Update on ITM Power – raising buy limit
8th January 2020 |
Quick update today…
Last month my colleague James Allen told you about a big opportunity in the hydrogen market. I hope you took his lead!
Below James gives you a quick update on what’s happening with the company – ITM POWER – and why he’s raising his buy limit (hint: the company is on an absolute tear).
Over to you James,
Eoin Treacy
Editor, Frontier Tech Investor
First things first: Happy New Year! I hope you had a great time over the festive period, and I wish you all the best for 2020.
I just want to get down to business with a small bit of housekeeping concerning ITM Power, the UK-listed manufacturer of integrated hydrogen energy systems.
It’s certainly had a good start to the decade.
On just the second day of the year, the Aim-traded firm said that HyDeploy, the “first live pilot project” to inject zero carbon hydrogen into a gas network to heat homes and businesses, is now fully operational.
ITM Power said the hydrogen for the pilot project was being produced by an electrolyser – which uses an electrical current to split water molecules into hydrogen and oxygen – it had supplied.
HyDeploy is a £6.8 million project funded by UK energy regulator Ofgem and its ultimate goal is to “establish the potential for blending up to 20% hydrogen into the normal gas supply” in order to reduce carbon dioxide emissions.
The pilot trial is underway at Staffordshire, in England’s West Midlands, injecting up to 20% of hydrogen into Keele University’s existing natural gas network, feeding 100 homes and 30 faculty buildings, ITM Power said.
If a 20% hydrogen blend was rolled out across the UK it could reduce CO2 emissions by about 6 million tonnes annually, according to the company statement.
“A very significant step”
ITM Power CEO Graham Cooley described the HyDeploy’s pilot project as a “very significant step.
“The increased use of hydrogen to decarbonise heat via the gas grid will perform a critical role in helping the UK to fulfil its ambitious climate change obligations,” Cooley said.
“Indeed, the Committee for Climate Change has indicated that the UK will need between 6 GW and 17 GW of electrolysis in the next 30 years to store renewable power and provide renewable heat.”
This prediction above implies the country will need to build up to 567 MW of electrolysis per year for 30 years.
Considering each megawatt of electrolyser capacity costs about €1 million, that’s over half a billion euros that will need to be spent in the UK per year on average for 30 years to get to zero emissions.
For the so-called hydrogen economy in the UK generally, and ITM Power specifically, that’s huge.
Remember, MPs on the influential Business, Energy and Industrial Strategy Committee have said the rules should be changed as soon as this year to allow hydrogen into the natural gas grid.
If the HyDeploy trial proves successful, then a positive decision is that much more likely.
The stock is now trading around 83p, above our buy-up-to limit of 80p.
But with all the above in mind, I think we can lift the buy limit, which will allow those of you who haven’t yet claimed a stake to take a position, and those who already have to increase your holdings.
I think a buy-up-to limit of 100p is sensible for now.
That’s all from me for now.
Until next time,
James Allen
Editor, Exponential Energy Fortunes