The government has announced a combined £86.5 million investment to expand hydrogen technology manufacturing in South Yorkshire. The funding goes to ITM Power UK Ltd, a Sheffield based company that makes electrolysers, the machines that use electricity to split water into hydrogen and oxygen. The announcement builds on previous governments net zero and clean energy policies, with ministers framing it as part of a wider push to modernise the UK's energy system, reduce dependence on volatile international fossil fuel markets, and strengthen domestic industrial capacity.
Key Facts at a Glance
- £86.5m total investment - £40m from Great British Energy (GBE) and £46.5m government grant in principle.
- Recipient: ITM Power UK Ltd, a Sheffield based electrolyser manufacturer.
- 400+ new jobs in manufacturing, engineering, and construction.
- 1 GW electrolyser factory expansion - the largest of its kind in Europe, according to the government.
- GBE's largest single investment to date, funded through its Energy Engineered in the UK programme.
- The government grant is still subject to Subsidy Advice Unit review.
What Has Been Announced
On 9 April 2026, the government confirmed a combined £86.5 million package for ITM Power UK Ltd to expand its electrolyser manufacturing operations in South Yorkshire. The investment is made up of two parts:
- A £40 million equity investment from Great British Energy (GBE), the UK's publicly owned energy company. This means GBE will become a shareholder in ITM Power.
- A £46.5 million government grant in principle, subject to review and approval by the Subsidy Advice Unit.
The funding is intended to support a 1 GW expansion of ITM's existing South Yorkshire production facility, creating over 400 new jobs in manufacturing, engineering, and construction both directly and through the wider supply chain.
The government describes this as GBE's largest clean energy investment to date, made through GBE's £1 billion "Energy Engineered in the UK" programme, which was announced in December 2025.
What Is an Electrolyser, and Why Does It Matter?
An electrolyser is a device that uses electricity to split water into hydrogen and oxygen. This is how "green hydrogen" is produced using renewable electricity to power the process, meaning no carbon is emitted in the production of the hydrogen itself.
Green hydrogen is seen as a key tool in the UK's plan to reach net zero, particularly for parts of the economy that are hard to electrify directly, including:
- Heavy industry steel, chemicals, cement
- Aviation
- Shipping
- Long distance freight
The UK currently imports much of this technology. Electrolysers are the critical bottleneck, without enough of them, green hydrogen cannot be deployed at scale. This investment is intended to help close that gap by building domestic manufacturing capacity.
What ITM Power Will Build
The funding will accelerate the development and rollout of ITM's next generation electrolyser platform, known as Chronos. According to the government's announcement, Chronos is designed to:
- Reduce production and operating costs
- Improve energy efficiency
- Increase reliability and scalability for large industrial projects
The expanded facility would position South Yorkshire as the home of Europe's largest electrolyser factories, according to the government, and would support 1 GW of annual production capacity.
How This Fits Into Wider Clean Energy Policy
The government has presented this investment as part of a broader clean energy industrial strategy. Ministers highlighted the following recent milestones alongside the announcement:
- Over £90 billion of private investment in clean energy secured since July 2024
- Sizewell C nuclear project, expected to support 10,000 jobs at peak construction
- HyNet and East Coast Cluster carbon capture projects, expected to create over 4,000 jobs in the North West and Teesside
- A £500 million commitment to hydrogen infrastructure confirmed at the Spending Review
- Ten green hydrogen projects from the first funding wave signing operational contracts
Great British Energy's £1 billion Energy Engineered in the UK programme, from which this investment is drawn, is designed to support domestic clean energy supply chains, back UK based manufacturers, create skilled jobs, and provide public equity stakes in strategic energy technologies.
The government's wider clean energy employment target is for jobs in the sector to double to 860,000 by 2030.
What This Means for South Yorkshire
The announcement has particular significance for South Yorkshire, a region historically associated with steel and heavy manufacturing. The government and local leaders are presenting the investment as part of a broader industrial transition for the area.
