ITM Power secures £86.5M in UK backing for Chronos electrolyser line

The UK is betting £86.5 million that ITM Power can build a next-generation electrolyser line capable of competing with China's low-cost manufacturing machine.

The UK government has awarded ITM Power a £46.5 million grant and a £40 million equity investment from Great British Energy to build a 1 GW manufacturing line for its Chronos electrolyser stack, betting domestic production can undercut China's dominant supply chain.

"This award marks a pivotal step in positioning ITM at the centre of the UK hydrogen economy," Chief Executive Dennis Schulz said.

The Chronos platform, which uses lessons from ITM's Trident line, cuts part count by 50% and doubles power density to 2.5 MW/m². The new Sheffield facility, expected online by 2028, will use automated equipment for catalyst-coated membranes, electrode welding and stack assembly alongside the existing 1 GW Trident capacity.

The backing comes as global electrolyser manufacturing capacity reaches 61 GW while only 2.15 GW is operational, according to a World Bank report, with China driving most of the expansion through low-cost materials and labour. ITM Power continues to report operating losses and negative free cash flow, but the government's £86.5 million commitment provides a capital buffer as the company targets profitability.

Chronos Specs Close the Cost Gap

The Chronos stack represents a generational leap from ITM's Trident platform. By reducing component count by half and doubling power density, the company aims to lower the levelized cost of hydrogen — the key metric determining whether green hydrogen can compete with grey hydrogen from natural gas. ITM did not disclose specific LCOE targets for Chronos, but the UK's Hydrogen Production Business Model provides revenue support through contracts for difference, with the first allocation round awarding 125 MW of projects at an average strike price of £241/MWh.

ITM has already secured offtake agreements that will use the Chronos platform. The company is supplying electrolysers to MorGen Energy's 20 MW government-subsidised project in South Wales and has been selected for Uniper's 120 MW plant in the Humber. It recently partnered with Protium to develop the 15 MW Cromarty project in Scotland, a rescued HAR1-backed development.

Sheffield's Industrial Heritage Gets a Hydrogen Overhaul

The manufacturing line will be built at ITM's existing Sheffield site, leveraging the Trident production platform to minimise execution risk. The company will also manufacture modular testing systems and validation equipment in-house to ensure a smooth ramp-up. Management sees the investment as an opportunity to reshape Sheffield's industrial heritage by establishing the city as a major centre for hydrogen technology manufacturing.

The expansion proceeds despite persistent headwinds in the electrolyser market. Global manufacturing capacity has grown far faster than project deployment, with the World Bank reporting 61 GW of capacity against just 2.15 GW of operational electrolysers. Chinese manufacturers, benefiting from integrated supply chains and lower labour costs, have driven much of this capacity buildout, putting pressure on European producers like ITM, thyssenkrupp Nucera and Nel Hydrogen to differentiate on performance rather than price.

ITM Power shares have performed strongly against key moving averages, though technical indicators suggest near-term overbought conditions, according to recent market data. The company trades without earnings or a dividend, making valuation dependent on the timing and scale of future profitability. The £86.5 million in government backing de-risks the Chronos manufacturing buildout, but investors will need to see order conversion and margin improvement before the stock can command a sustainable premium. Thyssenkrupp Nucera, by comparison, trades at roughly 1.5 times forward sales, offering a valuation anchor for the sector as project deployment accelerates.

This article is for informational purposes only and does not constitute investment advice.