June 1st, 2023 | 08:30 CEST
Nel ASA, First Hydrogen, Plug Power - Paving the way for hydrogen technology
Germany has shut down its nuclear power plants, and now the expansion of renewable energies is to be accelerated. But what happens to the surplus electricity when the sun shines all day? In order not to overload the grids, the energy is given away to neighbouring countries. In the future, it will be turned into green hydrogen that can cover the energy needs of industry and the transport sector. On May 25, the Federal Cabinet passed an amendment to the Energy Industry Act that defines the legal framework for a future hydrogen core network in Germany. Hydrogen technology will not only prevail in Germany. We, therefore, take a look at three international hydrogen companies.
time to read: 4 minutes
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Author:
Armin Schulz
ISIN:
NEL ASA NK-_20 | NO0010081235 , First Hydrogen Corp. | CA32057N1042 , PLUG POWER INC. DL-_01 | US72919P2020
Table of contents:
"[...] We can convert buses and trucks to be completely climate neutral. In doing so, we take a modular and incremental approach. That means we can work with all current vehicle types and respond to new technology and innovation [...]" Dirk Graszt, CEO, Clean Logistics SE
Author
Armin Schulz
Born in Mönchengladbach, he studied business administration in the Netherlands. In the course of his studies he came into contact with the stock exchange for the first time. He has more than 25 years of experience in stock market business.
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Nel ASA - Invests in the USA
During his trip to Norway, Lower Saxony's Minister President Stephan Weil made a strong case for a hydrogen pipeline to Lower Saxony. Various companies are currently examining the construction of a pipeline. This offers an opportunity for Nel ASA, which is based in Oslo and is one of the leading suppliers of electrolysers. That the demand for hydrogen technology is growing is shown by the figures for the 1st quarter. Turnover was NOK 359 million, an increase of 68% compared to the same quarter last year. Order intake was NOK 580 million, an increase of 105%. The order book at the end of the quarter was NOK 2,913 million, an increase of 126% year-on-year. Cash reserves amounted to NOK 4,621 million at the end of the quarter.
Nevertheless, the Company did not make a profit. The bottom line was a net loss of NOK 192 million. But the group is also investing. On May 3, Nel ASA announced the construction of a gigawatt-sized electrolysis plant in Michigan, USA. The plant will be one of the largest in the world, producing up to 4 gigawatts and creating over 500 jobs. Michigan was chosen because of financial incentives, a skilled workforce and collaborative opportunities with universities and research institutions. Proximity to General Motors was also an important factor. The factory will be built in stages according to demand.
This gives the Company a foot in the door to America and will also allow it to benefit from the USA's large climate package in the future. With the further expansion of renewable energies, the demand for electrolysers will continue to grow. Unlike Plug Power, the Company has sufficient cash reserves. The latest quarterly figures boosted the share, going up from NOK 11.96 to NOK 15.30. Since then, the share has consolidated and is currently priced at NOK 14.22.
First Hydrogen - Hydrogen vehicles perform better than expected
First Hydrogen has developed hydrogen-powered light commercial vehicles (LCVs) using a best-of approach. The first test vehicles are already being put through their paces. It found that their hydrogen-powered LCVs perform better than predicted. The vehicles have travelled 6,000 km in the UK and achieved a range of over 500 km on one fuel tank. The LCV's fuel consumption is less than 2 kg per 100 km and even less than 1.5 kg per 100 km in urban traffic. This confirms that hydrogen as a fuel offers an emission-free solution with sufficient range and short refuelling times for fleet managers.
Most recently, there was praise from Rivus, a provider of fleet management services, which was the first to test the hydrogen-powered LCVs on UK roads. The commercial vehicles were praised above all for their smooth running and pleasant handling. The LCVs achieve longer ranges and can be refuelled faster than battery-electric vehicles. This will help fleets that need long ranges to reach their zero-emission goals. On May 9, First Hydrogen signed a memorandum of understanding with the Hydrogen Research Institute (HRI) to support the development of the sustainable energy transition in the province of Quebec. The Company will provide HRI with a hybrid fuel cell powertrain to conduct extensive testing and collect data.
In addition, the Company has entered into an agreement with the City of Shawinigan, Quebec, to acquire two parcels of land to build a green hydrogen production facility using advanced electrolysis technology. The hydrogen produced will be distributed within the Montreal-Quebec City corridor and used for First Hydrogen's light commercial vehicles (LCVs) and other hydrogen-powered vehicles and applications in the province of Quebec. Like many hydrogen stocks, First Hydrogen has been under pressure recently. In the meantime, however, the share has been able to pull back significantly from its low for the year of CAD 2.24 and is currently trading at CAD 2.75.
Plug Power - Wins 3 large projects
The possible insolvency has also hit the hydrogen sector, as some investors were worried that the money from the subsidy programs might not flow. Now it looks like a settlement has been reached, which would be positive for Plug Power. The group could also use some good news after its latest quarterly figures. Turnover rose to USD 210 million, an increase of 49% compared to the previous year, but the net loss widened by 32% to USD 205 million. Accordingly, analysts' expectations for earnings per share were clearly missed.
So to achieve the ambitious revenue targets of USD 1.4 billion and a gross margin of 10%, the group will have to make significant gains. To do so, it needs more announcements like the one on May 22 when the Company signed three 5-megawatt electrolyser projects with Ardagh Glass Limmared AB, Hydro Havrand and APEX Group. The projects are designed to produce green hydrogen on an industrial scale for glass manufacturing, aluminium recycling and steel production. The projects are based on PEM electrolysers with a capacity of 5 MW in containers, which reduces construction costs and implementation complexity.
The three projects increase the Company's presence in Europe. Plug Power's biggest shortcoming is its low cash balance. If things go badly, it could run out of money by the end of the year. Most analysts are still bullish on the stock. The average target price is USD 15, meaning the share has about 70% upside potential, with a current share price of USD 8.84.
Hydrogen technology will find its way into our lives more and more. Too high a hydrogen price is still a handicap. But with the expansion of renewable energies, the price should come down visibly. Nel ASA has already noticed the increasing demand and is expanding into the US. First Hydrogen is planning to build a green hydrogen production plant in Canada and is getting positive feedback from fleet operators about the performance of their hydrogen-powered vehicles. Plug Power has recently landed three large orders, but declining cash reserves could become a problem in the long run.
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