Itm Power Regulatory News (ITM)

30 November 2016

This announcement contains inside information.

ITM Power plc

("ITM Power" or "the Company")

National Grid HyDeploy Consortium wins £7m Ofgem Funding for UK Power-to-Gas

0.5MW electrolyser sale

ITM Power (AIM: ITM), the energy storage and clean fuel company, is pleased to announce that, as part of the HyDeploy consortium, it will be supplying a 0.5MW electrolyser to a programme to demonstrate the use of blended hydrogen in the UK gas grid. The £6.8 million project, funded by Ofgem and led by National Grid, is a key enabling project which will establish a framework for hydrogen gas-grid injection in the UK and open up a new UK Power-to-Gas market.

According to National Grid, "The three year project will begin in 2017 and the results will be used to inform a further public trial of the use of hydrogen-blended natural gas in the UK grid, with the intention of then rolling out the use of hydrogen blends nationwide."

The HyDeploy consortium includes National Grid, Northern Gas Networks, Keele University, The Health and Safety Laboratory (HSL), ITM Power and Progressive Energy. It is supported by gas experts KIWA Gastec and engineering company Otto Simon.

Dr Graham Cooley, CEO, ITM Power, commented: "This award by Ofgem to fund a demonstration of the use of hydrogen in the gas grid is the first step towards the creation of a UK Power-to-Gas market, which will play an important part in the decarbonisation of the U.K. gas grid. We are delighted to be a contributor to setting out the structure and benefits to the public of this new market."

The text below is from an announcement made today by National Grid:

£7 million for ground-breaking green heating scheme at Keele University

· Pioneering 'green gas' scheme secures £7 million of Ofgem innovation funding

· Hydrogen heating pilot project at Keele University aims to cut carbon emissions

· Scheme could pave the way for a future low carbon gas grid

A ground-breaking pilot scheme that could transform the way Britain heats its homes and industry, while tackling climate change, has today (30 November) won £7 million in Ofgem funding.

National Grid Gas Distribution, together with Northern Gas Networks and the HyDeploy Consortium, has been awarded £6.8 million by Ofgem's Network Innovation Competition. The funding will be used for a pioneering green heating initiative, using Keele University's gas network in Staffordshire.

The HyDeploy project aims to inject hydrogen into the existing natural gas network. Hydrogen is a clean, carbon-free gas that does not contribute to climate change.

It would make up a maximum of 20% of the volume of gas in the network. Those using the gas won't notice any difference to their supply, no changes will be required to gas appliances and it will be no less safe than using natural gas.

If the project is successful, this will enable hydrogen to be blended with natural gas in gas networks across the country. Potentially, the project could prevent 120 million tonnes of carbon reaching the atmosphere by 2050.

The project will help towards the Government's tough 'decarbonisation' targets. It has pledged to cut Britain's carbon dioxide emissions by 80% of 1990 levels by 2050. Heating accounts for one third of emissions.

Using Britain's existing world-class gas network, HyDeploy could pave the way for a clean, low carbon gas grid, keeping homes warm and powering industry.

David Parkin Director of Network Strategy at National Grid Gas Distribution, said: "Ofgem's decision to award National Grid £6.8 million recognises the important role for the UK's world class gas grid in delivering low carbon heat. We believe introducing a hydrogen blend nationally has the potential to save over 6 million tonnes of carbon emissions every year."

Professor Mark Ormerod, Deputy Vice Chancellor and Provost of Keele University, said: "Energy and sustainability is a key overarching institutional priority for Keele University, and we are delighted to be a partner in this important, highly relevant and prestigious project. This collaborative project tackles one of the major societal challenges and has the potential to be highly impactful and lead to a significant reduction in carbon emissions".

Martin Alderson, Asset Management Director for Northern Gas Networks, said: "This is an extremely exciting time for the energy industry. We believe this project will prove blended hydrogen gas can be distributed and used safely and efficiently in the existing gas network, an essential pre-requisite for the wider deployment of clean, cost-effective hydrogen in the UK gas grid."

The three-year pilot will start in 2017. The Ofgem funding, together with £760k contributed by National Grid and Northern Gas Networks, will be used to provide hydrogen production and injection facilities at Keele University and to run a rigorous experimental testing and safety programme.

Keele was viewed as the perfect test site for the project. Keele is Britain's biggest university campus. The university owns and operates its own gas network, which is independent of the national gas network.

With more than 340 residential, teaching and business premises, the campus closely resembles a small town. This project will run on part of the university's gas network, which supplies 17 buildings and more than 100 homes for researchers and staff.

The project has been developed by National Grid Gas Distribution, Northern Gas Networks and the HyDeploy consortium. The consortium includes Keele University, The Health and Safety Laboratory (HSL), hydrogen production company ITM Power and clean energy firm Progressive Energy. It is supported by gas experts KIWA Gastec and engineering company Otto Simon.

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

About ITM Power plc:

ITM Power manufactures integrated hydrogen energy solutions which are rapid response and high pressure that meet the requirements for grid balancing and energy storage services, and for the production of clean fuel for transport, renewable heat and chemicals. ITM Power plc was admitted to the AIM market of the London Stock Exchange in 2004. The Company received £4.9m as a strategic investment from JCB in March 2015. The Company signed a forecourt siting agreement with Shell in September 2015. The Group currently has £18.27m of projects under contract and a further £2.79m of contracts in the final stages of negotiation, totaling £21.06m, subject to exchange rate variation. ITM Power is a founder member of the Social Stock Exchange.

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