Manufacturing problems see ITM Power shares plummet

The problems concern the second iteration of its MEP proton exchange membrane electrolyser stack, which it claims offers a “step change” in performance and efficiency.

“The issues are not to do with the core technology,” ITM Power chief technology officer Dr Simon Bourne told Utility Week. “The core technology is something that has been behaving very well and we’re very pleased with.

“It’s been the almost mundane mechanical challenges in the first assembly operations and so we’ve been going through a process, which is relatively common ground for introducing new technology, of identifying each issue and putting in place a solution for that and moving forward.”

“The difference between version one and two is in hydrogen pressure from 20 to 30 bar and increasing the conversion efficiency, which is very important for the clients operational costs,” he explained.

“There is a lot carry over from one version so we can benefit from that but of course there are some differences and we have in parallel been scaling up our manufacture to be able to track the increasing demand that we’ve got stretching out in front of us.”

He said: “The solutions we’ve been putting in place are around heightened internal quality controls on components and a number of assembly aids to ensure that the production process is as reproducible and tolerant as we can make it.”

ITM Power is currently contracted to install 77MW of the new electrolyser stacks, including 24MW at Linde’s Leune chemical complex in Germany, but Bourne said the production problems have delayed these initial deployments.

As a result, the company will have less field data available to assess the necessary warranty provision for larger projects still being negotiated.

Bourne said they are trying to compensate for this by encouraging the early adopters to run the electrolysers “aggressively” and accelerating testing in their labs.

Nevertheless, the company said there may be delays in finalising contracts in the late stages of negotiation as it seeks to mitigate the “potential risk associated with the growing and uncertain levels of warranty provision”.

The news initially saw shares in the UK-based technology company plunge by around a third from £104 to less than £70, although they are now trading at around £80 each.

Last month, ITM Power announced that its chief executive Dr Graham Cooley would step aside after 13 years at the helm to allow someone with more experience in manufacturing to take over. Cooley has remained post whilst the company appoints a successor.