focusIR May 2024 Investor Webinar: Blue Whale, Kavango, Taseko Mines & CQS Natural Resources. Catch up with the webinar here.
It looks like ITM are still ahead with their technology, but let's hope they can iron out the difficulties they owned up to recently. I think Plug Power are still only offering and building around their 1MW stack whilst ITM are moving to 2MW and 5MW. For scaleability that could really matter (although it's not altogether clear why customers can't just construct everything out of enough 1MW stacks if you've got the space).
But ITM seem to have dropped the ball by showing too much loyalty to their initial customers with what feel like exclusive partnerships. We have seen that Shell are in other partnerships with multiple projects all over the world. Likewise Linde don't seem to care what colour their hydrogen is. And we've heard nothing from Snam in over two years.
Plug also recognise the advantage in vertical integration. They have a head start in this as they began in fuel cells and end-user forklift product. They're going full vertical integration with manufacturing their own electrolyser systems, using those electrolysers in their own green hydrogen production factories, building their own delivery trucks, delivering hydrogen to their forklift truck customers, and selling more hydrogen forklift trucks. So no matter what their future customers ask them to supply, their answer will be "Yes we can". On the other hand ITM had one bad experience trying to supply and construct all the balance of plant to Shell that they immediately threw in the towel and signed that part of the business over to Linde.
It's still early days for this industry (assuming hydrogen actually is the future) and ITM can still do well. But I think they need to take back control and get back to doing their own marketing and selling. After all it was their own marketing and selling that got Shell, Linde and Snam in the first place.
It's the CPI data released in US. It's come in under all forecasts so a huge stockmarket move was expected as a result. You never know though, they could give it all back by the end of the day. All tech is up massively so far.
I'm not a fan of nuclear, but I found this interesting...
https://www.youtube.com/watch?v=_uTZWaJU6ho
...but just don't expect the UK to lead the way on it.
It's nearly 6 years since ITM and Shell opened the Cobham Services hyrdrogen refueling pump. Had we built only 10 each year since then we'd be able to describe it now as a national network. And it would have probably only cost about £25m each year. But instead we seem to be closing them down faster than we're putting them up. And we're probably spending more than that amount on running 'competitions' and studies instead. It's all daft.
Looking at the numbers it feels like the energy storage opportunity for hydrogen is a long way off being useful, if you're considering excess wind as a driving factor. I accept that we're early days for wind generation (heading for about 60TWh this year out of approx 270TWh electricity demand), but curtailed excess generation is going to be about 4TWh. If you want to capture that through electrolysis you'd be able to supply about 0.5% of our annual electricity demand or 0.33% of our annual gas usage.
I would concentrate instead on using the green hydrogen from excess wind to directly replace existing grey hydrogen demand. UK grey hydrogen demand is approx 700 ktonne (2020) and the numbers presented above represent approx 70 ktonne of green hydrogen generation. So already if we had 1GW of electrolysis equipment, appropriately spread across the network to capture the excess generation, we'd be satisfying about 10% of the UK hydrogen commodity demand.
Furthermore, we'll be spending around £200m on curtailment this year to generate absolutely nothing, whereas the hydrogen we could have generated instead could have been sold for circa £200m-£350m. The economic case already looks sound but for some reason the inability of our masters to connect the dots is letting us down.
Perhaps I've got it wrong. Maybe someone could double-check my numbers.
I don't quite see why the new CEO of ITM-Motive should be such a negative influence for ITM Power. I rate the chances of success for ITM-Motive to be <25% irrespective of who runs it. So I don't see that as being a huge driver of electrolyser sales to ITM Power either. I'll be more intersted to see who they choose to be the new CEO of ITM Power. Might be more enlightening or concerning if it's a Linde man.
Pretty much as we've been experiencing over recent months.
https://www.ft.com/content/7d7420bc-079e-4730-b849-5a18ccd7258f
Anyone behind a paywall can read an alternative summary at either of these...
https://hydrogen-central.com/johnson-matthey-chief-says-uk-fallen-behind-hydrogen-energy-race/
https://www.newsncr.com/business/johnson-matthey-chief-says-uk-has-fallen-behind-in-hydrogen-power-race/
Yes bilbs, the AGM has reverted back to the old fashioned in-person event. Seems like a backward step given that we're all Zoomed and Teams'd up these days. Then again, this one is only the AGM so it's generally just voting procedures. I think I remember even at last years InvestorMeet AGM they didn't take any questions.
ITM just don't like to make life easy for us do they? It would be comical if it wasn't hitting our investments.
I don't even know why they are bothering to give forward guidance. It's all at such an early stage, it must be almost impossible to predict anything specific over a 6-12 month timeframe. 30% drop is the standard market opener for a 'profit warning'. But even calling this a profit warning would be odd for a company that won't be making a profit for a good few years yet.
