ITM finds new use for hydrogen; stock still considered a high risk investment

• The search for new energy sources is likely to be a major theme for investors in coming years, after the dramatic 2004 surge in crude oil prices.
• This is abundant and can be stored or burnt in a combustion engine or converted to electricity through fuel cells.
• The simplest way is likely to be through fuel cells, which work like batteries but are cleaner.
• Many companies have joined the race to produce a cheaper fuel cell.
• For the winner, the prizes are great.
• The cells could power laptops and mobile phones and could be an alternative to petrol in cars.
• Experts reckon this market alone could be worth 7 billion pounds within 10 years.
• This brings us to ITM Power, the Lincolnshire group that floated on Aim in June, in a placing at 50 pence by broker Durlacher.
• ITM uses a thin sheet of a special polymer through which hydrogen can pass, allowing a series of fuel cells to be made in a single process.
• The shares, placed at 50 pence, have run up to 77 pence, valuing the group at 70 million pounds.
• The risk with fuel cell firms is that they may burn money rather more efficiently than they burn hydrogen.
• It hopes outsiders will contribute to its development costs next year, but in revenue terms it has yet to trouble the scorers.
• Such early-stage companies frequently need more funding, possibly at a lower share price, before making a commercial breakthrough.
• But it seems that ITM is making real progress toward its goal of producing a 20-watt flexible fuel cell.
• If ITM can cut the costs of making fuel cells by using something cheaper than platinum, that could open up the mass market.