MFE220 Testing Incident Investigation Update

CPH2 cancels £750,500 loan, repays interim payment, and starts redesign after testing failure.

What the company is saying

Clean Power Hydrogen plc is updating investors on the investigation into the 28 May 2026 incident during the final stage of factory acceptance testing for its 1MW MFE220 membrane-free electrolyser. The company frames the update as a technical milestone, stating that a combination of factors—such as gas velocity near valve V705, component specification, supplier quality, and test facility conditions—likely caused the incident, but no single ignition source was found. The board emphasizes there is no evidence implicating the proprietary membrane-free stacks or separator vessels. Remedial research and redesign work is underway, with a revised design package planned for licensees and manufacturing partners, subject to successful testing and board approval. Commercially, the company highlights that a previously announced £750,500 secured convertible loan note with Lisheen H2 Energy Park Limited (Hidrigin) will not proceed, and a £750,500 interim payment under the legacy MFE220 sales contract has been repaid. Hidrigin's technology license is being extended to include own-use rights in the United States, with discussions ongoing for the USA, Canada, Mexico, and the UK. CEO Richard Scott describes the investigation as sufficiently advanced to identify principal remedial areas, with independent verification still in progress.

What the data suggests

The update confirms that the technical investigation into the 1MW MFE220 incident has progressed, identifying several contributing factors but no definitive ignition source, and specifically rules out failure in the core membrane-free stacks or separator vessels. The company has begun remedial design and research work to address these issues, but successful completion of testing and board approval are still pending. Financially, the company has cancelled a proposed £750,500 secured convertible loan note with Hidrigin and repaid a £750,500 interim payment previously received, resulting in no new debt or security granted. The commercial relationship with Hidrigin is shifting toward a broader strategic partnership, with licensing discussions now focused on own-use rights in the United States and ongoing negotiations for other territories. No revenue, profit, cash balance, or operational KPIs are disclosed, and the only quantified figures are the £750,500 amounts related to the cancelled loan and repayment. The announcement is specific about technical and contractual developments but does not provide evidence of resumed commercial production or new earnings streams.

Analysis

The announcement is factual and restrained, providing a technical update on the investigation into a testing incident and the status of commercial arrangements. Most claims are realised and relate to the completion of an internal investigation, the identification of likely contributing factors, and the commencement of remedial work. Forward-looking statements (e.g., revised design package, ongoing licensing discussions, improved technology roadmap) are clearly identified as intentions or ongoing processes, with explicit caveats that outcomes are uncertain. There is no promotional or exaggerated language regarding future benefits, and the company is transparent about the need for further verification and the lack of a definitive agreement. The only capital-related disclosures are the cancellation of a proposed loan note and the repayment of an interim payment, with no large new outlay or immediate earnings impact. No profitability or operational growth metrics are disclosed, but the tone and content are appropriate for a technical incident update.

Risk flags

• ●Technical risk remains elevated as the root cause of the testing incident has not been definitively identified, and successful completion of remedial work is still subject to further testing and external verification. This uncertainty could delay or prevent the resumption of commercial activity.
• ●Commercial risk is present due to the cancellation of the £750,500 convertible loan note and repayment of the same amount under the legacy sales contract, which removes a potential source of funding and may impact short-term liquidity. The company now relies on future licensing and partnership agreements, which are not guaranteed.
• ●Execution risk is high for the revised design and licensing strategy, as the company has ceased in-house manufacturing and must secure external partners for technology development and commercialization. Ongoing negotiations with Hidrigin and other parties have no guaranteed outcome or timeline.
• ●Disclosure risk exists because the announcement provides no information on current cash position, fundraising totals, or operational performance, making it difficult for investors to assess the company's financial resilience or ability to fund ongoing R&D and partnership activities.

Bottom line

CPH2's update signals a reset in both technical and commercial strategy following the MFE220 testing incident. The company has identified multiple likely causes for the failure, ruled out core stack issues, and is now redesigning the product, but successful completion and external validation are still pending with no timeline. Financially, the cancellation of the £750,500 loan note and repayment of the same amount to Hidrigin removes a potential funding source, and the company offers no detail on its cash position or fundraising totals. Licensing discussions with Hidrigin are ongoing for the United States, Canada, Mexico, and the UK, but no agreements are finalized and there is no assurance of near-term revenue. Investors should focus on whether CPH2 can complete its technical remediation, secure new licensing or manufacturing deals, and provide clearer financial disclosures. The key takeaway is that while the company is addressing the incident and pivoting commercially, material execution and funding risks remain unresolved.

Announcement summary

(AIM:CPH2) (AIM:CPH2.) Clean Power Hydrogen plc provided a progress update on the investigation into the incident that occurred on 28 May 2026 during the third and final stage of factory acceptance testing (FAT3) of the Company’s 1MW MFE220 membrane-free electrolyser. The company has completed an extensive internal technical investigation, with certain aspects still subject to ongoing external verification by specialist subject-matter experts. The investigation has identified a number of unrelated factors likely to have contributed to the incident, including gas velocity and particle impingement near valve V705, specification and configuration of certain check valves, hoses and pipework bends, supplier quality, the nature of the exposed outdoor test facility, and adherence to relevant European Industrial Gases Association (EIGA) guidance. No single definitive ignition source has been identified, and there is no evidence that the incident originated within the proprietary membrane-free stacks or associated separator vessels. The board believes these primary factors, in combination, are highly likely to be responsible for the testing failure. The findings indicate that changes to certain component designs, system-cleanliness protocols, manufacturing control, and operating condition monitoring will be required to successfully complete testing. The company has commenced remedial research and design work to address these factors. Subject to satisfactory test results and Board approval, the company intends to provide a revised design package for relevant licensees and prospective manufacturing partners. On 25 June 2026, the company announced a binding term sheet with Lisheen H2 Energy Park Limited (Hidrigin) for a proposed £750,500 secured convertible loan note (CLN), subject to conditions and execution of definitive documentation. Following the company’s oversubscribed fundraising, the company and Hidrigin agreed not to proceed with the CLN, and the company has repaid a £750,500 interim payment previously received under the legacy MFE220 sales contract. No CLN has been issued or security granted. Hidrigin’s technology license is now being extended to include own-use rights in the United States. Discussions regarding the previously announced territories of the USA, as well as Canada, Mexico, and the UK are ongoing. There can be no certainty that these discussions will result in a definitive agreement. Richard Scott, Chief Executive Officer of CPH2, stated that the investigation has progressed sufficiently to identify the most likely causes of the incident and the principal areas requiring remedial work, and that independent verification remains in progress. The company has commenced redesign, research, and testing to address the identified factors, which will result in an improved technology roadmap to be communicated to the market and form part of discussions with prospective Strategic Manufacturing Partners.

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