30th Mar 2021
Established in 2001, ITM Power PLC was the first UK-based fuel cell company to go public, back in 2004. The energy storage and clean fuel company focuses on developing materials and technology to lower the cost of hydrogen production and increase its accessibility. It recently announced that its consortium, together with Ørsted, Siemens Gamesa Renewable Energy, and Element Energy, has been awarded a €5m grant to develop a combined wind turbine and electrolyzer system for offshore marine hydrogen production. The announcement follows recent successes including the opening of the company’s new gigafactory in the UK, and the sale of a 24MW electrolyzer to chemical company Linde for installation in its Leuna Chemical Complex in Germany as the world’s largest proton exchange membrane (PEM) electrolyzer.
The grant from the European Commission’s Fuel Cells and Hydrogen Joint Undertaking (FCH2-JU) reflects the dedication of the EU and its member states to developing cost-effective, reliable green energy solutions that enable them to meet their zero-carbon targets. Most European nations joined the Paris Climate Agreement, in which they committed to substantially reducing their greenhouse gas emissions by 2050, while a number of governments and municipalities have also set their own emissions goals. A public increasingly concerned about the impact of CO2 on climate change and public health is maintaining pressure on world leaders to meet these commitments.
Green hydrogen fuel plays a key role in enabling them to do so, indicating a positive outlook for the hydrogen fuel market and a fuel cell ETF. Hydrogen is the most common element on the planet, making up 90% of our atmosphere, so it’s available in abundance. It’s typically found in compounds with other elements, most often in water. Energy producers use electrolyzers, such as those developed by ITM, to release and harvest the hydrogen molecules. They are stored in pressurized containers, then transferred into fuel cells so that the energy can be delivered as fuel.
Despite the rise in solar, wind, and biomass energy solutions, none of them are able to provide power that is consistent, price-efficient, and sufficient to meet Europe’s ever-growing energy demands. While electrification has made great strides recently, it too cannot fully replace fossil fuels, especially for industrial applications that require molecule-based fuels and are responsible for around 30% of the world’s carbon emissions.1 However, hydrogen’s energy-dense nature means that it has long-duration discharge cycles. Hydrogen can collect excess energy from other sources and redistribute it for use at times of peak demand.
The €5m grant won by the ITM consortium and the opening of its expanded electrolyzer manufacturing plant in the UK is further testimony to a strong future for green hydrogen fuel, making this a potentially positive time to invest in a hydrogen ETF. Together, ITM and the other members of the consortium intend to develop a green hydrogen production solution that can stand up to the harsh marine conditions. The grant is aimed at building an offshore wind-powered hydrogen plant that would enable green hydrogen fuel to compete with natural gas in terms of price, so as to open up bulk markets for green hydrogen. This in turn would significantly reduce Europe’s carbon emissions and encourage a fully renewable energy system across the continent, boosting the clean fuel market.
ITM produces hydrogen electrolyzers at its recently-expanded plant in the UK, The electrolyzers run on excess energy from the power network, thereby converting power that would otherwise be wasted into green energy. They are produced in a range of sizes to meet various use cases. The turnkey hydrogen power solution, together with dedicated ITM support, enables enterprises, utilities, and municipalities to generate high purity hydrogen gas and transfer it for use as fuel by any application. Green hydrogen from ITM is used by industries needing molecule-based fuels, for refueling hydrogen-powered vehicles, and for heating, lighting, and backup power.
An ITM subsidiary, ITM Motive, was formed in May 2020 to manage the company’s refueling stations. ITM Motive currently operates 7 hydrogen refueling stations across the UK, with a world-class availability of 98%. These stations serve FECVs that are already in use, but also provide the vital infrastructure that will enable the roll out of more hydrogen-powered vehicles. The company has committed to 5 more operational refueling stations by summer 2021, and it plans to expand its refueling network to 100 stations around the country. ITM has already secured funding from the UK and the EU to cover build and deployment costs, and a recent agreement with Shell will see many of them sited in Shell gas station forecourts.
With companies like ITM expanding the hydrogen fuel production market and taking steps to make green hydrogen even more competitive, it’s an excellent time to invest in green hydrogen stocks. A diversified clean energy ETF like the new HDRO ETF from Defiance enables investors to mitigate risk and spread their investment across a number of emerging fuel cell companies in a sector that is ripe for disruption and innovation. HDRO tracks the rules-based BlueStar Global Hydrogen & Next Gen Fuel Cell Index, and is the first US-listed hydrogen ETF.
The BlueStar Global Hydrogen & Next Gen Fuel Cell Index is rules-based and tracks the performance of a group of globally listed equities in the hydrogen and fuel cell segment.
1 BNEF 2020, California Fuel Cell Partnership, cited in “Thematic Investing: The Special 1 – Hydrogen primer,” Bank of America Securities, Global Research, 23 September 2020, p.13.