Still, it's a shame that the share price reaction to this sort of news for such an early stage company has to be the same as for a big multinational that's just seen its market surprisingly shrink. Such is life.
Unfortunately there always seems to be double-standards applied when it comes to hydrogen versus batteries/electricity, and in this case it also manifests in the refuelling network. Anything to do wth hydrogen and zero-carbon results in stipulations from several government bodies, including UK, that green hydrogen MUST be combined with a dedicated renewable electricity source. We don't see the same rules applied to public charging points which can simply take electricity from the grid irrespective of how clean or dirty it was generated. Until the playing field is levelled I'm afraid we won't see a massive rollout of hydrogen refuelling here. If I were a conspiracy theorist I would conjecture that all the trials for comparison that we see our government initiating is to fulfil their desire to have a scientifically proven outright win for battery/electricity so they can abandon hydrogen altogether for a simpler life.
Wednesday is Plug's Symposium day. They released this 3D factory tour ahead of the event.
https://3d.zuant.com/experience/plug-power/KJ66EE8SEe2i3O%2BCc7Lqpg/
As with everything else, we'll have to wait for the rest of the world to decide which way to go. I've given up on the UK ever taking the lead in anything. If ITM want to make any serious sales of electrolysers, it's going to have to be overseas.
SatellitePro, the only counter-arguments I have left are in relation to 1) battery lorries and 2) excess energy storage.
1) Liebriech et al. suggest that battery lorries will work because you only need 4 hours battery life (120-160miles) and drivers will recharge during legally-required breaks and delivery points. Those will both be high-speed chargers. Each time that case is made there is never an explanation of what's involved. and I suggest that what's involved is non-trivial. Each lorry requires 400-600kWh batteries for the proposed minimum battery life. A 20 minute delivery slot requires a 500kW charger (50 miles) installed at company expense. I'm not convinced that such power and expense will be provided by many companies receiving deliveries. Multiple banks of 500kWh chargers at truck-stops the length and breadth of Britain also seems like a tall order, but I'd like to see a legitimate proposal by the proponents.
2) Excess energy from a wind turbine is a power limited, not energy limited. Whereas a solar panel is energy limited (8-10 hours of sunlight) and can therefore be matched to a battery for storage, the same is not true for a wind turbine. The wind may blow continuously for 10 days delivering continuous power. A battery would fill with energy in a finite time rendering it useless thereafter. Alternatively a constant stream of power into an electrolyser simply keeps generating hydrogen as long as the blades keep turning. Offloading the hydrogen generated into storage tanks or pumped away through a pipe is a trivial hurdle. Batteries are limited stores of energy, electrolysers are limitless converters of power.
Remember, power and energy are not the same thing.
Porsche918, I suspect you know the answer to your own question - orders and deliveries. They need to generate sales specifically targetting the current grey hydrogen market and non-energy markets (ammonia for fertiliser, refining, steel and cement). The markets for energy uses have too many sceptics so unlikely to guarantee strong growth in the share price with sales concentrated in those areas. If green hydrogen ends up only serving to replace grey hydrogen then competition with other electrolyser manufacturers could be quite tight, so early market share could be critical. The current Yara project is tyical and needs to be scaled up as fast as possible. The Yara plant only requires 0.5-1.0GW of electrolysis to be fully satisfied with green ammonia production, and that's only one year's production for ITM. But globally there's anticipated to be 17GW required by 2030 for green ammonia production. A decent slice of that would demonstrate the viability of ITM's factory and could justify around £5bn market cap.
It's important not to read these things as "All or Nothing" though. He said "Just replacing this dirty hydrogen — used mainly in chemicals production and oil refining — with green H2 made from renewable energy would require 143% of all the wind and solar installed globally to date", and that is a vast demand. Maybe some will be Blue, but I hope people have enough sense to demand a lot of it be Green so it really should be multiple GW of factories of electrolysers. Shipping tons of Green Ammonia from Australia as a chemical feedstock to the rest of the world should be a good market.
Some of you will remember a previous discussion we had involving Professor David Cebon. Personally I'm not a fan as I find his arguments a bit 'double standards'. He does at least support Green Hydrogen and never Blue. But he also only really advocates direct replacement of existing grey hydrogen demand with green, NOT using hydrogen for anything energy-related. The podcast posted is worth a listen and you can make up your own mind as regards 'Friend or Foe'.
https://podcasts.apple.com/gb/podcast/how-clean-is-hydrogen-actually-with-prof-david-cebon/id1449137711?i=1000581354031
For full reference you can find out more about his "Hydrogen Science Coalition" on their website.
https://h2sciencecoalition.com/
Is it just an anti-hydrogen echo chamber?