Hydrogen enters critical phase – New momentum ahead? thyssenkrupp, Plug Power, First Hydrogen

Plug Power - Jack of all trades waiting for the big push

Plug Power has been considered the top dog in hydrogen for years. The Company is one of the leading providers of integrated hydrogen solutions, from green hydrogen to fuel cells. To date, Plug Power has delivered 70,000 fuel cells and 250 hydrogen refueling stations worldwide. Under the GenEco brand, the American company also builds its own electrolysers for producing hydrogen from renewable energy. But how is this business model being received on the stock market?

Plug Power reported a net loss of USD 196.7 million in the first quarter. In the previous year, the loss was USD 295.8 million. The Company reported improvements in operating cash flow and progress in the areas of electrolysis, hydrogen production, and fuel cell development. However, Wall Street is not yet convinced: analysts currently have a mixed view of Plug Power, with the consensus rating at "Hold". Looking at the ratings in detail, they cover the entire spectrum from "Sell" to "Buy". But why are analyst opinions on Plug Power so mixed? The reason is likely to be found in the expected unit sales. As a full-service hydrogen supplier, Plug Power is driving down costs – only with increasing volumes does the business model work out.** Some analysts are more skeptical than others when it comes to the Company's growth targets.

First Hydrogen thinks in terms of hydrogen solutions

The Canadian hydrogen company First Hydrogen is pursuing a slightly different business model. As a manufacturer- and technology-neutral company, First Hydrogen offers Hydrogen-as-a-Service. With the development and distribution of light commercial vehicles, the provision of fuel cells, and the construction of hydrogen filling stations, the Company has a similarly broad base. However, the focus is less on in-house developments and more on offering customers practical solutions that work. The Company demonstrated its flexibility and technology-neutral approach during the development of its hydrogen vans. Even today, the chassis for its hydrogen delivery vans is still sourced externally.

This openness to technology is also evident in the consideration of using small modular reactors (SMRs) to produce green hydrogen. The technology involves decentralized mini-reactors that supply large industrial plants with electricity independently of the sun and wind. A few weeks ago, the Company founded a subsidiary, First Nuclear, for this purpose. First Hydrogen is now also represented in Germany through a subsidiary and intends to get involved in the expansion of import pipelines and infrastructure for ships in Germany. In this context, First Hydrogen also benefits from funding by the European Union (EU) and the German federal government's special infrastructure fund, which has a total volume of EUR 500 billion.

First Hydrogen docks with German industry

First Hydrogen's business model fits well with current developments in German industry, where people are finally thinking long-term and questioning existing structures. Thyssenkrupp is currently on a downsizing course with a clear focus on the goal of "green industry." Of the five main segments still in place, some are expected to be discontinued. For instance, there are plans to float the shipbuilding division on the stock exchange later this year.

thyssenkrupp restructures – Value creation potential emerges

Over the next few years, thyssenkrupp is to become a group holding company. To this end, the Duisburg-based company is selling minority stakes in its automotive, materials services, and decarbon technologies divisions in order to exploit their value potential. At the end of May, Thyssenkrupp CEO Miguel López told Reuters news agency that "this step allows us to leverage the full value potential of the businesses and use their independence in a targeted manner for investment and growth." When corporate structures are changed, and former divisions are to operate independently on the market in the future, there is often a need for tailor-made solutions from industry partners. In addition to established companies like Plug Power, First Hydrogen's Hydrogen-as-a-Service approach is also a strong fit.

First Hydrogen on the comeback trail?

The new holding structure of Thyssenkrupp has been very well received on the stock market – in the last six months alone, the share price climbed by 116%. The market's underlying assumption is likely to be that the sum of the prime assets is ultimately worth more than a company struggling with the challenges of the energy transition. In contrast, the development at Plug Power is met with great skepticism. Many analysts and observers consider it questionable whether the hydrogen jack-of-all-trades will finally get rolling on a large scale and doubt the ambitious plans – the stock lost nearly 65% within six months. Things are looking better for hydrogen competitor and innovator First Hydrogen: Its expansion into Germany and the founding of its own nuclear subsidiary, First Nuclear, to supplement its Hydrogen-as-a-Service model with small modular reactors are sparking the imagination. The stock has gained more than 100% in the past six months and recently hit a multi-month high. If the Company's operations also perform well in the future, the stock, which was still trading at EUR 4 in 2022, could be poised for a spectacular comeback.