ITM Power placed its stamp on the blueprint for UK’s green industrial revolution as a top energy official launched the long-awaited UK hydrogen strategy at the company’s Bessemer Park electrolyser factory.
The announcement pushed ITM shares up by more than 11% and will help draw a line under losses earlier this year, when the “green bubble” burst and sent hitherto soaring hydrogen equities tumbling.
UK Secretary of State for Business, Energy and the Environment, Rt Hon Kwasi Kwarteng, announced the plan while opening ITM’s new plant in Sheffield, currently the world’s largest. The plant, in operation since January, can produce 1 gigawatts (GW) worth of electrolysis equipment per year.
The Sheffield plant also employs 320 people. Employment may become just as important a future element for popular success as environmental protection, as hydrogen delivery will inevitably come at a higher cost to consumers.
The equipment manufactured at the ITM plant splits water into constituent molecules of hydrogen and oxygen using renewable power. The zero-carbon green hydrogen can be used as fuel in transport, heating or industrial processes to help mitigate climate change.
The clean burning fuel has the potential to be a part of up to a third of the UK’s energy, according to Kwarteng.
“Our first-ever Hydrogen Strategy sets out how we will back this technology, ramp up domestic production and create a new, British industry,” Kwarteng said. “ITM Power is at the forefront of manufacturing green hydrogen and its world-leading technologies are already playing an important role in cutting emissions.”
The UK strategy envisions creating a world-leading hydrogen economy which will support over 9,000 jobs and unlock 4 billion pounds of investment by 2030. Both of those figures could jump in scale after 2030. The strategy is the basis by which the UK will meet a goal of 5 GW of low carbon hydrogen production capacity be the end of the decade.
Development may employ tools and subsidies similar to those used by the UK government in the development of offshore wind generation, such as contracts for difference scheme. The government has launched a public consultation on use of a similar instrument for hydrogen.
The UK government plans to consult on a 240 million-pound Net Zero Hydrogen Fund, providing support for both green and “blue” hydrogen, which is made with fossil fuels and carbon capture. It will also work with industry on safety and technical requirements in potentially blending natural gas supplies with 20% hydrogen as a means to reduce emissions, according to the report.
Blending may be critical in stimulating an expanding market for hydrogen and supporting production. Other uses, such as deploying the fuel in aviation or trucking, involve a complex, multi-step widespread revamp of trucking or marine fleets to switch to the fuel.
Popular support from both the general public and investment community has put wind under the wings of lawmakers in the UK and elsewhere worldwide to support investment into green energy. That state support will be key to investor confidence in the delivery of a new industry.
Shares in manufacturers like ITM will likely continue to depend on state initiatives and continual support for energy transition plans.