Update on Hydrogen Cost Structure

18th July 2012
HFuel

ITM Power (AIM: ITM), the energy storage and clean fuel company, is pleased to update the market on the cost structure of hydrogen generated by the Company’s HFuel electrolyser platform. In November 2011 the Company announced the cost of hydrogen (in £/kg) derived from electrolysis based on the capital cost and operating efficiency measured during completed HOST trials. This update represents a revised cost structure based on the Company’s larger 25kg/24hr stack platform which was launched at the Hannover Messe in April 2012 for larger scale refuelling and gas grid injection applications.

HFuel 100Kg/day Generation Module

A hydrogen generation module comprising four 25kg/24hr electrolyser stacks and associated balance of plant has been used in the analysis. In addition to capital cost and electricity consumption, the analysis includes an indicative annual maintenance cost together with utilisation factor. The assumptions used are listed below:

Generation capacity: 100kg/24hr
Sale price: £713,243
Amortisation period: 10 years
Electricity price: 3.5p/kWhr
Water price: 0.13p/litre
System efficiency: 60kWhr/kg
Annual Service: £35,662 (5% of sale price)
Utilisation factor: 70%

Hydrogen cost is projected at £6.23/kg within a 10 year capital amortisation period and £3.49/kg after capital amortisation. This represents a significant reduction in hydrogen cost.

Increasing utilisation factor to 100% reduces hydrogen cost to £5.00/kg during a 10 year capital amortisation period and £3.08/kg thereafter.

The European cost targets for hydrogen generation are EUR9.90/kg (£7.92/kg) in 2015 and EUR5.50/kg (£4.40/kg) in 2025 (McKinsey ‘A portfolio of power-trains for Europe: a fact-based analysis’). Assumed conversion rate of £1 = EUR1.25.

1MW Energy Storage Units

Utilisation of the larger capacity stack platform enables HFuel to carry forward the flexible modular design philosophy, consisting of up to 16 electrolyser stacks per 1MW element (20ft standard ISO container). In response to varying load requirements each stack can be switched on/off in 1 second and may be turned up and down dynamically either independently or coordinated with the others in the system. This provides tremendous flexibility for system operation and maintenance. Integration with an overarching energy management system enables real time decisions to be made as to optimal operational mode and overall efficiency.

Each stack has a conversion efficiency in excess of 75% at full load, higher at part load. The 80 bar maximum operating pressure of the stacks obviates the need for a compressor when used for gas grid injection. This eliminates the energy consumption associated with an external compressor and significantly reduces system maintenance. This coupled with the balance of plant design achieves a system efficiency of less than 60kWhr/kg.

The power industry can deploy and control the operation of the ITM Power units, located at various sites nationally, to valley fill local electrical load profiles and so ensure that wind farms never need to be shut down. Unlike other forms of energy storage, there is no need to reconvert the stored energy to power, or to control the timing and duration of power transfer.

The electrolyser may be called to operate at any time, can absorb various power levels up to 1MW per unit and can be cycled several times per day if required. It can provide up to 24MWh of storage per unit per day. The generated hydrogen can be directed to the natural gas grid to reduce the carbon footprint of gas turbines, boilers and other gas-fired heating equipment or used to refuel vehicles or both.

ITM Power CEO, Graham Cooley, commented: “I am delighted to report this positive adjustment to our hydrogen cost structure. We have achieved 1MW scale electrolysis and significantly reduced hydrogen cost at the same time.”

For further information concerning injection of hydrogen into the natural gas network, see the following website: http://www.gridgas.co.uk/

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

ITM Power plc
Graham Cooley, CEO
0114 244 5111

Singer Capital Markets Limited (Nominated Adviser & Broker)
Shaun Dobson / Samantha New
www.singercm.com
020 3205 7628

Tavistock Communications
Simon Hudson / Kelsey Traynor
020 7920 3150

About ITM Power

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. A further funding round of £28.5m was completed in 2006. 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. The Company has been successful in developing strategic industry partnerships in the following projects:

700bar Dispensing Collaboration in Germany

Marks & Spencer pilot materials handling fuel cell project

UKH2Mobility with leading auto OEM’s, UK gov. and industrial gas companies

EcoIsland with Toshiba, IBM, Cable & Wireless, SSE and Southern Water

Boeing Unmanned Aircraft System Refueller

Electrolyser Distribution with Horizon Fuel Cells

CREO with Ford, Jaguar Land Rover and Johnson Matthey

Exclusive European distribution rights for Infintium Materials Handling Fuel Cells

Sale of Equipment to EADS

EU Grant Award for PEM Water Electrolysers Coupled to Renewable Power Sources



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