Trading Update

7th October 2014
stacks in ITM factory

ITM Power (AIM: ITM), the energy storage and clean fuel company, is pleased to provide a trading update for the period since its final results announcement on 30 July 2014. The Company now has £6.77m of projects under contract and £1.20m of new projects subject to final contract negotiation. This reflects the successful conclusion of a number of negotiations and the receipt of revenue for existing projects.

As the Company continues to develop income streams from different sources, the recognition of revenue against contracts is dependent on the level of completion of these contracts. ITM Power in the current financial year will experience a weighting towards income being recognised in the second half, with delivery of the HyFive and Island Hydrogen projects nearing completion. The nature of some of the projects are that costs, and in particular non-recurring engineering costs, are subsidised through project income that ultimately culminates in ITM Power retaining ownership and operation of completed units. This means the assets in build will be of value to ITM Power in the future, as demonstration projects, a source of metrics and information for continually improving the performance of plant and as sales tools.

In the five months to the end of September, ITM Power has recognised £0.6m of sales revenue, and £0.7m of project income. These figures represent the continuation of existing, and the commencement of new, contracts. The Company recognises the need for vigilance surrounding cash control and as at the date of this announcement, the directors consider the Company to have cash resources in excess of that required to execute its plans over the next 12 months, even before any new business is generated.

Product Build

ITM Power currently has three large scale refuelling stations and six HPac products at its facilities in Sheffield, which have either completed factory acceptance testing and are ready for shipping or are in the final stages of manufacture. Three further refuelling stations for the HyFive project are about to go into production together with one to be supplied to the City of Riverside in California. All products have undergone significant cost reduction through simplification, standardisation and supply chain improvement. Customer visits, quotations and project partnerships have increased significantly.

Power-to-Gas Large Stack Platform

ITM Power has been developing a large PEM electrolyser cell and stack module capable of absorbing 0.35MW electrical power. The stack is a significant strand in ITM Power’s development activity and will extend the Company’s reach to higher capacity energy storage applications. The main advantages to the stack module are the ability to fit more electrolysis into a smaller footprint; an important consideration when addressing multi MW installations, and enabling plant simplification through the use of fewer stacks in products. Electrolyser systems incorporating the 0.35MW rapid response, self-pressurising stack will be on sale for the first time at the Hannover Messe in April 2015.

Power-to-Gas in Germany

Following on from the successful Thüga Power-to-Gas (P2G) project in Frankfurt, the first PEM electrolyser to inject hydrogen into the German gas distribution network, engagement with power and gas utilities in Germany has been very significant. The electrolyser system has undergone an extensive testing programme and is performing well.

The Company is pleased to report it has won a second public call in Germany, issued by a well-known Technical University, for a Power-to-Gas project. ITM Power will integrate an HPac40 unit into the university’s wider P2G project, due to be in operation in early 2015. The electrolyser will be housed within a €7.5m Energy Technology Campus, which will focus on wind energy and the interdisciplinary research fields of smart grids and demand-side integration as well as energy storage, while a wind farm will provide the energy basis for the Energy Campus. ITM Power’s PEM electrolyser will be operated in a demand dependent mode, responding to external factors including electricity price signals and changes in the local load.

The visitors’ centre built on the Frankfurt site by the Thüga group has been very busy. Since the official inauguration of the plant with participation of the state of Hessen’s Economics Minister, Tarek Al-Wazir and his counterpart from the neighbouring state of Rhineland Palatinate, Eveline Lemke, on 7 May, the plant has welcomed a diverse set of visitors. Alongside a significant number of interested domestic visitors, a significant number of foreign visitors have also been to inspect the plant. These include France’s Air Liquide, Japan’s Tokyo Gas, California’s Public Utility Commissioner and one of the state’s largest utilities – Southern California Gas, Dr. Monterey Gardner of the US Department of Energy, as well as New Jersey Assemblyman and chair of the Commerce and Economic Development Committee Gordon M. Johnson. Delegations from the North Sea Power to Gas grouping and GRTgaz are also among recent visitors.

Island Hydrogen, UK

The project formerly known as EcoIsland will see the deployment of two hydrogen refuelling stations incorporating on-site electrolysis systems. The first will be used to refuel road vehicles including Hyundai ix35, Microcab and Ford Transit vans, while the second will be used to refuel a hydrogen powered boat. The collaborative project is supported by Innovate UK, the UK’s innovation agency. The ITM Power led project brings together IBM, Vodafone, SSE, Cheetah Marine, Toshiba, Arcola Energy, NPL, University of Nottingham and University of South Wales.

