM will receive £4.3mln of the funding to build four new hydrogen refuelling stations and to upgrade five existing hydrogen refuelling stations to increase capacity to support a larger fleet of fuel cell electric vehicles.

Cooley said the consortium partnership with Shell, Toyota, Honda, and Hyundai “constitutes a highly coordinated roll-out of hydrogen vehicles and refuelling infrastructure”.

More recently, the company announced its seventh hydrogen refuelling station (HRS), located on the Johnson Matthey property in Swindon, on the ‘M4 corridor’. As it happens, Johnson Matthey knows a bit about fuel technologies, as it produces products that drastically reduce automotive emissions – more of which, later.

“There's no doubt that hydrogen will be part of our energy mix going forward and we are delighted that ITM's seventh refuelling station is located at our site in Swindon,” said Johnson Matthey’s group strategy director, Matthew Harwood.

The Swindon site was supported by innovative car makers Toyota, Hyundai and Honda. Significantly, the new HRS is the first of two to be deployed as part of the pan European H2ME2 project – funded by the European Fuel Cell and Hydrogen Joint Undertaking (FCHJU) and the Office of Low Emission Vehicles (OLEV); the second will be opened at Gatwick airport before the end of this year.

Power-to-gas and cleaner air for all

Electricity to hydrogen conversion technology has the potential to revolutionise renewable energies, and that's what ITM Power specialises in, meaning cleaner air for all.

The 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.

Its clean fuels solutions come in the form of modular hydrogen stations to recharge fuel cell vehicles.

Hydrogen-powered cars are 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.

Government funding secured for feasibility study

Innovate UK, the government’s innovation agency, is very interested in the technology to the extent it will provide funds for a feasibility study to assess ‘Project Centurion’, a proposal to demonstrate a 100 megawatt (MW) power-to-gas (P2G) energy storage system.

We’re not just talking powering cars, here; the system would produce low carbon hydrogen for heat, decarbonisation of industry, and transport fuel.

“Once successfully demonstrated, such systems can make a significant contribution to the decarbonisation of the electricity and gas networks, and by coupling these two networks together provide energy storage, allowing the UK energy system to accommodate increasing amounts of renewable energy, reducing curtailment and constraint,” ITM said.

The feasibility phase of the project will aim to produce a system design with costs significantly below current targets, build the consensus on P2G systems, and produce an evidence base for raising project financing.

"Project Centurion is an ambitious project with an important consortium of industrial partners that share a world-class vision of power-to-gas energy storage,” said Cooley.

So … great technology but what about the financials?

Well, it’s a company striving to gain acceptance for a new technology so it is no surprise that it is making a loss.

The loss before interest, tax, depreciation and amortisation (LBITDA) widened to £4.8mln in the year to the end of April from £2.3mln the previous year, while the loss before tax deepened to £6.48mln from £3.55mln as prototype production and engineering costs climbed to £4.1mln from £2.6mln the previous year.

ITM incurred one-off costs associated with producing the first-of-its-kind plant and also clocked up higher expenses as a result of inefficiencies associated with testing the large plant at ITM Power's existing facilities.

The company also saw increased costs of recruitment as it seeks to prepare for delivery of its order book.

The company noted that all of the main contributors to the increased loss will be non-recurring once the company has built its new factory – the company has identified new premises and expects to sign terms before the end of the year.

On the plus side, the company is clearly moving to its next phase of development as evidenced by a 36% increase in product revenue. Product revenue rose to £3.3mln from £2.3mln the year before; including grant funding, the top-line rose 53% to £14.1mln from £9.2mln the previous year.

“Power-to-Gas is now demonstrating real traction around the world and we remain very well placed to benefit from this development with our long-running reference plant in Germany," Cooley said.

Quick facts: ITM Power PLC

Price: 158.5 GBX

Market: AIM
Market Cap: £747.05 m

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