ITM Power: Government Cash and a Rheinmetall Bet Can’t Halt the Technical Slide

Despite £86.5M UK government backing and a NATO synthetic fuel partnership with Rheinmetall, ITM Power stock falls 50% from high, breaching key moving average.

The UK government has thrown its weight behind ITM Power with a £46.5 million grant and a 10.8% equity stake via Great British Energy, while a newly minted partnership with Rheinmetall promises to channel hydrogen electrolysers into NATO’s synthetic fuel supply chain. Yet the stock keeps falling. At 1.31 euros, it sits nearly 50% below the 52-week high of 2.58 euros notched on 29 May and has breached its 100-day moving average — a clear warning for a company that still sports a year-to-date gain of 80.7%.

State Ownership as a Double-Edged Sword

The British government’s decision to take a direct 40-million-pound equity position in ITM Power, making it the second-largest shareholder, marks a rare crossover between industrial policy and portfolio risk. The grant from the Department for Energy Security and Net Zero, announced on 9 July, is earmarked specifically for the Chronos electrolyser production line in Sheffield, which will have an annual capacity of one gigawatt. Together, the £86.5 million package is meant to accelerate delivery of the new platform.

This is not classical subsidy. Westminster now owns a stake in a single manufacturer’s technology roadmap, blurring the line between strategic backing and outright bet. For ITM Power, the implicit political backstop provides a floor — failure would be too costly for the government to allow. But it also ties the company’s fortunes to the willingness of politicians to keep writing cheques, a dependency the market must price. The annualised 30-day volatility of 105.4% reflects that extreme sensitivity to headlines.

The Defence Pivot that Recast the Thesis

Parallel to the state support, the collaboration with Rheinmetall introduced a new narrative: green hydrogen as a tool of military logistics. The Giga PtX project envisions hundreds of decentralised Power-to-X plants across Europe, each with up to 50 megawatts of electrolysis capacity churning out 5,000 to 7,000 tonnes of e-fuel annually for NATO forces.

This reframing shifts the investment case from pure decarbonisation timelines to European rearmament budgets, which run on faster, more geopolitically driven cycles. ITM Power’s order book is no longer solely a bet on climate policy deadlines; it is increasingly a proxy for defence spending. That diversification should, in theory, stabilise demand, but so far the market has not rewarded it.

Technical Pressure Despite Cash and Progress

The stock closed at 1.30 euros on Tuesday, slipping beneath the 100-day moving average of 1.34 euros — a bearish signal that wiped out 4.5% on the week and 15.96% over the past month. The relative strength index of 40.4 suggests selling momentum has eased but has not yet reached oversold levels. Meanwhile, the 200-day average sits at 1.08 euros, meaning the stock still holds a 21.5% premium over the longer-term trend.

Operationally, ITM Power has real ammunition. The last interim report showed a cash position of £197.8 million and narrowing EBITDA losses. Yet technical stability and confirmed order backlogs matter more to today’s traders than long-term project potential. A broad sector sell-off has hit hydrogen favourites indiscriminately, and rising oil prices that might have rotated capital back into clean energy have instead triggered profit-taking.

The Infrastructure Wild Card

What neither state equity nor a defence contract can fix is the bottleneck in British grid connections. Clean energy and AI projects are already facing decades-long waits for grid access. If ITM Power’s customers cannot secure timely power for their electrolysers, the Sheffield factory’s output will struggle to translate into revenue — regardless of how well-funded the production line is. That logistical constraint may prove the most stubborn headwind of all.

The next inflection point is 12 August, when ITM Power reports its next quarterly results. Until then, the stock is caught between a multi-month upward trend and a sharp near-term correction, waiting for either the fundamentals or the chart to resolve the tension. For a company that has become a test case of how far government ownership and defence dollars can drag a clean-tech stock through turbulent markets, the answer is not yet written.