The war in Ukraine and spike in the price of natural gas have underlined the benefits of switching to “green hydrogen” production as the only “net zero energy gas”, according to the British firm ITM Power.
The Sheffield-based company, which manufactures electrolyser machines that make hydrogen from water, said the energy crisis had shown hydrogen represents a viable alternative to methane gas.
However, widening losses and the departure of the company’s longstanding chief executive, Graham Cooley, spooked investors, with shares in ITM falling 26% in early trading on Wednesday.
Most hydrogen is “grey hydrogen” produced from fossil gas. An alternative to this process is “blue hydrogen”, which uses carbon capture to reduce emissions, but this method still fails to capture between 5% and 15% of the CO2. Green hydrogen is produced by splitting water using electricity from renewables, with minimal emissions.
Backers of the technology argue that hydrogen could present a solution to decarbonising heavy, polluting industries. There are questions, however, over the method’s cost.
Cooley said that since the start of the year, as prices of methane and fertiliser have increased, green hydrogen has “achieved first parity and then become cheaper in many cases than producing these commodities from gas feedstocks”.
He added: “There is only one net zero energy gas that can replace methane to help the world address climate change. Green hydrogen can also help to deliver energy security and contribute to food security through the production of green ammonia for fertilisers.
“These abilities have become very powerful drivers for our business as governments seek to accelerate the share of intermittent renewables in their countries’ energy mix to address dependence on weaponised gas supply from Russia.”
ITM, which is listed on London’s AIM exchange, posted revenues of £5.6m for 2022, up from £4.3m a year earlier. However, pre-tax losses widened from £27.6m to £46.7m. Last November, the company raised £250m to expand its manufacturing capacity. Cooley, who has led the company for 13 years, will remain in post until a successor is found.
Hydrogen has long been touted as a significant option for the future of fuel. The government published a hydrogen strategy in August 2021, setting out a target to double the UK’s hydrogen production to 10 gigawatts by 2030.
Last month the Guardian revealed that ScottishPower is planning to build a £150m green hydrogen plant at the Port of Felixstowe to power trains, trucks and ships. The company said demand for the green fuel had stepped up since petrol and diesel prices began to soar last year, emboldening the firm to invest.
