Itm Power Regulatory News (ITM)

29 November 2018

ITM Power plc

("ITM Power", "the Company" or "the Group")

Ofgem funding for UK's first Hydrogen Trials on the public gas network

ITM Power (AIM: ITM), the energy storage and clean fuel company, is pleased to note the announcement by the HyDeploy partners following the award of £14.9m of further funding by Ofgem.

Commenting on the plans, Graham Cooley, ITM Power's CEO, said: "Today's announcement represents a natural second step for the HyDeploy partners following the trial already announced on Keele University's closed gas grid. The £14.9m from Ofgem funds two field trials on public gas networks supplying a total of 1,500 homes. We are delighted to see power-to-gas beginning to take its place in the UK as a front-running technology to cut emissions and - with ITM Power's technology - decarbonise our gas grids."

The full text of the HyDeploy announcement is set out below.

Hydrogen to heat homes: £14.9m for UK's first trials on public gas network

· Green light for next phase in plan to use low-carbon hydrogen to heat homes

· £14.9m will fund two trials in the north of England: 750 homes in each trial

· Building evidence that hydrogen can deliver big and rapid carbon reductions

Plans to use hydrogen to help heat UK homes - and massively cut the country's carbon emissions - took a big step forward today with a £14.9 million funding boost.

The money will fund two field trials on public gas networks, blending hydrogen with natural gas to heat around 750 homes in each of the year-long trials.

Over the course of the four-year programme, starting in 2019, the team behind 'HyDeploy2' will monitor the performance and safety of using hydrogen in this way.

The aim is to build support for a much wider roll-out. If adopted across the UK, using hydrogen like this could save the same amount of carbon as taking 2.5 million cars off the road. A major benefit of this blending approach is that it comes with no disruption to customers - they do not need to change their gas appliances or the pipes to their homes.

Backed by the north of England's two gas distribution networks - Cadent and Northern Gas Networks - there will be one trial in each company's geographic footprint. This means one in North West England and one in the North East / Yorkshire. Identifying suitable locations, and consulting customers and authorities in those areas, will be the next steps.

The tests will take place following the completion of the first UK trial on a closed gas network. Earlier this month, after extensive scientific analysis and safety checks, the Health and Safety Executive gave the HyDeploy team permission to do just that, at the Keele University campus. Hydrogen will be blended with natural gas at volumes up to 20 per cent.

HyDeploy2 is the natural next step - demonstrating use of blended gas in a controlled and carefully monitored way, at similar hydrogen volume, on the public gas networks.

Industry regulator Ofgem today announced it was approving £14.9 million in funding for HyDeploy2 as part of its Network Innovation Competition (NIC) allocations. By funding level, this is this is the largest gas NIC project ever.

HyDeploy is led by gas distribution network Cadent. Cadent is working in partnership with Northern Gas Networks, clean energy project management specialists Progressive Energy and scientific consultants at the Health and Safety Laboratory, along with other members of the same consortium who are behind the initial UK trial project at Keele.

The hydrogen for these trials will be produced by an ITM Power electrolyser. This technology uses an electrical current to split water molecules into hydrogen and oxygen. When burned at end use, for example in a home central system, this hydrogen will produce only heat and water - in stark contrast to natural gas, which releases carbon into the atmosphere.

"This funding is fantastic news," said Simon Fairman, Director of Safety and Network Strategy, Cadent. "It means we can press on with a game-changing vision: to prove hydrogen can safely keep us warm, as well as significantly reduce our carbon footprint.

"We know our existing gas networks are in good shape to help the UK meet its climate change targets. Blended hydrogen in this way means customers will use gas tomorrow as they do today, without any disruption or need to change their pipes or appliances."

Mark Horsley, Chief Executive, Northern Gas Networks, said: "Through the Network Innovation Competition funding mechanism, gas industry projects like HyDeploy2 are unlocking the potential for green energy sources to make a real difference to customers and to the planet, at the lowest possible cost.

"HyDeploy2 represents a huge step forward for wider deployment of hydrogen as a clean energy source, as the UK looks towards achieving its vision of a low carbon energy future."

Fast facts

· Heating homes and industry accounts for nearly half of all energy use in the UK and one third of the country's carbon emissions. More than 80 per cent of homes in the UK are heated by gas.

· If hydrogen were blended with natural gas across the UK at a similar level to HyDeploy, it could save around six million tonnes of carbon dioxide emissions every year, the equivalent of taking 2.5 million cars off the road.

· Hydrogen was a major component in 'town gas', gas created from coal and used widely throughout Britain before the discovery of North Sea gas in the 1960s. Up to 60% of the gas (by volume) being used by consumers was hydrogen.

· Cadent is involved in a wider portfolio of projects - such as HyNet, to use hydrogen to power industry and blended hydrogen to heat 2 million homes in North West England - which first depend on the success of the HyDeploy trials, in proving the concept.

· Building on the HyDeploy principles towards wider deployment of hydrogen, Northern Gas Networks is delivering a suite of hydrogen projects called H21, focused on converting the gas network to 100 per cent hydrogen.

More information about HyDeploy is at www.hydeploy.co.uk

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

About ITM Power plc

ITM Power manufactures integrated hydrogen energy solutions for grid balancing, energy storage and the production of green hydrogen for transport, renewable heat and chemicals. ITM Power was admitted to the AIM market of the London Stock Exchange in 2004. In September 2017 the Company announced the completion of a GBP29.4m working capital fundraise. The Company signed a forecourt siting agreement with Shell for hydrogen refuelling stations in September 2015 and subsequently a deal to deploy a 10MW electrolyser at Shell's Rhineland refinery. The company entered into a Strategic Partnership Agreement with Sumitomo Corporation in July 2018 for the development of multi-megawatt projects in Japan. Additional customers and partners include National Grid, Cadent, Northern Gas Networks, RWE, Engie, BOC Linde, Toyota, Honda, Hyundai, Anglo American among others. www.itm-power.com

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