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Partnerships are great, the proof will always be in the pudding (or in this case, the hydrogen). It’s one thing to host meetings and showcase potential; it’s another to deliver tangible results that impact the bottom line. So while I applaud the progress, I’m keenly awaiting the follow-through. Let’s hope AFC’s journey from ‘infancy to maturity’ translates into real growth and not just well-aged presentations. Cheers to seeing more green power and less greenwashing!
The estimated share price range of £2.00 to £3.00 is based on the significant boost this deal gives to ITM Power's annual revenues, almost doubling previous figures and greatly improving the company's financial outlook. This large, confirmed deal will likely elevate the market's view of ITM Power, showcasing its capability to handle major projects and signaling robust growth prospects. This new revenue stream not only enhances the company’s appeal to investors seeking growth in the renewable energy sector but also supports a higher valuation, potentially allowing the share price to double or even triple from its current level in the next 6 months.
So it will be interesting to hear more about this deal (dates/price - FID) but say revenue is projected at approximately £200 million spread evenly from 2024 to 2027, and assuming all other factors remain constant, the share price could potentially rise significantly. Based on the increase in annual revenue, a reasonable estimate might see the share price reaching upwards of £2.00 to £3.00, reflecting the company's expanded financial base and growth prospects.
Estimated Revenue for ITM-Hygen Hydrogen Projects: £20M to £40M for Phase 1, Potentially Higher Due to Additional Costs of Plug and Play Electrolysers; £60M to £120M for Phase 2
Phase 1 (50 MW or 50,000 kW):
Lower estimate: $25 million ÷ 1.25 = £20 million
Higher estimate: $50 million ÷ 1.25 = £40 million
Phase 2 (150 MW or 150,000 kW):
Lower estimate: $75 million ÷ 1.25 = £60 million
Higher estimate: $150 million ÷ 1.25 = £120 million
This holds true for the decarbonisation of the industry as a whole, for green hydrogen and related infrastructure in particular, and for the electrolyser market as a crucial pillar and subset.
Many OEMs (and some investors) are falling to the trap of believing this will be a sprint, and that whoever sprints faster (and more aggressively) in the beginning will win, or at least make it to the end. But that’s is not how this will go…
ITM Power’s strategic priorities reflect the dynamic between the expected long-term and near-term market development. Leveraging our superior technology, and building on our experience in real-world deployments and on our reference plants, we are focussing on readiness and flexibility, whilst maintaining a strong balance sheet. Our priorities are to:
- remain at the forefront of technology, product and delivery credibility,
- scale our operations whilst retaining flexibility and conserving cash, and
- grow our global footprint and reach whilst staying adaptable.
Let's hope we secure the deal for the multiple 100 MW projects we're quoting for, finalise the Shell deal, and add another 10 plug-and-play units this year. If we can also announce the completion of the 200 MW project for RWE, these milestones could propel our share price well past 100 and possibly close to 200 by year-end.
Dennis is zeroing in on real results over buzz. He believes that genuine achievements, rather than hype, will build a stronger business and naturally lift the share price. While I get where you are coming from Cureboy—some hype might seem good to boost a sagging share price—it’s really about long-term value. Real success stories are what will truly reassure investors and improve our sp's health. ITM Power needs to consistently deliver on its promises to get back to 600p.
Just saw on Dennis Schulz's LinkedIn that ITM will be exhibiting at this year’s World Hydrogen Summit & Exhibition, where they are set to reveal a new product. This might be the "game-changing" CHRONOS or the larger plug-and-play Neptune. Exciting!
Yes, the fact that they consider two 2 MW plug-and-play installations not worthy of an RNS, but just a LinkedIn post, suggests to me that they might have something substantial to announce via RNS soon.
