The Sheffield-based electrolyser maker ITM Power is caught between two powerful forces. On one side stands a blockbuster partnership with Rheinmetall that promises to deliver hundreds of modular hydrogen plants for NATO forces — a deal that has Berenberg nearly doubling its price target to 200 pence. On the other side sits a £46.5 million government grant that has been stuck in administrative limbo since late June, dragging the stock down 10.6% in a single week. The tension between long-term ambition and short-term uncertainty has rarely been starker.
The Rheinmetall tie-up revolves around the “Giga PtX” project, a plan to build up to 1,500 decentralised synthetic fuel facilities across Europe capable of supplying NATO troops. Rheinmetall has pencilled in a total capacity of 37.5 gigawatts, and ITM Power would provide the modular PEM electrolysers to make the green hydrogen feedstock. Berenberg, reacting to the scale of the opportunity, lifted its target from 110 pence to 200 pence and kept its buy rating, arguing that the defence sector could unlock billions in orders.
That bullish view is supported by a broader reshuffle of Britain’s power market. The government will scrap the CO₂ price floor for power stations in April 2028, but until then the £18-per-tonne levy remains. Meanwhile, a charge on electricity generators was raised to 55% in early July. These interventions are designed to accelerate investment in clean infrastructure; natural gas now sets the wholesale electricity price only about 60% of the time, down from 90% a few years ago. Recent auctions have secured contracts for nearly 15 gigawatts of zero-emission capacity — a market ITM Power hopes to serve alongside its defence work.
Yet nearer-term, the stock has been punished by delays that are entirely administrative. In April 2026, ITM Power secured a financial package from the UK government comprising £40 million in equity from the state-owned Great British Energy and a £46.5 million grant from the energy department DESNZ. The Competition and Markets Authority gave a positive assessment in late May, but the formal grant funding agreement was never signed before the review period expired in June. The market is now waiting for what is expected to be a final administrative sign-off.
Should investors sell immediately? Or is it worth buying ITM Power?
The money is earmarked for “Chronos”, a fully automated 1‑gigawatt production line for next-generation PEM stacks. The company claims Chronos will improve energy efficiency by 10% and cut manufacturing costs by up to 40% compared with the current Trident platform. Commercial production is slated for 2028, and the factory is expected to create about 400 skilled jobs in South Yorkshire. The government, through Great British Energy, already holds a 10.4% stake in ITM Power, making it a strategic anchor shareholder.
Amid the regulatory pause, one insider has put his own money on the line. Sir Warren East, the former Rolls-Royce chief and a non-executive director at ITM Power, bought 172,000 shares on 29 June for close to £200,000. The transaction was disclosed on 1 July, right as the stock was sliding from its May peak of €2.58 toward the current level of around €1.45. Analysts view the purchase as a signal of confidence that the subsidy holdup is a procedural glitch rather than a substantive rejection — and that the underlying business is gaining commercial traction.
That traction showed in the first half of the financial year, when ITM Power posted a record £18 million in revenue. Its order book stands at £152 million, and 71% of those orders are considered profitable — evidence that the Sheffield factory is finally moving beyond pilot-scale economics. The stock remains up roughly 97% since January, even after giving back some ground in recent weeks.
Two events are likely to provide the next catalyst. The first is the formal signing of the grant agreement, which would unlock the £46.5 million and remove the overhang that has weighed on sentiment. The second is the final investment decision for the Chronos line, a step that would cement ITM Power’s shift from prototype producer to industrial-scale manufacturer. The Rheinmetall deal offers a tantalising glimpse of the demand that awaits — but first the company must clear the paperwork that stands between it and the next phase of its growth.
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