Monday 13 September 2021

ITM Power - Full Year Results

Hydrogen is the most commonly occurring element in nature and is set to play a defining role in the 'green' industrial revolution as the world moves to replace fossil fuels. It can be stored and used to power long-distant transport such as cars, lorries, trains and ships. It can be used to generate electricity. It can be stored and transported for use at a later date. Green hydrogen made from renewable energy such as wind and solar is a clean source of energy and when used the only emissions are water and heat.

ITM Power (ITM.L) designs and manufactures products which generate clean hydrogen based on Proton Exchange Membrane technology. Earlier this year it opened its new Gigafactory in Sheffield with the prospect of producing 1GW of clean hydrogen each year. It is estimated that the new factory will cut the costs of electrolysers by 40% due to increased automation and economies of scale.

ITM was one of the first additions to my green portfolio back in August 2019.


It has recently announced results for the year to end April 2021 (link via Investegate). Obviously, there has been the impact of Covid over the trading year.

Total revenues including grant income fell by 6% to £5.1m (2020 £5.4m), with grant income reduced to just £0.8m (2020 £2.1m).

The company has seen an increase in qualified tender opportunities to £378m (£195m) and a corresponding contracts backlog of £171m (£119m) including contracts in the final stages of negotiation.

The company made a loss of £26.7m which was broadly in line with management expectations. The joint ventures with Linde and Snam are likely to reduce exposure to future development risks.

Graham Cooley, CEO, commented , "2021 has been another transformational year for ITM Power.  We attracted a strategic investor in Snam S.p.A., and through our fund raise in October 2020 developed a platform to deliver to market our next generation product, the 5MW Gigastack, two years earlier than previously planned.  We also moved into Bessemer Park, the world's largest PEM electrolyser factory and commenced manufacturing there in January 2021.  We have seen national commitments to net zero accelerate, and I believe we are very well placed, with our partner Linde, to address the rapidly growing demand in the market."

New gigafactory, Sheffield

The company maintains a positive outlook. Installation of the 10MW REFHYN project in Germany is now complete with a further 10MW planned. Work in progress has more than doubled to £36m representing 43MW of electrolysers. Global energy markets are increasingly recognising the need for the use of green hydrogen for energy storage, transport and heating. The UK Committee on Climate Change suggest we will need between 6 and 17GW of electrolysis to reach net zero emissions by 2050.

Earlier this year, the European Commission announced its EU Hydrogen Strategy and its Energy Systems Integration Strategy. The announcement prioritised the development of renewable hydrogen, produced using mainly wind and solar energy. From 2020 to 2024, they will support the installation of at least 6GW of renewable hydrogen electrolysers in the EU, and the production of up to one million tonnes of renewable hydrogen. ITM with its partners Linde and Snam are well positioned to benefit from these opportunities.

3 Yr Share Price

The results demonstrate a lot of potential from many different areas but progress towards profitability remains slow. The market does not seem impressed with the results and the share price has taken a hit...down 54p (11%) to 415p at the close today.

The potential for green hydrogen worldwide is huge but for investors in the individual companies, it remains risky as nobody really knows who will come out on top... still 'jam tomorrow'. Revenues of £5m are small compared to a market cap. of over £2bn so I am hoping to see more progress on a scaling up of operations over the coming year. The share price has made progress with a rise from 250p last year, reaching a high point of over £7 in January before sliding back - but still quite a jump from my purchase price of 37p just over two years back.

In the past few months I have started to take some of the profits from my green equity investments as I move to a more defensive position. This includes a reduction in my ITM holding - down from 9% at the start of this year to currently 3% of my green portfolio.

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 individual companies listed on AIM can be rewarding but is higher risk compared to collective investments - always DYOR!


  1. Useful write-up as ever. :) I just can't make my mind up about investing in hydrogen yet. As you say the market is there but the path to it seems so uncertain.

    In other news have you been watching UK power prices? One of the energy suppliers just called for the green levy to be scrapped, which bodes pretty poorly.

    Apparently there's a wind shortage. The result of the crunch is Drax and other coal power stations being paid a fortune to keep burning. Background and a shocking graph here:

    1. Thanks TI.

      Unfortunately I think we have been pulling in two directions regarding energy policy and the transition from fossil fuels to clean renewables. The fossil fuel lobby is still very powerful.

      It seems clear to me that we need to tap in to the abundant wave and tidal power sector which provides a constant flow of energy all around our coast line. The likes of Orbital Marine is showing the way but sadly our government have been slow to see the potential.

      Also we need far more energy storage capacity...battery, hydrogen, pumped hydro etc. otherwise we remain too reliant on the likes of gas, drax and imports and the issues that we have seen over the past week will be repeated.

      We now have a new energy minister Greg Hands, we are in the run-up to the COP meeting so maybe we will see a little more progress in the coming months. But one thing is for sure, hydrogen will play a big part in the transition...I just hope we don't have too wait too much longer and risk keeping 1.5C in sight.