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ITM Power electrolyzer order book points to booming green hydrogen demand

Highlights

Tender pipeline of $855 mil, up 131% on year

593 MW of potential green hydrogen demand

Green recovery measures boost outlook

UK-based electrolyzer producer ITM Power has more than doubled its tender pipeline in the last 12 months, painting a bullish outlook for the renewable hydrogen market.

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ITM Power submitted firm bids for electrolyzers worth a total GBP607 million ($855 million) in the year ended April 30, up 131% on the year, constituting 593 MW of potential demand, the company said in a trading update June 10.

The figure includes quotations submitted in response to commercial tenders in the 12-month period, and is expected to be contracted in the next three years, giving a gauge of growth in the global electrolysis market.

"Traction in the electrolyzer industry has been even more rapid than we were anticipating," CEO Graham Cooley said in a statement. "We moved into a gigawatt factory in January, which positions us strongly to meet rapidly growing global demand reflected in a contracts backlog and tender opportunity pipeline materially ahead of our original expectations."

ITM Power said the average project size of GBP8.9 million reflected strong industrial demand for larger systems.

The company's contracts backlog was up almost three times the previous year's, standing at GBP154 million, and constituting 290 MW of electrolyzers. Of this, GBP35.4 million was for projects under contract and in progress, with a further GBP118.6 million of awards in final stages of negotiation.

ITM Power expects to produce 50 MW of electrolyzers in the year ending April 30, 2022, of which 33 MW are contracted and 17 MW are in advanced stages of contract negotiation.

Growth prospects

The company said electrolyzer targets supported the market outlook for renewable hydrogen production, pointing to eight governments with explicit targets totaling 144 GW by 2030.

It said post-coronavirus pandemic economic support packages combining recovery packages with environmental measures boded well for ITM Power's growth prospects.

ITM Power opened the world's largest electrolyzer factory in January, and now has "significant manufacturing and operational capacity, and a blueprint to substantially increase that capacity," it said. The company has recruited additional 80 engineers.

The company allocated GBP24 million for a 1.5 GW/year electrolyzer factory, Cooley said in an investor call.

Cooley noted the fact that there were questions about the ticket price for an electrolyzer factory showed the trajectory of the industry, and how far it had come. "We've arrived now, haven't we, if that's what we're saying," he said.

ITM Power was not concerned about competitors in the field, Cooley said, citing the "phenomenal" number of projects being developed.

"Competition is a good thing," he said. "Competition normally drives performance, it also drives down costs. "We do have competitors. They are snapping at our heels, and they will all get projects," he added.

ITM Power was ahead of its cost reduction curve, despite rising and volatile metals and other commodity prices, Cooley said. The company was also reducing its use of precious metals.

"Over the last 10 years, the use of precious metals within ITM Power stacks has reduced by over 80%," the company said in the statement. "This enabled ITM Power to achieve the 2030 EU target of 0.4mg/W for precious metal loading for electrolyzers in 2019 and significant further progress has been made since then."

S&P Global Platts assessed the cost of producing hydrogen via alkaline electrolysis in the UK (including capex) at GBP4.56/kg June 9. PEM electrolysis production was assessed at GBP5.64/kg.