The vehicle refueller will now be located on the Advanced Manufacturing Park in Rotherham. This decision was taken by agreement with the project consortium to ensure maximum utilisation for the station.  The site is off the M1 close to the junction with the M18 and will be an important part of the UK hydrogen infrastructure roll out. Planning permission for the site has been granted and we look forward to the commissioning process which is now underway. ITM Power already has a presence on the site and is commissioning a wind hydrogen fuel project partially funded by Rotherham Metropolitan Borough Council which will see a Hyundai ix35 fuel cell vehicle deployed in the South Yorkshire region.

The electrolyser build programme has gone to schedule and the system has achieved a CE mark and successfully completed Factory Acceptance Testing.  The measured system efficiency of the electrolyser system is <55kWhr/kg (>71%) which surpasses the target set by the Fuel Cell and Hydrogen Joint Undertaking (FCH JU) for 2017. This project represents the first deployment of the Company’s standardised HGas180 platform, capable of generating 80kg of hydrogen per day, the template for further refuelling station deployments in both the UK and USA.

HyFive, UK

Hydrogen For Innovative Vehicles (HyFIVE) is an ambitious European project funded by the FCH JU under the EU Framework 7 programme, including 15 Partners who will deploy 110 Fuel Cell Electric Vehicles (FCEVs) manufactured by five Global Automotive Companies across three European cluster locations. ITM Power is providing three new hydrogen refuelling stations to London for deployment in spring 2015. Each will include both on-site electrolyser systems and 700 bar refuelling capacity. Siting activities have been ongoing both for HyFIVE refuelling equipment and potential additional roll out programs. Three planning applications have been submitted to date and a further four are in progress.

The parallel electrolyser build programme is underway with functional and compliance testing of the first electrolyser system due for completion before the end of 2014 and commissioning by March 2015.

The first Hyundai ix35 Fuel Cell Vehicles, funded under the HyFive London Cluster, have now arrived in the UK at Tilbury dock and ITM Power will be one of the first to take delivery of this production ready, revolutionary vehicle.

Hydrogen Mobility Programmes

The UK H2Mobility and Mobilité Hydrogène France consortia have defined deployment scenarios for fuel cell electric vehicles (FCEVs) and hydrogen refuelling stations (HRS), which identified costs, emissions reductions and benefits to society. The total number of HRS required by just these two countries between 2015 and 2030 amounts to over 1,700. The UK Government is expected to make a statement shortly, outlining the funds that will be made available to assist deployment of hydrogen infrastructure to support the launch of FCEVs over the coming months.

H2USA continues to make progress and gather pace with nine new members joining in the last 13 months. ITM Power Inc. is a member of the Hydrogen Fuelling Station working group and is contributing to the technical and commercial aspects of hydrogen stations nationwide in the US.

Also in North America, in California, the California Energy Commission (CEC) continues to fund the roll out of hydrogen stations across the state. The next phase of funding will be publicly released within the next few months and ITM Power continues to engage with a number of potential partners, land owners, vehicle OEMs and end users to secure further stations in California and add to its station network.

Chino and Riverside Refuelling Stations

ITM Power is working on the delivery of its high pressure electrolyser to Chino, where it will be used in conjunction with a 700 bar refueller, sited at Hyundai’s Technical Centre in California. This is a particularly important project for the Company as it is the first 80 bar self-pressurising electrolyser system to be put into service. The project, which was funded by the California Energy Commission as part of the Californian Hydrogen Infrastructure Initiative, has required ITM Power to go through a different compliance route from that required for deployment in Europe, enabling the Company to demonstrate compliance in both US and European markets. The electrolyser system is on track to be shipped before the end of 2014.

The Company has now started its second refuelling project in California, this time as the lead organisation to supply a 100kg per day station. Sub-contracts with key partners and the land owner are in the final stages of negotiation. The station will be sited at the City of Riverside’s fleet site and is due to be operational by October 2015. This refuelling station will be open to the public as well as selected industrial partners operating heavy duty fuel cell powered vehicles.

ITM Power will be pursuing ongoing maintenance contracts for the electrolyser systems once deployed, recognising this as an important and valuable long term revenue stream.

