UK-based proton-exchange-membrane (PEM) electrolyser manufacturer ITM Power has announced it will start to bid for US projects, as European manufacturers continue to focus on the region following the introduction of the Inflation Reduction Act (IRA).

The firm said it can sell its standardised 20MW core electrolysis module, called Poseidon—which was launched in August—under both the EU’s and the US’ certification standards.

“The US has the potential to become one of the largest markets for green hydrogen. The region’s green hydrogen journey has just started, which provides ITM with a tremendous opportunity to become a leading electrolyser provider as the market develops over the coming years,” said CEO Dennis Schulz.

The firm said it will pursue an accelerated, asset-light entry into the US market, building on its relationships with various North America-based industry firms.

ITM has recently announced collaborations with power converter manufacturer Friem, materials sciences firm Gore and filter manufacturer Mott as it aims to reduce the costs and improve the efficiency of its electroyser design.

Cutting losses

ITM announced a year-long scheme to cut costs after reporting significant adjusted EBITDA losses of £54.1m ($65.9m) in the first half of 2023, caused by inventory losses stacking up on top of investment outlay.

The firm had been raising money to pursue an aggressive expansion strategy but said it underestimated the skills and competencies required to expand at the rate it wanted—particularly around engineering and manufacturing.

“The US has the potential to become one of the largest markets for green hydrogen” Schulz, ITM

The firm is now halfway through the year-long scheme to address these shortcomings, which include consolidating its offerings into a smaller suite of products, improving capital discipline and debottlenecking some of its fabrication processes.

The firm in August reported full-year adjusted loss of £94.2m, which included a number of what CFO Andy Allen said were one-off impacts, notably around stock restructures.

“The losses are unacceptable,” said Allen. “But I am pleased to see a number of the gaps are closing quickly as part of the 12-month priorities plan.”

In a capital markets update in August, the firm said the customers have delayed FIDs because of high energy prices, inflation and slow government funding decisions.

“As such the big demand spike is yet to come and ITM will be ready for it,” said Schulz. The expansion into new territories…. is part of the firm’s strategy to expand its new streamlined suite of products as widely as possible.

“We are actively bidding for ever larger commercial projects,” said Schulz.

Going west

A number of European electrolyser manufacturers have started to focus on the US in response to the incentives put in place under the IRA, which provides producers with a tax credit of up to $3/kg on green hydrogen production for ten years, if projects meet criteria on carbon intensity and other factors.

Norwegian firm Nel has selected Detroit, Michigan as the location for its second gigafactory after evaluating various locations around the world, including Europe and China. German firm Thyssenkrupp Nucera is also evaluating whether to invest in North American production capacity.

A recent study by the German Council of Economic Experts (GCEE) confirmed the IRA subsidies are increasing the attractiveness of the US as a production location and thus strengthening the incentive to invest in the region.

However, it goes on to note that lower energy and electricity prices in the US than in the EU are likely to have a significantly greater impact on the relative attractiveness of the region, rather than the IRA itself.

Rather than engage in a subsidy war with the US, the body urges the EU to take urgent action to address energy price differences.

Over the past quarter, electricity prices in Germany were on average ¢9.kWh higher than in the US, it noted.

“In order to reduce the relative energy costs, [EU] electricity supply and energy infrastructure should be expanded rapidly,” said GCEE council member Martin Werding.

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Author: Tom Young