January 9th, 2023 | 17:42 CET
A look at what the hydrogen deal with Norway means: NEL, Volkswagen, dynaCERT
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"[...] Why should a modular electrolyzer cost more than a motorcycle? [...]" Sebastian-Justus Schmidt, CEO and Founder, Enapter AG
At home in Southern Germany, the passionate stock exchange expert has been accompanying the capital markets for about twenty years. With a soft spot for smaller companies, he is constantly on the lookout for exciting investment stories.
NEL: Are the new orders enough for a liberation blow?
Norway already supplies gas to Germany and is its most important trading partner. Cooperation is to be further intensified around electricity from wind power and green hydrogen. But Germany also exports something to Norway. But unfortunately, this deal is also a good one for the Norwegians. In the future - as soon as the amended London Protocol on marine protection is ratified - they will import German CO2 and inject it under the seabed. German Economics Minister Robert Habeck does not consider this practice, which is not permitted in Germany, to be impeccable, but sums up the new pragmatism with the saying, "CO2 is better under the ground than in the atmosphere." What does Norway's new role now mean for investors?
If you combine the terms "hydrogen" and "Norway" on Google, you quickly land on the stock of hydrogen specialist NEL. The Company is one of the first movers in the hydrogen market. If Norway now concludes contracts for the export of blue and green hydrogen, this will be positive for NEL - the domestic company is likely to have advantages in providing the infrastructure, for example, in order to score points in tenders. A first order has already been placed. The share has been showing strength for several trading days and gained around 10% in the first trading days of the new year. But be careful: if you look at the share price performance since last March, there is still an intact downward trend. Whether the share can develop momentum in the current market environment to sustainably brighten the chart picture is questionable.
Volkswagen: 2,000km on a single tankful
Volkswagen, on the other hand, is a different story. The car manufacturer is doing very well on the stock market in 2023. Although this chart also shows a downward trend, the share still has more room for improvement. Last year, VW reported that it was working with a partner on a fuel cell to enable ranges of 2,000km on a single tank of hydrogen. Another advantage of the approach: thanks to a ceramic membrane, the fuel cell is said to start up faster than competitors that rely on plastics. The technology is also less expensive and does not require platinum. On the stock market, this kind of hydrogen fantasy still needs to be priced in around automotive shares. It may be some time before hydrogen in this form is suitable for everyday use.
dynaCERT: Business is taking off
In contrast, the dynaCERT share has reached market maturity. The Company offers conversion kits for diesel engines. In the past, the Company reported that adding small amounts of hydrogen can reduce fuel consumption and CO2 emissions by up to 19%. Conversion units installed "under the hood" produce the hydrogen themselves. Having been unsuccessful in converting buses and passenger cars for a long time, dynaCERT has been targeting the raw materials sector for some months now - with success. In the fourth quarter alone, dynaCERT reported 137 orders related to its patented HydraGEN technology.
"Significant efforts by dynaCERT's product development team throughout 2022 have resulted in our HydraGEN technology being modified and adapted to meet the specific needs of each industry. As a result of these ongoing efforts, dynaCERT now has HydraGEN technology systems installed in mining vehicles, oilfield drilling rigs and fracking pumps, road trains in Australia, large power generation facilities, rail transportation, and our traditional mass transit and mainline markets. dynaCERT's sales division continues to build momentum in these sectors and explore additional markets to reach a diversified user base with global impact," commented Ed Cordeiro, Director of Sales, Americas at dynaCERT. The stock has been consolidating over the past few months and could become interesting again at current levels. But beware: dynaCERT is a pure-play growth stock synonymous with dynamic intermediate moves. Those who can monitor positions regularly and have a sense of market timing can have fun with dynaCERT's paper. If further orders succeed in 2023, the share can initiate a turnaround.
The deal between Germany and Norway around CO2 storage and the supply of gas, electricity and hydrogen shows a way forward for the industry. But this road is long. Hydrogen technology is still in its infancy. There is a lack of cheap, green hydrogen and infrastructure. Transitional technology remains an option, especially in areas where vehicles and machinery are large and expensive.
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