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ITM Power shares [LON:ITM] have been doing incredibly well recently, but they have run out of puff over the last few weeks.

The stock has been struggling to breach the key 300 level and reward investors who have already seen the hydrogen storage specialist push from around GBX 100 in March to its current levels in the 280s.

That said, this does not mean that the macroeconomic story that has been driving the share price is any less potent than it was in March.

ITM Power well positioned for sector innovation

ITM Power stock has come off a little in August, and investors are going to be wondering whether they are going to see further upside from this alternative energy play.

However, the business is well positioned to benefit from further innovation in the sector – the European Union for example recently unveiled an energy systems integration strategy to help develop renewable hydrogen, using mainly wind power and solar energy.

The European Commission says that between 2020 and 2024 it is going to support the installation of at least 6 gigawatts of hydrogen electrolysers and the production of one million tonnes of renewable hydrogen.

“This is one of the biggest moments for green hydrogen produced by electrolysis,” explained Graham Cooley, CEO of ITM Power. “The EU’s target of at least 40GW of green electrolysis by 2030, which complements the earlier commitments by the governments of Germany, the Netherlands and Portugal for a total of 10GW, means green hydrogen will take centre stage in the world’s drive to decarbonise.”

Government and regional initiatives

ITM Power has a joint venture with ITM Linde Electrolysis GmbH in Dresden and is anticipating bringing further capacity online once it opens a factory near Sheffield in the UK later this year.

Cooley sees these new government-level and regional initiatives as a “huge market opportunity” for the company.

ITM Power designs and produces products which generate hydrogen gas. Employing Proton Exchange Membrane technology, it can draw on renewable electricity and tap water to generate hydrogen gas on-site.

It currently has a product offering that can generate over 100MW.


ITM Power aims to use its technology to convert excess energy from the power network into hydrogen, which can be used in a number of areas. The company is already active as a partner in a number of projects.

The EU initiative holds out the prospect of further activity for ITM Power along the lines of its REFHYNE project in Germany, which involves the installation and operation of the world’s largest hydrogen electrolyser at Wesseling (Shell Rhineland Refinery).

The PEM electrolyser, which is being built by ITM Power, is the largest of its kind, and is being built on an industrial scale. Significantly, it is being backed by the European Commission’s Fuel Cells and Hydrogen Joint Undertaking.

The Armchair Trader says

We have seen plenty of value growth from ITM Power shares so far.

It is one of the more closely followed companies in the hydrogen energy sector, which we believe is set for further aggressive expansion in Europe as governments start to prioritise and support the activities of companies such as these.

ITM Power is an active and central player in key projects like REFHYNE and HyDeploy and we anticipate that there will be further projects of this nature in the future.

Related

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Stuart Fieldhouse

Stuart Fieldhouse

Stuart Fieldhouse has spent 25 years in journalism and marketing, including as a wealth management editor for the Financial Times group, covering capital markets and international private banking, and as an investment banking correspondent for Euromoney in Hong Kong. He was the founder editor of The Hedge Fund Journal.

Stuart has worked at CMC Markets, supporting the re-launch of its global financial spread betting and CFD trading platforms. He is also the author of two books on trading, published by Financial Times Pearson. Based in The Armchair Trader’s London office, Stuart continues to advise fund managers, private banks, family offices and other financial institutions.

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