Thursday, 29 August 2019

ITM Power - Portfolio Addition

ITM Power (ITM.L) manufactures integrated hydrogen energy solutions which enhance the use of renewable energy that might otherwise be wasted. The company, founded in 2001 is based in Sheffield and floated on AIM in 2004. It has offices in Australia, Germany, France, USA and Canada.

These green energy solutions are increasingly in demand from large global companies who are keen to reduce their carbon footprint and demonstrate their commitment to the environment. ITM's solutions have many applications such as grid balancing, energy storage, and the production of green hydrogen for use in many areas of transport - buses, cars, trains, ships and planes - to replace conventional petrol/diesel, and also for renewable heat.

The electrolysis of water involves the use of renewable electrical energy, for example from a wind turbine, to separate water - H2O - into hydrogen and oxygen. The hydrogen is then used as a fuel - for example for use in transport - to replace fossil fuels or nuclear energy. Carbon dioxide emissions are reduced to almost zero. The emissions from the use of hydrogen is just water as it recombines with oxygen when used.

Furthermore, hydrogen could be used as an alternative to natural gas to heat our homes in the future. Traditional gas boilers will be banned for all new-build homes from 2025. This could be relatively inexpensive as the existing natural gas infrastructure could be used to carry the hydrogen gas instead.

The company has collaborated with Shell Energy for hydrogen refueling at their forecourts and also signed a partnership agreement with Sumitomo for multi-megawatt projects in Japan. They have recently entered into joint venture with Orsted to combine renewable wind power with green zero-carbon hydrogen which is key to decarbonising the global energy systems.

Climate Change Minister Lord Duncan said:   
"Using the power of hydrogen could help cut emissions, create jobs and make industrial processes cleaner and greener, benefitting the whole economy as we work towards net zero by 2050.   

This innovative project from ├śrsted and ITM Power will help our efforts to roll out hydrogen at scale by the 2030s - a crucial step towards the end of the UK's contribution to global warming."

This is a fairly small company with a market cap. of £120m and I therefore expect the share price to be a little volatile however, the market for green energy solutions is likely to grow at a rapid pace as more developed nations follow the lead of the UK and legislate for net zero emissions by 2050.

3 Yr Share Price

I think this company could really take off in the coming few years and have therefore added the shares to my 'green' portfolio at the purchase price of 37p. The company is due to report full year results in the very near future.

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation... investing in smaller companies can be rewarding but is higher risk - always DYOR!

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