Nel ASA, dynaCERT, Plug Power - Hydrogen: Multiplier or downfall?

Nel ASA - Focus on the electrolyser business

Substantial investments in hydrogen projects have been announced in Germany. These investments are intended to promote the green production and use of hydrogen. The German government is allocating EUR 4.6 billion for 23 projects to establish a sustainable economy. A total of around EUR 7.9 billion is expected to be invested in the hydrogen sector by 2030. The hydrogen infrastructure is seen as crucial to decarbonizing industry and energy. The well-known European hydrogen player Nel ASA should be able to benefit from this momentum. The hydrogen industry is not lacking in tailwinds.

The Company has spun off its loss-making fueling station division under the name Cavendish Hydrogen ASA and listed it on the Oslo Stock Exchange. For every 50 Nel ASA shares, shareholders received 1 Cavendish Hydrogen share. Investors are now pinning their hopes on this new brand. As emphasised on its website, the Company aims to eliminate emissions from heavy-duty commercial vehicles. Despite a current market value of EUR 60.8 million and an order book of EUR 28 million, Cavendish posted a loss of EUR 6 million in Q1. A low cash balance indicates that a capital increase may be imminent.

Following the spin-off of the fueling station division, Nel ASA is now fully focused on developing and producing electrolysers. The Norwegian company recently received a significant follow-up order from Europe worth over EUR 7 million. Nel is focusing on improving existing technologies while investing heavily in the next generation of PEM and alkaline electrolysers. Today, July 17, the Company will present its figures for the second quarter. This should cause some movement in the share, which is currently trading at NOK 7.00.

dynaCERT - Expanding hydrogen commitment

dynaCERT announced on June 11 that it has acquired a 15% stake in Cipher Neutron by obtaining 7,178,000 shares. This acquisition strengthens dynaCERT's strategic position in the fast-growing green hydrogen sector. Cipher Neutron, an industry leader in AEM electrolyser technology, is recognized for pioneering environmentally friendly and cost-effective innovations. By acquiring a stake in Cipher Neutron, dynaCERT is optimally positioned for the green hydrogen market, which is forecast to be worth over USD 500 billion by 2030. dynaCERT is not only focusing on hydrogen through its investments but also with its proprietary HydraGEN™ technology.

This system is used in diesel engines and produces hydrogen and oxygen from distilled water, which is then fed into the air intake system of combustion engines. This results in improved performance, higher torque, lower fuel consumption, and reduced emissions such as CO2, CO, NOx and particulates. Thanks to the CO2 savings, the Company has applied for Verra's Verified Carbon Standard (VCS) certification. The Company has now reached the final stage, as can be seen on the Verra website. The announcement should, therefore, only be a matter of time.

The CO2 certificates generated would then be shared between the customers and dynaCERT. This could serve as another selling point and could lead to a story similar to that of the trailer skirts. After it was documented that the skirts on trucks could save 1% of fuel, 90% of trucks have now been fitted with them. By comparison, HydraGEN™ technology can save up to 10% fuel. In order to meet demand, the Company recently raised a further CAD 3 million via a private placement, ensuring sufficient working capital is available. The share price recently rose to CAD 0.29 but has since fallen to CAD 0.20.

Plug Power - Positive profit margin from 2025?

Plug Power has recently improved its financial position thanks to a conditional loan commitment of USD 1.66 billion from the US Department of Energy (DOE). This significant financial commitment could significantly support the Company in scaling its green hydrogen production and further its ambitions in various sectors. A key driver for this development is the prospect of up to 6 additional production facilities in the US, which should accelerate growth in areas such as material handling, transportation, and industrial applications. However, caution is advised: Plug Power must fulfill several technical, legal and financial conditions to secure the loan guarantee.

These hurdles bring with them considerable uncertainty. Added to this is the US political landscape, which could become even more unstable with the possible return of the Trump administration, which in turn could have a negative impact on the long-term prospects and the DOE guarantee. However, the Company has already secured the Federal Clean Hydrogen Production Tax Credit in Georgia to reduce fuel costs and generate positive profit margins from 2025. This support will help Plug Power expand its hydrogen production capacity and drive technological advancements. The tax credit of up to USD 3.00 per kilogram for clean hydrogen produced in the US is intended to improve the competitiveness of hydrogen-based technologies.

Most recently, the Company announced that it has installed and commissioned over 95 MW of electrolyser capacity worldwide, with hydrogen production on five continents for both internal use and at external customer sites. In addition, 13 hydrogen filling stations have been built in Europe in the last two years. The Company operates these to support material transportation and mobility for customers like Amazon, Stef, and others. Infrastructure development plays a key role in the roll-out of hydrogen-powered technology. The share has moved upwards after a triple test around USD 2.30 and is currently trading at USD 3.21.

Nel ASA, dynaCERT and Plug Power are showing progress in hydrogen technology. Nel ASA is focusing on electrolysers and today announces its quarterly figures. dynaCERT is investing in Cipher Neutron and awaits Verra certification, which should give a boost to HydraGEN™ technology and the Company. Plug Power received a significant loan guarantee and will benefit from tax credits for clean hydrogen production. These companies are well-positioned and have the opportunity to become multipliers. Nevertheless, investors need to weigh the risks and rewards carefully.