Clean Power Hydrogen Halts MFE220 Testing After Major Damage

Clean Power Hydrogen (CPH2) halted testing of its flagship MFE220 electrolyser on 5 June 2026 after sustaining major damage during a pressurised test run, sending shares down 18% in early London trading. The MFE220 unit, designed to produce 220 kg of hydrogen per day with proprietary membrane-free technology, suffered a catastrophic failure at the company’s Doncaster facility at approximately 10:45 BST. No injuries were reported, but the damage is extensive enough to require a full engineering review and component rebuild, pushing first commercial delivery timelines into 2027 at the earliest. The stock fell to 42 pence, its lowest level since November 2024, wiping £28 million from the company’s market capitalisation.

Context — why the MFE220 failure matters now

The MFE220 failure strikes at a critical moment for CPH2, which had been accelerating toward first commercial deployment after securing a £12 million order from Northern Gas Networks in March 2026. The unit was the company’s largest-scale electrolyser to date, intended to validate the scalability of membrane-free electrolysis — a design that eliminates expensive perfluorinated membranes and purports to slash capital costs by 40% versus proton exchange membrane (PEM) competitors like ITM Power. This was the unit CPH2 needed to prove it could move from lab-scale success to industrial-grade reliability.

The last time a clean-tech start-up suffered a major testing failure at this stage of commercialisation, it took Heliogen 14 months to recover investor confidence after a receiver tube rupture during a 2024 supercritical CO2 test. Heliogen’s shares fell 34% on the news, and the company ultimately pivoted to smaller-scale projects. CPH2 now faces a similar credibility gap.

The macro backdrop is unforgiving for pre-revenue hydrogen firms. The S&P Global Clean Energy Index is down 22% year-to-date, while the UK 10-year gilt yield sits at 4.31%, lifting the cost of capital for capital-intensive scale-ups. The EU’s renewable hydrogen targets remain in place — 10 million tonnes of domestic production by 2030 — but equipment failures at this stage feed a narrative that green hydrogen’s unit economics remain unproven. CPH2’s failure also comes just three weeks after the UK government cut the Low Carbon Hydrogen Standard certification budget by 18%, reducing the subsidy visibility that had underpinned near-term order books.

Data — what the numbers show

CPH2’s stock closed at 42 pence on 5 June, down 18% from 51 pence the prior session, marking the largest single-day decline since the company listed in February 2023. Trading volume spiked to 4.2 million shares, nearly 5x the 90-day average of 870,000, indicating institutional sellers reducing positions. The stock is now 64% below its 52-week high of 117 pence set on 12 January 2026, the day after a successful 100-hour continuous-run test of a smaller MFE110 unit.

Before the halt, CPH2 projected first revenue from the MFE220 in Q4 2026, with an estimated gross margin of 38% per unit based on a £1.2 million selling price. That revenue is now shifted to mid-2027 at the earliest, assuming a six-month root-cause analysis and redesign cycle plus a three-month retest. The company held £14.2 million in cash as of its 31 December 2025 balance sheet, with a monthly burn rate of £1.1 million — implying a runway of roughly 13 months without additional capital, now shortened by unplanned remedial engineering costs.

For comparison, ITM Power’s PEM electrolyser stacks have achieved 20,000 hours of cumulative runtime across multiple customer sites, while Ceres Power’s solid-oxide technology has logged over 15,000 hours in test cells. CPH2’s membrane-free electrolysers, by contrast, have fewer than 2,000 total hours of operational data, all at sub-50 kg/day scale. The MFE220 was the first attempt to scale the technology by a factor of 4.4.

Metric	Before Failure	After Failure
Stock price (pence)	51	42
Market cap (£M)	155	127
First revenue target	Q4 2026	Mid-2027
Cash runway (months)	~13	~10 (est.)

Analysis — what it means for markets, sectors, and tickers

The immediate losers are CPH2 shareholders, but the ripple effect extends to the UK hydrogen ecosystem and pre-revenue clean-tech valuations. ITM Power (ITM.L) shares edged down 3% on the day, as the failure reinforces buyer preference for proven PEM technology despite its higher membrane replacement costs. Ceres Power (CWR.L) was flat, benefiting from its focus on solid-oxide fuel cells rather than electrolysers. The Global X Hydrogen ETF (HYDR) shed 1.2%, with small-cap hydrogen names globally trading lower on the perception that technology risk is being repriced.

The second-order effect is a widening of the cost-of-capital gap between incumbent electrolyser OEMs and challengers. Nel ASA (NEL.OL) and Thyssenkrupp Nucera (NCH2.DE) already enjoy 300-400 bps lower weighted average cost of capital than pre-revenue peers, according to a 15 May 2026 Bernstein research note. CPH2’s failure will likely widen that spread as lenders and equity investors demand higher risk premiums for membrane-free and other novel architectures. This makes it harder for challengers to fund the scale-up needed to compete on cost.

A key limitation of the bearish read is that CPH2’s failure is mechanical, not fundamental to the chemistry. Membrane-free electrolysis has demonstrated high efficiency in lab settings — 82% stack efficiency in a 2025 University of Sheffield study — and the problem may be surmountable with better pressure vessel engineering. If the root cause is a weld defect or sensor fault rather than a design flaw, recovery could be faster than the market assumes. Positioning data from the London Stock Exchange shows short interest in CPH2 rose to 6.2% of free float as of 4 June, suggesting a crowded short that could squeeze on positive engineering updates.

Outlook — what to watch next

CPH2 management has scheduled a technical briefing for 15 June 2026, where it must disclose the root cause of the failure and a revised timeline. The market will focus on whether the damage is confined to a replaceable component or requires a fundamental redesign of the membrane-free stack. A component-level fix could see the stock recover to 60 pence; a full redesign could push it below 30 pence.