August 30th, 2022 | 11:12 CEST
Plug Power, dynaCERT, First Hydrogen - The winners of the hydrogen revolution
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"[...] Why should a modular electrolyzer cost more than a motorcycle? [...]" Sebastian-Justus Schmidt, CEO and Founder, Enapter AG
First Hydrogen - With force to North America
The new star in the hydrogen sky is igniting the next stage and plans to expand into North America. The planned value chain could enable the Canadians to access the Canadian government's subsidies from several sides. With the "Clean Fuel Standard," Trudeau & Co. developed a program that supports financing for zero-emission medium- and heavy-duty vehicles. CAD 547.5 million is to be made available over a four-year period. In addition, CAD 3 billion is already reserved in the 2022 budget for zero-emission vehicles and related infrastructure.
First Hydrogen is working with global partners such as Ballard Power and AVL Powertrain UK on the commercial hydrogen vehicle of the future. It uses existing technologies and a proven chassis, which creates time and cost advantages. The first operational readiness test runs of the two demonstration vehicles have already been completed. The fuel cell systems, including the stack supplied by Ballard Power Systems, have undergone extensive calibration and testing. The Company plans to conduct operational trials under real-world conditions with major fleet operators in early 2023.
In addition to the utility van, refueling systems and the Company's own production of green hydrogen are on the agenda. A cooperation agreement was signed with FEV Consulting GmbH, based in Aachen, Germany, to develop a prototype for a customized refueling system for the hydrogen mobility market. Four green hydrogen production sites have been identified in the UK, and two projects have already been submitted for a first round of funding to the UK government's Net Zero Hydrogen Fund through its subsidiary First Hydrogen Limited. With funding from the Canadian government, First Hydrogen plans to develop additional production sites in North America, primarily in Canada.
In the current year, First Hydrogen has outperformed its peer group, but with a market capitalization of about CAD 210 million, it is well behind Plug Power and Nel Asa. The visions from first-class management are big. If these are even partially carried out, the valuation could be adjusted to the competition in the next few years.
dynaCERT - Small steps to the goal
The shares of the Canadian energy company attracted attention due to their high volatility. dynaCERT develops and sells technologies to reduce carbon emissions. Since the beginning of the year, the share of the Canadians lost about 66% in value to CAD 0.10. However, experienced chartists could already recognize a bottom formation here, especially since the RSI and the MACD showed a clearly oversold situation. With the breakout above the mark of CAD 0.15, some short-sellers were probably caught on the wrong foot, so the dynaCERT share could more than double again to CAD 0.33 within one week. Due to the rapid increase, the share appeared overheated and corrected to CAD 0.22 in the following trading days. Technically, there is still a gap to close, which is currently at the breakout level of CAD 0.15.
Fundamentally, dynaCERT could celebrate successes concerning the application within the Verified Carbon Standard program of Verra. The Company announced that Verra's Chief Program Development and Innovation Officer has signed an agreement with Earthood Services Private Limited to provide independent verification services in connection with dynaCERT's application under the Verified Carbon Standard program. To date, dynaCERT and Verra have worked through several steps regarding carbon credit initiatives. Now, the only pending items are for Verra to engage an approved validator to provide services in connection with the "methodology validation" per the terms and conditions set forth in the Agreement and the VCS Regulations.
Currently, the parties dynaCERT, Earthood, Verra, and dynaCERT's consultant, International Environmental Partners Limited, are engaged in completing the VCS process so that dynaCERT's carbon credits achieve Verra's Verified Carbon Standard. Jim Payne, President and CEO of dynaCERT, commented, "dynaCERT is pleased to have now reached that point where Verra has approved the engagement of Earthood to verify our application under the Verified Carbon Standard, and we thank them for this important milestone."
In terms of personnel, the Canadians were able to further strengthen their team by appointing Jeff Zajac as a director of the Company. Zajac is the founder and CEO of Facial Stats Ai, a company specializing in neural networks, computer vision and artificial intelligence in the Canadian, US, Mexican and Central American markets.
The fact is, should the final positive decision come from Verra and the "Verra Verified Carbon Standard seal" be handed to dynaCERT, the recent interim highs should be history. Operationally, the decision would also attract more prominent customers, so the roll-out of the promising technologies could virtually be a no-brainer.
Plug Power - Beware of dilution
History repeats itself. What has just been hailed as a sensational deal between Plug Power and Amazon has happened many times in the past and is a clever financing strategy by the go-getting Plug Power CEO Andy Marsh.
In 2017, Plug Power sold warrants to Amazon that gave the online giant the right to purchase up to 23%, or about 55,286,696 shares, of the Company's common stock tied to various events. The deal was struck partly to get Amazon to invest up to USD 600 million in Plug Power to make the warrants valid. Last year, these warrants were declared vested, and Amazon was thus able to dispose of them freely. The exercise price was USD 6.00. Since Amazon does not appear in the shareholder structure, the pieces were sold in 2021 at a significant profit. Plug Power closed a similar deal for the same number with Walmart in July 2017.
For Plug Power, the current deal with Amazon represents a growth opportunity and could help the Company reach its revenue target of USD 3 billion in 2025. However, the exercise of the warrants will be significantly dilutive. So, once again, the remaining shareholders are footing the bill. Remember, Plug Power is not a stock market success story. Since the IPO in 1999, the share has lost 85% of its value.
The agreement between Germany and Canada represents a quantum leap in the hydrogen industry. First Hydrogen could benefit by expanding into Canada. dynaCERT should rush to new shores once receiving a favourable ruling from Verra. Caution is advised for Plug Power despite the Amazon deal.
Conflict of interest
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