ITM Power Pivots to Build-Own-Operate With a 150MW Refinery Deal, but Funding Is Unresolved and Cash Will Fall to GBP 170-180 Million
FY26 results and FY27 guidance call, October 19, 2026
Hydropulse: transformational in scale, but financing is not yet in place
The most consequential disclosure was the detail behind Hydropulse, ITM Power's build-own-operate model. Management has signed heads of terms with an unnamed EU oil refinery for a 150-megawatt plant with a planned 10-year operating contract. The customer would supply land and utilities, including power, which removes ITM's exposure to electricity price risk. A joint FEED study is under way, with FID targeted for 2027 and hydrogen production targeted for 2029. CEO Dennis Schulz said the project would be "by far the largest contract of ITM to date." The caveat is that this is a heads-of-terms agreement and not a contract.
CFO Amy Grey set out the cash profile of the model, which differs sharply from equipment sales. Equipment sales are "at worst, cash flow neutral," because customer inflows fund outflows. Hydropulse involves a 2- to 3-year build phase with no customer cash, and then a 10-year operating phase that is cash generative from the start. Debt repayment in the first years means it would still take "a small number of years to become cumulatively cash flow positive." Grey said ITM could fund a 10-megawatt project from its own balance sheet, but 150 megawatts is "a different proposition and a different scale." Talks with banks are under way on project-style working capital finance for the build phase. Two repayment routes are under consideration. The first is conventional repayment from operating revenues. The second is to bring forward customer receipts at the start of the operating phase, effectively revenue-financing the project, which would repay the debt, fund the rest of the contract and potentially seed other projects. Grey said the plant would be profitable from day 1 of operation, with flat, inflation-linked monthly invoicing against stable operating costs.
Investors should note that no financing terms, project cost or return metrics were disclosed. With FY27 year-end cash guided to GBP 170-180 million, the 150-megawatt plant is clearly too large to fund from the balance sheet, and the viability of the model depends on how much third-party capital can be raised against it.
Guidance: revenue up, losses narrowing slowly, cash burn continues
For FY27 (year to April 30, 2027), ITM guided to revenue of GBP 50-60 million, against GBP 43.6 million in FY26, which was up 68% and a record. Adjusted EBITDA loss is guided to GBP 17-20 million, against GBP 20.2 million in FY26 and GBP 33 million in FY25. That is a modest improvement. Grey attributed the losses mainly to factory utilization, saying the manufacturing base and cost structure "established to support a higher production volume." Year-end cash is guided to GBP 170-180 million, down from GBP 215.6 million. That figure already includes the first capex on the Chronos manufacturing line, and it implies cash use of roughly GBP 35-45 million.
The composition of revenue is changing. About two-thirds of FY27 revenue is expected to come from profitable contracts, mostly recognized progressively under percentage-of-completion accounting on Poseidon and Neptune projects. The remaining third is legacy contracts that are fully provided for and contribute no gross profit. Grey put the legacy backlog at about GBP 25 million, almost all of which should be recognized in FY27. Management did not give a timeline for EBITDA breakeven.
FY26 quality of earnings: provision releases flattered the improvement
Gross loss narrowed to GBP 6.1 million from GBP 23.7 million. Part of that improvement came from operating leverage and cost discipline, but Grey said progress on the Lingen 1 and Lingen 2 projects gave "greater certainty over the remaining cost to complete," which allowed the company to release provisions from earlier periods. The same releases drove the FY26 EBITDA beat against guidance. Investors should therefore treat FY26 as a flattering base. Of the GBP 40.7 million of equipment revenue, GBP 36.8 million came from legacy contracts recognized at a point in time. Only GBP 3.9 million came from percentage-of-completion Neptune and Poseidon contracts.
The backlog was GBP 144 million, against GBP 145.1 million a year earlier, so ITM replenished what it delivered. The share of profitable contracts rose to 83% from 60% in April 2025. When Schulz joined in January 2023, the figure was 0%. The remaining 17% is legacy work, which is fully provided for. The results were also published later than usual because of a first-year audit by BDO, which was complicated by a partner change after the original partner took leave for personal reasons.