Local impacts highlighted include:
- Over 400 new jobs directly and through the supply chain
- Growth in demand for skilled manufacturing and engineering roles
- Positioning of the Don Valley Corridor as a national hydrogen production hub
- Reinforcement of South Yorkshire's status as an advanced manufacturing region
Oliver Coppard, Mayor of South Yorkshire, said:
"The government's commitment to invest £87 million to scale up ITM Power is a huge vote of confidence for South Yorkshire's clean energy economy. This is an investment that will help to not only secure the future of ITM Power in South Yorkshire, but to further build a company that's vital to our leadership of a key industry of the future."
"The government's commitment reinforces South Yorkshire's status as a globally leading advanced manufacturing region, and positions the Don Valley Corridor as an international hub for hydrogen production."
"Hydrogen is a fast growing element of our energy mix, and will be essential in our ambitions to create a greener, cleaner South Yorkshire economy. The government's support means we are one step closer to meeting that challenge."
"Our region powered the UK's first industrial revolution, this new investment today continues to put us right at the forefront of the next industrial revolution."
What Ministers Said
Energy Secretary Ed Miliband said:
"This investment is the government's clean energy mission in action, rebuilding our energy security with clean homegrown power and good industrial jobs for South Yorkshire. Communities have long been calling out for a new generation of good industrial jobs, and with these plans we answer that call, helping to create an economy in which there is no need to leave your hometown just to find a decent job. Thanks to this government's commitment to clean energy, a generation of young people in our industrial heartlands can have well paid secure jobs."
"This has only happened thanks to months of intense collaboration between Great British Energy, our publicly owned energy company, the government and ITM Power. It is time to make and build things in Britain again, and with this government's clean energy mission, we will."
Chancellor of the Exchequer Rachel Reeves said:
"Sheffield was the backbone of Britain's industrial revolution, and today shows our commitment to it being at the forefront of the industries that will shape our future. We have the right economic plan. We are backing skilled jobs, regional growth and British manufacturing, benefiting the people of Sheffield and strengthening the country's economy."
Dan McGrail, CEO of Great British Energy, said:
"With this investment Great British Energy is backing British innovation, technology and hundreds of skilled jobs. This is our Energy Engineered in the UK strategy in action. We are investing in ITM helping them to scale, compete globally and keep vital engineering expertise here in the UK."
Dennis Schulz, CEO of ITM Power, said:
"We are grateful for the confidence and support demonstrated by the UK government. Clean power increasingly underpins energy sovereignty and resilience, which are critical to long term economic success."
"The UK government's support, through a combination of equity participation and grant funding, marks a pivotal step in establishing ITM at the centre of the UK's hydrogen economy and firmly positions us as a natural partner for projects in the UK."
"The funds will enable the build out of large scale domestic manufacturing of our next generation Chronos platform, underpinning confidence in our technology and sustained growth."
What Happens Next
There are a few things still to be confirmed before the full package is in place:
- The £46.5 million government grant is in principle only and remains subject to review and formal consideration by the Subsidy Advice Unit.
- ITM Power will begin scaling up its Chronos manufacturing line using the investment.
- Great British Energy will formally take an equity stake in ITM Power once the investment process completes, becoming a shareholder in the company.
- The expanded facility is expected to support 1 GW of annual electrolyser production capacity once operational.
Key Takeaways
- The government and Great British Energy are jointly investing £86.5 million in hydrogen electrolyser manufacturing in South Yorkshire.
- The money goes to ITM Power UK Ltd, which makes the machines needed to produce green hydrogen at scale.
- Over 400 new jobs are expected, alongside a 1 GW expansion that would make South Yorkshire home to Europe's largest electrolyser factories.
- GBE will become a shareholder in ITM Power, a deliberate model of public co-investment in strategic clean energy technology.
- The £46.5 million grant remains subject to formal Subsidy Advice Unit review.
- The investment is part of a broader government strategy to build domestic clean energy supply chains and reduce reliance on imported technology and fossil fuels.