The government’s £86.5 million backing for ITM Power was announced last week – on the same day Drax pulled out of a scheme to capture its carbon, and OpenAI pulled out of a huge data centre in the UK because energy costs are too high.
The investment is being sold as a bold bet on Britain’s industrial future. It is nothing of the kind. It is a cowardly, committee-safe decision by ministers, spads and civil servants who wanted the appearance of action without the risk of thinking for themselves.
I should say at the outset that I am an investor in ITM myself. Even as a shareholder, I look at this decision and see not vision but management by committee: the state piling into a 20-year-old stock market zombie which has let investors down time and again, and doing so precisely because its stock exchange listing gives officialdom somewhere to hide.
Whitehall has chosen one of the very few companies in the green transition space that already has access to the capital markets, already has a quoted share price, already has institutions on the register, already has brokers, analysts and all the comforting paraphernalia of “serious” finance. That makes it safe in bureaucratic terms. A civil servant can point to the market listing and say the company has been validated. A special adviser can say it is not a speculative punt because the City has already done due diligence. A minister can say the government is merely supporting a proven national champion. It is a perfect arse-covering move.
But that logic is completely backwards. The very fact that ITM is quoted is the strongest possible reason not to hand it public money first. If a business already has access to investors, placings and the whole apparatus of the capital markets, let it use them. That is what they are for. Public money should go where capital markets do not go, or do not go enough: to smaller-scale, distributed, practical energy schemes that can get built quickly, produce real energy, and do not have the luxury of City sponsorship. Instead, government has done the opposite. It has handed taxpayers’ cash to one of the oldest, most visible and most serially disappointing market stories in the whole sector.
ITM has spent years selling shareholders a hydrogen future that is always just around the corner. The story is familiar: Britain was going to lead in green hydrogen, ITM had the technology, scale would arrive, orders would follow, margins would eventually emerge, and patient investors would be rewarded. Instead, shareholders got delays, profit warnings, manufacturing problems, management churn, missed expectations and a share price that has spent much of the last decade near its lowst.
ITM is not a fresh idea being unfairly ignored by timid markets. It is a veteran disappointment.
And now, because the hydrogen story has softened and investors have become more sceptical, the state steps in. That should make people furious. Not because one dislikes hydrogen in principle, but because this is such a transparently establishment way of allocating public money. It says: we will not back the awkward, decentralised, small-scale things that might actually work quickly. We will back the familiar listed company, because its familiarity protects us.
The other scandal is what this money could have bought instead. For the same £86.5 million, you could fund a serious programme of distributed generation and storage: local solar, small wind where appropriate, batteries for estates and industrial parks, microgrids for new developments, behind-the-meter systems for schools, hospitals, farms and business sites. You could put together a proper portfolio of practical schemes that would produce actual energy now, not merely the hope of equipment manufacture for a market that still depends on subsidy to exist.
On the rough numbers, that sum could support enough local energy investment to serve over 25,000 households and create roughly 90-100 MW of distributed generating capacity. That is 25,000 homes that could be built 5 years sooner because they would not need to wait in the grid-queue.
Real capacity. Real resilience. Real kilowatt-hours. Real reduction in bills and grid stress. It is energy you can use. By contrast, what the ITM deal buys is not energy at all. It buys manufacturing capacity for electrolysers, dependent on separate projects, separate electricity supply and separate hydrogen demand all turning up later and all making economic sense. It is a second-order bet built on top of several other bets.
That is why this is such a poor use of public capital. Distributed energy projects are not glamorous. They do not have hydrogen summits, ministerial hard hats and stock exchange badges. But they are quicker, cheaper, greener and more additional. They also tend not to have access to capital markets. They are precisely the things government should be helping if it wants to do something the market will not do by itself. Instead, ministers have chosen the one route that lets them say they backed a serious listed company with a Sheffield factory and institutional investors already on board.
In other words, they have chosen optics over outcomes.
And let us be honest about the technology too. Electrolysis may have a role. Hydrogen may have niche uses. But the green hydrogen economy remains a heavily policy-made market with uncertain demand, poor near-term economics and a long history of hype outrunning reality. The state is not stepping in to accelerate an already proven industrial wave. It is trying to hold up one part of a still-unproven chain in the hope that some more of it eventually catches up. That is not disciplined industrial policy. That is speculative statecraft.
What makes this especially maddening is that the people making these decisions will call it prudent. They will say it is lower risk to invest in a quoted company. They will say governance is clearer, there is a board, a market cap, public accounts, a shareholder register. But that is precisely the sort of pseudo-rigour that gets countries stuck. It confuses familiarity with quality. It mistakes financial packaging for productive value.
If this government were serious about energy abundance, resilience and decarbonisation, it would be pouring money into the parts of the system that can deliver more power faster and at lower cost: local generation, storage, flexible demand, microgrids, community energy, industrial self-supply and schemes that bypass some of the worst bottlenecks of the central grid. Instead it has chosen to back a stock exchange zombie because no one in Whitehall ever got sacked for preferring the company with a ticker symbol.
That is the truth of the ITM decision. It is not bold. It is not visionary. It is not even especially strategic. It is a bureaucratic comfort blanket disguised as industrial policy.
And even as someone with money in the stock, I find that intolerable.