Large projects bring bigger prizes and lumpier orders
Schulz said refineries are the largest source of demand and, directly or indirectly, "dominate our sales pipeline today." The driver is the RED III renewable fuels of non-biological origin target of 42% by 2030. Mobility demand, which used to make up a large part of the pipeline in 2 to 10-megawatt projects, has declined moderately. Interest from steel, cement and chemicals is flat, and so is ammonia and fertilizer demand, which Schulz called "surprising" given the dependence on imports. Demand from energy companies converting surplus renewable power is steady, and he expects it to grow.
Shifting to larger projects favors the NEPTUNE V and Alpha 50 products. It also lengthens the path to FID and makes order intake lumpier. Schulz said it is "pretty black or white," and that orders may slip between financial years, with "a fewer number of very large projects" replacing a steady stream of small orders. His argument is that only a handful of suppliers can credibly deliver at this scale. ITM has the 100-megawatt Lingen 1 plant for RWE operating, which he described as the largest PEM electrolyzer in the world and Europe's largest operating electrolyzer of any technology. Lingen 2 is 60% commissioned, and Shell's REFHYNE II is progressing. The company also reported that its first NEPTUNE V unit, for Guttroff, beat contractual efficiency and production rate in factory acceptance testing. Supplier selections ahead of FID include Uniper's 120-megawatt Humber project, a confidential Asian project above 300 megawatts, and two Stablegrid projects totaling 710 megawatts, plus a 150-megawatt capacity reservation with RWE. None of these is a firm order, and the time to FID remains the main uncertainty.
Rheinmetall: strategically interesting but early
ITM is working with Rheinmetall on its Giga PtX program, which envisions several hundred modular Power-to-X plants making drop-in synthetic diesel, jet and marine fuel from green hydrogen and captured CO2 through Fischer-Tropsch synthesis. The focus is on the UK and Germany, and discussions with both governments are described as positive. Management declined to give a date for pilot projects, citing the unpredictability of government processes. Schulz said it is undecided whether any project would be an equipment sale or a Hydropulse ownership structure. Investors should treat this as an option and not as pipeline.
Chronos and UK support: progressing, with no commercial date
The GBP 85.5 million UK support package is made up of a GBP 40 million equity investment from Great British Energy, which brought in net proceeds of GBP 39.2 million, and a GBP 45.5 million DESNZ grant. It funds the validation of the Chronos stack and a 1-gigawatt-per-year manufacturing line in Sheffield, alongside the existing Trident line. The call text also cites GBP 86.5 million at one point, so the figure should be confirmed against company filings. Chronos has more than 20,000 hours of operation at component, cell and short-stack level. Its bill of materials is defined and the manufacturing processes are being validated. The Horizon program has reached FID, though Simon Bourne said capital is committed "on a case-by-case basis." ITM will make its first DESNZ grant claim in the next few weeks. A GBE board representative has not yet been appointed.
ITM also declined to guide on a Chronos commercial release date, to avoid cannibalizing Trident-based sales. Capex rose to GBP 13.2 million, helped by installation of the auto stacker equipment.
Market backdrop: Europe first, UK delays, China oversupplied
Schulz reiterated that Europe, including the UK and Nordics, is ITM's focus, with Germany the largest market and growing activity in Iberia and Poland. He described the UK as "a bit behind the expectations," and HAR2 funding as having gone "a bit quiet." He urged the government to "just crack on and award the HAR2 funding." Management reported early engagement on HAR3. The US "remains challenging" under the current administration, and Asia is promising but well behind Europe. On China, he was blunt: "The Chinese market is a bloodbath. Competitors are underbidding each other at low cost levels, and we expect many of them to drop out." He added that "many final investment decisions continue taking longer than anticipated."
On data centers, Bourne said green hydrogen has a role but is "slightly overhyped at the minute," because it lacks the incentives that refineries have. ITM is pursuing it only in a "structured bottom-up way."