ITM Power price target cut as JPMorgan sees signs of waning enthusiasm for hydrogen energy storage s

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Market enthusiasm for the hydrogen (H2) energy storage sector is giving way to greater scepticism and concerns over industry competitiveness, according to JPMorgan Cazenove.


While collaboration is accelerating to support H2 adoption, the outlook for electrolyser original equipment manufacturers (OEMs) remains mixed in the broker’s view.


Several projects capable of generating more than 100 megawatts (MW) were announced in the first half of this year for delivery in 2023-25, taking the size of projects to near commercial scale for several end-uses.


Scaling up should help lower system cost, reduce inefficiencies for electrolyser OEMs, and reduce the all-in H2 cost. Recent and upcoming policy announcements offer further positive catalysts for H2 investments while disbursements from the NextGenerationEU Fund could drive further large-scale project announcements over the rest of the year, the broker believes.


However, the industry faces what JPMorgan calls a “chicken and the egg dilemma”. The electrolyser OEMs will likely rely upon engineering, procurement and construction (EPC) partnerships to deliver larger project orders, but these can also present revenue downside risks to the OEMs.


The broker lopped 20% off its price target for UK hydrogen energy outfit ITM Power PLC (LON:ITM) to reflect its more cautious view of the industry.


The new ITM price target of 550p is still significantly ahead of the current share price of 392.8p.

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