Power to Gas in North America

In December 2010, the California Public Utilities Commission (CPUC) set policy for California utilities and load-serving entities to consider the procurement of viable and cost-effective energy storage systems. In October 2013, the CPUC, to support this policy, adopted an energy storage procurement framework and established an energy storage target of 1,325 megawatts for PG&E, Edison, and SDG&E by 2020, with installations required no later than the end of 2024. P2G is one of the energy storage technologies that has been formally registered with the CPUC by ITM Power through its association, the California Hydrogen Business Council. The Californian ISO (Independent System Operator) together with the CEC and CPUC will publish the first Energy Storage Roadmap for the State of California in December 2014.

The Minister of Energy for the Province of Ontario in Canada issued on 31 March 2014, a directive for the province of Ontario to procure its first energy storage to support “Achieving Balance: Ontario’s Long-Term Energy Plan”. The Ontario government determined that the procurement of the first 50 MW of energy storage by the end of 2014 should be pursued. Hydrogen P2G is registered as one of the acceptable energy storage technologies that can be implemented in Ontario.

ITM Power has become a leader for the introduction of P2G technology in the USA and Canada. P2G technology was largely unknown in North America a year ago and ITM Power, through a dedicated programme of education and outreach, is now actively pursuing numerous opportunities. Initially targeting California’s mandated deployment of 1.3GW of energy storage and Ontario’s procurement directive, the Company is in discussions with a number of potential partners to utilise its European experience and deploy products in the USA and Canada.

Marketing

ITM Power continues to attend and present at many industry specific trade fairs and conferences and have a number of high profile presentations coming up over the next six months.  There has been particular focus on energy storage technologies, with many industry events now having this as a main focus.  ITM Power will be presenting at a number of events, including The World of Energy Solutions, Stuttgart, Von der Innovation zur erfolgreichen Markteinführung, Frankfurt, REA: “Storage: its place in the UK’s evolving energy mix”, UK, Gas to Power Forum, UK, European forum on Underground Gas Storage, Berlin, Application of Storage Technologies, Düsseldorf, Energy Storage Europe, Düsseldorf and once again a big focus will be at the H2FC, Hannover in April.

The Company continues to use its links to governments to explain and make the case for both energy storage and clean fuel production using electrolysis. A number of high profile and influential politicians and civil servants have now engaged with the concept and are exploring mechanisms to support its early roll out.

Graham Cooley, CEO, ITM Power PLC, commented: “This update reflects a very busy time for the Company. Customer engagement has been significantly increased while the project and quotation pipeline has been steadily growing. We look forward to sharing more of the results of our efforts with shareholders over the coming months.”

For further information please visit www.itm-power.com or contact:

ITM Power plc
Graham Cooley, CEO
0114 244 5111

Zeus Capital
Tim Metcalfe (Nominated Adviser)
John Goold (Institutional Sales)
020 7533 7727

Tavistock Communications
Simon Hudson / James Collins
020 7920 3150

About ITM Power plc:

ITM Power plc was admitted to the AIM market of the London Stock Exchange in 2004 and raised its initial funding of £10m gross in its IPO.  Further funding rounds of £28.5m in 2006, £5.4m in 2012, £2m in 2013 and £10m in 2014 have been completed.  The Company has now made the transition from a research and development company to a product manufacturer and technology provider.  The Company has both a strong base of intellectual property and engineering expertise for providing complete hydrogen solutions.

www.itm-power.com 

About Innovate UK

Innovate UK is the new name for the Technology Strategy Board   the UKs innovation agency. Taking a new idea to market is a challenge. Innovate UK funds, supports and connects innovative businesses through a unique mix of people and programmes to accelerate sustainable economic growth. For further information visit www.innovateuk.org

About the CEC

The California Energy Commission is the state’s primary energy policy and planning agency. Established by the Legislature in 1974 and located in Sacramento, seven core responsibilities guide the Energy Commission as it sets California energy policy:

About the FCH-JU

The Fuel Cells and Hydrogen Joint Undertaking (FCH JU) is a unique public private partnership supporting research, technological development and demonstration (RTD) activities in fuel cell and hydrogen energy technologies in Europe. Its aim is to accelerate the market introduction of these technologies, realising their potential as an instrument in achieving a carbon-lean energy system.

Fuel cells, as an efficient conversion technology, and hydrogen, as a clean energy carrier, have a great potential to help fight carbon dioxide emissions, to reduce dependence on hydrocarbons and to contribute to economic growth. The objective of the FCH JU is to bring these benefits to Europeans through a concentrated effort from all sectors.

The three members of the FCH JU are the European Commission, fuel cell and hydrogen industries represented by the NEW Industry Grouping and the research community represented by Research Grouping N.ERGHY.



Rebecca Markillie
Marketing & Communications
E: rlm@itm-power.com
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