Specialist
Former executive at ITM Power plc.
Agenda
- Order outlook, focusing on timeline for large order intake across ITM (LON: ITM) and competitors
- Hydrogen-per-kilogram pricing outlook and delta vs natural gas
- Commoditisation in PEM (proton exchange membrane) and alkaline
- Competitive landscape and technology comparison
Questions
1.
Could you rank the major electrolyser players? Specialists we’ve spoken to recently who were buying electrolysers put Siemens, Plug and Cummins in the top three, and then Nel, Thyssenkrupp and ITM in the second tier.
2.
In our previous Interview [see ITM Power – Hydrogen Electrolysers – Near-term Demand & Capacity Build-out – 18 May 2021], you said we’re 2-3 years away from 100MW-type electrolyser orders beginning to come through. We’ve had a 200MW order from Shell with Thyssenkrupp and a 100MW order from Shell again with ITM. Is this happening quicker than you expected? Is this a sign of 100MW orders becoming the norm, or are these pilot projects and a unique case?
3.
Why do you think Thyssenkrupp and ITM were picked here? Would you expect them to be the winners, or would you expect large, 100MW plant orders be made with Nel and Siemens in a similar step?
4.
If more 100MW orders begin to come through, would you expect Thyssenkrupp to continue to take share or for the orders to be split across Siemens and Nel as well?
5.
You mentioned expecting PEM [proton exchange membrane] to be stronger in transportation applications, perhaps more broadly decentralised applications rather than centralised production and piping to it, given the scale. A previous Interview [see Nel & ITM – Hydrogen Refuelling – Competitive Landscape Technology & Order Outlook – 4 April 2022] discussed refuelling and electrolyser synergies, and the specialist thought the refuelling will tend more towards centralised production of hydrogen and then either pipe or transport with a truck to the refuelling stations. This seems to lend itself more to alkaline technology. How do you think about PEM in the world of a centralised hydrogen model?
6.
Could PEM ever decrease in CAPEX per megawatt to the point where it’s competitive for a centralised application?
7.
You mentioned Thyssenkrupp improving the performance of its alkaline. How commoditised do you think alkaline is? If it’s not commoditised, how you think about ranking the players on a pure technology basis?
8.
What does Thyssenkrupp’s announcement about running its alkaline electrolysers at higher density change? Are these electrolysers now 3x better?
9.
How does the 3x greater efficiency of Thyssenkrupp’s alkaline electrolysers translate into TCO [total cost of ownership] or cost of hydrogen?
10.
How are you thinking about the important break-even cost of 1kg of hydrogen, given gas and electricity prices have changed so much since our last Interview?
11.
Nel was targeting USD 1.5 per kilogram by 2025 and you mentioned that would be the historical break-even of grey hydrogen. Given the prices of electricity now, I imagine that would be near impossible on a normal project where you’re paying for grid electricity, but could the company reach that by 2025 if we take the USD 5 per kilogram as a new benchmark and adjust for the break-even changes?
12.
How much more expensive have electrolysers and producing hydrogen with electrolysers become over 2022, ignoring electricity costs and thinking about the elements within ITM’s control –supply chain challenges relating to precious group metals, the actual metal of the stack, challenges surrounding labour and transportation costs vs efficiency improvements, CAPEX and any technological improvements?
13.
You said CAPEX for an electrolyser, all else equal, is up 15%. How much of that could be offset by improvements in the electrolyser’s electrical and heat efficiency and then the efficiency or cost-out of making the electrolyser?
14.
You’ve got CAPEX increasing, the spread of grey and green hydrogen increasing, but 100MW-plus orders are coming in quicker than you expected. How do you see this playing out over the rest of 2022?
15.
What are your expectations for when green hydrogen breaks even with hydrogen?
16.
What are your expectations for break-even on an EBITDA basis? Sell-side consensus on ITM is around 2025 and for Nel it’s around 2024. Do you think this is reasonable? Do supply chain challenges in the space push your expectations up further?
17.
Does selling at a lower price not bring scale that reduces the cost and allows you to turn a profit more quickly? Or are you more cautious about the scale benefits?
18.
Do supply chain challenges in the market push your expectations for break-even further out?
19.
When do you think ITM will break even on an EBITDA basis?
20.
What are your expectations for the growth in orders in the market in 2022 vs 2021?
21.
Which applications are you most excited about? Which do you think are the hardest to electrify and hydrogen is most well-suited for?
22.
What do you think about the developments in the steel space? ArcelorMittal successfully tested the use of green hydrogen for its DRI [direct reduced iron] process and replaced 7% of natural gas. SSAB has done with the same with Hybrit, but I think has done more for an untested amount of time. ArcelorMittal is claiming its project was a landmark. Do you think that’s reasonable, and what does this mean for hydrogen in steel production?
23.
ITM has experienced local supply chain constraint involving the tooling for the scale-up of stack manufacturing for the Leuna contract with Linde. It has said it expects the majority, but not all, of the 12 modules to complete in April 2022. Could any challenges be drawn from this project that might impact other projects, or is this a unique case?