Shorting should be restricted in companies like ITM Power, which are driving innovation in sectors like green hydrogen. Allowing shorting in such firms can impede their growth potential and discourage investment in groundbreaking technologies crucial for addressing pressing global challenges like climate change. We require stability and investor confidence to secure funding and advance their pioneering solutions. Shorting introduces unnecessary volatility and speculative pressures that can undermine the long-term viability of these ventures, hindering their ability to achieve meaningful impact and sustainable growth. Therefore, restricting shorting in startup companies is essential to foster innovation and support the development of transformative technologies vital for a sustainable future.
Grants: The French government will provide financial support to companies investing in renewable hydrogen and biomass. This support will come in the form of direct grants, meaning companies will receive money directly from the government to help cover the costs of their projects.
Timeframe: Companies receiving these grants must complete their projects within 36 months. In other words, they have three years from the time they receive the grants to finish their work and start operating. This ensures that the projects move forward efficiently and contribute to the transition towards renewable energy within a reasonable timeframe.
The European Commission approved a €900 million French scheme to support companies investing in biomass and renewable hydrogen for energy and fuel production, aligning with the Green Deal Industrial Plan. This aid, granted under the State aid Temporary Crisis and Transition Framework, aims to accelerate the green transition and reduce fuel dependencies. The French measure supports the production of heat, fuels, and liquid fuels from biomass and renewable hydrogen for industrial processes and transport. It takes the form of direct grants and is open to new installations and scaled-up projects, requiring completion within 36 months. The Commission found the scheme compliant with the Framework, ensuring aid incentivizes renewable energy production, adheres to aid intensity limits, and is granted by December 31, 2025. Approved under EU State aid rules, the scheme contributes to implementing the REPowerEU Plan and the Green Deal Industrial Plan. This decision comes in the context of the Temporary Crisis and Transition Framework, adopted to support sectors crucial for transitioning to a net-zero economy, with provisions amended following Russia's aggression against Ukraine.
ITM's decision not to announce the sale through an RNS suggests that they view it as relatively small compared to other developments on the horizon... This implies that ITM Power likely has larger, more impactful projects or milestones in the pipeline, which could potentially offer greater value to shareholders in the long term.
Absolutely, you're correct Jim.
However, while companies like ITM Power have a legal obligation to disclose material information, the significance of a specific transaction can be contextual. For instance, if ITM Power sells a small 2mw to Japan, they might argue that its impact relative to their overall operations is minimal. For example, if RWE announces a 260 MW project, ITM Power's smaller transaction may seem inconsequential in comparison. Therefore, ITM Power could reasonably consider the transaction's size and significance in the broader industry context when deciding on disclosure. As long as this decision aligns with regulatory guidelines and is made in good faith, it's typically considered legal and within their discretion as a company.
The reasons could be strategic, such as not wanting to disclose too much about their market penetration plans: By avoiding public announcements via RNS, they can maintain a strategic advantage and avoid drawing attention from competitors, allowing them to establish a foothold in Japan without alerting everyone to their market entry strategy. This approach helps them operate under the radar and potentially negotiate more favourable deals with clients or partners in Japan.
To me, ITM's decision not to share Japan's first purchase of a MW electrolyser from an international company via an RNS indicates a pending major announcement which makes this seem like nothing, could it involve a significant deal with RWE? Speculations suggest a potential agreement spanning 100-260MW over four years, potentially driving the share price back above £1.50 this summer. Come on Dennis.
To be honest, they might be planning a major reveal which makes this seem like nothing, such as deploying several hundred megawatts, or they could be maintaining silence to prevent premature market reactions before a big investor buys in like mentioned below. The significant growth potential in Japan's green hydrogen sector, backed by substantial government investments, underscores the importance of ITM's position. This strategic silence hints at careful planning that could shape the company's future significantly.
ITM's decision to withhold news of the megawatt electrocyser sale to Japan could be part of a strategy to deliberately stabilise their share price. By keeping developments quiet, they may be creating an opportunity for significant investors to enter the market at a lower price point before any substantial rise. This calculated approach could enable big investors to capitalise on potential future growth before it accelerates too rapidly.