November 14th, 2022 | 12:46 CET
Hydrogen buying panic for COP27: Plug Power, First Hydrogen, Nel ASA, Ballard Power - 100% rally ahead!
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"[...] Why should a modular electrolyzer cost more than a motorcycle? [...]" Sebastian-Justus Schmidt, CEO and Founder, Enapter AG
Born in Munich, he first studied economics and graduated in business administration at the Ludwig-Maximilians-University in 1995. As he was involved with the stock market at a very early stage, he now has more than 30 years of experience in the capital markets.
Plug Power and Nel ASA - Still deep in the red
Typically shares should fall when bad numbers are reported. However, this is not always the case, especially when they were expected and, at the same time, important legal decisions are in the offing. So it is not surprising that Plug Power and Nel ASA started to soar last week. The bad mood seems to have blown away, and now in 48 hours, they are making up for what was previously lost in 3 weeks.
Plug Power, the industry leader, again posted a loss of USD 179 million in the third quarter and was only able to generate USD 189 million in sales. Consequently, management lowered its 2022 guidance and there is still a long way to go to reach the lower guidance. Instead of revenue between USD 900 million and 925 million, it will now be 5% to 10% lower. However, revenues are only expected to shift towards 2023, but this has been announced many times before. Does this mean that the next forecast miss is already preprogrammed? It could be. The liquid assets, however, are still ample: they have been reduced from USD 3.85 billion to USD 2.56 billion in one year, and so far, Plug has always been able to count on its generous shareholders.
From a purely technical point of view, the share fell to fertile ground with a drop of USD 15 or a full 50% in six weeks and regained momentum. At the end of the week, it managed to regain the USD 18 mark. Now it needs rising turnovers to manifest the breakout. At Nel ASA, it went up immediately after the figures. The large order intake in the 3rd quarter was impressive. The Nel share also benefited ad hoc, leaving its lows at EUR 0.95 impressively. However, both could prove to be a flash in the pan in the coming days.
First Hydrogen - Solutions now being rolled out for testing
Far advanced is the Canadian hydrogen specialist First Hydrogen. The Company recognized early on that battery power is not a viable option in the logistics sector. Long charging cycles and short range are determinants that have so far made a network of delivery vehicles unprofitable.
The Canadian government is showing the necessary support for introducing sustainable energy and increased climate protection by closing ranks with the US government. Taking its cue from the US Inflation Reduction Act (IRA), which is worth around USD 370 billion, Ottawa intends to introduce new tax credits to promote forward-looking investments. The credits will see relief for financing investments in clean energy technologies such as H2 production, including the development of zero-emission industrial vehicles.
CEO Rob Campbell of First Hydrogen commented: "This announcement demonstrates the overall momentum with which the Canadian clean tech industry is expanding. It comes just weeks after the United States took bold action with the IRA and just before the important COP27 conference in Egypt. These initiatives are fully in line with our plans to develop green hydrogen ecosystems in Canada."
First Hydrogen's first zero-emission light commercial vehicles (LCVs) will soon be tested at the Horiba Mira test site near Birmingham. Additional demo vehicles will then be tested on public roads for a 24-month period beginning in January. Last week, the Company's first test vehicle was refueled with hydrogen at 700 bar at the ITM/Motive site in Essex. High-pressure refueling is a key performance parameter to enable a range of 400 to 600 km within minutes. After commissioning, drivers can see the energy storage and the energy flow in the vehicle on the display on the dashboard. It will be extremely exciting to see what results can be expected here soon. After all, if the driving parameters turn out well, nothing should stand in the way of mass production.
The share price of First Hydrogen (FHYD) already picked up considerable momentum in the summer, peaking at EUR 4.47. Currently, the share price is consolidating slightly again to EUR 2.93, giving hydrogen fans another chance to get in on the action. Contrary to the beaten-up H2 sector, the FHYD share can reflect a solid 12-month performance of plus 128%.
Ballard Power - First steps taken for climate-friendly solutions
Ballard Power and AVL Powertrain are responsible for the H2 powertrain, also used in First Hydrogen's products. The international technology partners should enable good commercialization of the solution if testing with the prototypes delivers the desired results. In the area of logistics, fast refueling is crucial, in addition to security of supply.
According to Allied Market Research, the global light commercial vehicle (LCV) market was valued at USD 463 billion in 2020 and is expected to reach USD 787 billion by 2030. Zero-emission mobility solutions are essential to the European Union's climate change plans and the only way to ban the sale of gasoline and diesel vehicles by 2035. Among other things, the EU has decided to reduce CO2 emissions from new cars by 55% by 2030 and from new vans by 50% compared to 2021.
The stationary production of hydrogen and the necessary infrastructure for its distribution is thus crucial to the success of H2 technologies. For demonstration purposes, Ballard Power is building a green hydrogen production facility with Fusion Fuel in Portugal. The demonstration project, consisting of 15 Fusion HEVO solar-to-hydrogen units, will produce 15 tons of green hydrogen per year, avoiding 135 tons of CO2 emissions. Electricity will be produced via a 200 kW fuel cell module from Ballard, which will then be fed into the Portuguese power grid by partner Fusion Fuel. The companies hope to demonstrate how hydrogen can serve as a flexible energy storage and off-grid power supply. Even with the interesting technologies, investors should consider that Ballard Power has so far only generated quarterly revenues of about CAD 30 million, with a measurable profit not expected before 2027. Even after the share price tripled, the Canadian company is still valued at 20 times annual sales.
The hydrogen sector is again in the spotlight at the COP27 climate conference because of its future technology. The projects are still all loss-making, and private financiers are being sought to support the government's subsidies. That always brings fantasy into the industry. Investments should therefore be geared toward the long term, and traders take advantage of the momentum.
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