08. April 2021 | 09:42 CET
Nel ASA, dynaCERT, FuelCell Energy - Hydrogen, the second wave!
The hydrogen hype is entering its second wave. The reason is undoubtedly the current draft resolution of the Joe Biden package in favor of the global climate goals. This package contains an investment sum of several hundred billion US dollars to lower climate damaging emissions. The market will decide whether battery or hydrogen technology will play a greater role here; the only important thing is that the funds for the start of the research projects are released quickly. Time is pressing because the pandemic has put many industries on the sidelines. The transport industry, in particular, depends on the sale of goods, and in the future, this should take place without any negative environmental impact.
time to read: 4 minutes by André Will-Laudien
"[...] 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.
Nel ASA - Entry into the Canadian market
Canada is one of 31 countries worldwide that have recognized the vital role of hydrogen in the energy transition towards a sustainable economy and have cemented it in support programs. Canada's government has already set clear climate targets with its hydrogen strategy, published in the "Climate Action Plan." The aim is to decarbonize entire sectors of the economy that could not become climate-neutral without hydrogen. These include heavy-duty transport, logistics vehicles, trains, freighters, buses and transport vehicles.
Together with its associate Everfuel, Nel ASA presented its plans to expand Norway's H2 refueling infrastructure. But that is not to be the end of the story, as NEL will also take a stake in an H2 fueling station chain in Quebec. The client is an old acquaintance: HTEC. The new filling stations are scheduled to come online in the second quarter of 2022. This project significantly expands the existing collaboration between HTEC and Nel ASA by expanding HTEC's network of hydrogen refueling stations in Canada and Quebec. NEL's state-of-the-art hydrogen refueling stations allow hydrogen vehicles to be refueled safely and quickly in less than 5 minutes. NEL has extensive experience in H2 refueling technologies and defined clear expansion goals throughout North America.
NEL shares recently managed to turn back up under EUR 2.15, reaching EUR 2.65 earlier this week. After a 20% increase in a few days - the comeback seems to be on.
dynaCERT - Transport logistics can become cleaner
Whether Joe Biden's billions will also reach Canadian dynaCERT depends on the relevance of the solutions for the US market. That is where dynaCERT can deliver because their systems for CO2 reduction are developed directly for the big logistics players on the highway. To understand the size of the market, let's look at the statistics. The number of professional over-the-road truck drivers in the US increased by a handsome 10% between 2010 and 2020, to 1.80 million. Since these drivers do not operate just one vehicle, the corresponding number of trucks and buses is likely 70% higher.
When it comes to quick and pragmatic solutions, as is the case with NEL, dynaCERT can also deliver immediately. The Canadians have on-site technology for combustion optimization with hydrogen, specifically for heavy-duty diesel vehicles. The HydraGEN system, with a switchable power supply, has already been used in several Canadian small towns, such as Woodstock City. Direct hydrogen supply optimizes combustion by up to 19% for a manageable wholesale price of around CAD 6,000 per system. Considering acquisition costs of over CAD 200-250 thousand for a new truck, this is a perfectly justifiable investment.
With HydraLytica, dynaCERT already has the appropriate telematics software on board to officially measure the CO2 savings and document them for the responsible environmental authority. Thus, the fleet operator receives credits in CO2 certificates - a nice reward for green business.
The DYA share has been on the market for some time at around CAD 0.54. The general correction in hydrogen stocks cost a few percent here as well. However, at the lowered level, one should grab it now because there should still be surprising developments for 2021.
FuelCell Energy - The first wave of correction has rolled through
FuelCell has a long history of negative cash flows and dilutive capital raises. It has been trying to roll out a profitable strategy in the fuel cell market for years. Now it is focusing on commercializing new technologies such as hydrogen generation and carbon capture. Still, based on the numbers at hand, the Company is overvalued.
So is it faith and hope in the upcoming breakthrough? FuelCell Energy is per se an overhyped fuel cell stock that has been burning money since 1992. The Company is perennially cash flow negative and even has negative gross margins. There has recently been a new CEO who has implemented a new strategy in 2020. Some interesting projects have been named, but what is missing is the industry's consistent willingness to invest. Again, people are squinting at the Joe Biden billions for a green planet, but the line of waiting is so extensive that even for FuelCell, only a tiny morsel will fall.
Still, from a multi-year view, the product strategy remains just too opaque. FuelCell has had hydrogen production on its agenda for more than a decade and has not yet been able to offer any real mass solutions. Overall, it is unclear whether FuelCell has any strategic advantage at all over other hydrogen companies.
Meanwhile, some of the competition is moving forward in leaps and bounds. Nel ASA and Bloom Energy, for example, have recently set an ambitious cost target for the hydrogen they will produce, making their stories more predictable. Arguably, the only reason FuelCell is still around today is because of its continuous capital raises. Most recently, the Company raised USD 128.8 million in additional cash in December. We have had the stock on our radar for some time - a 50% plunge in 2 months is analytical confirmation.