Free Issue No. 11 of 02.06.2021
The energy and mobility merry-go-round is turning at high speed towards the future. The move away from fossil fuels towards renewable sources of electricity is omnipresent and definitely necessary, fundamentally in favour of nature and regardless of whether we can actually influence climate change. The trend for the electric car seems crystal clear! Definitely clear and indispensable is the way to "green" energy in the form of wind power and solar power. The future promises hope, investment and excitement. As is well known, hydrogen also plays a corresponding role in the whole dynamic. However, it is still controversial where ultimately "the egg of Columbus" is to be found. It will certainly be a combination of all feasible and profitable combinations.
Especially on the subject of hydrogen there are some discrepancies, not so much in the principles of scientific knowledge, but rather in feasibility or in terms of areas of application. Some say so, others say so. We would like to shed some light on some of these technical elements here, and at the same time open up the spectrum to investment business again somewhat; following our recent, very successful transaction with the shares of Ballard Power Systems (performance: +107% in two months). Hydrogen is the most abundant chemical element in the sun as well as the large gas planets. The entire universe is thought to contain over 90% hydrogen. This was already discovered in 1766 by the English chemist and physicist Henry Cavendish, although oxyhydrogen was already produced in a similar way in 1620 and 1670. From history to the present, the element H2 today often defines itself in different "colors":
- Black hydrogen, derived from coal and lignite, is fortunately rarely used today. It is the most harmful version (USD 1-2/kg).
- The grey hydrogen is produced by a chemical reaction from natural gas, currently the most common process, but with high CO2 emissions (USD 1-3/kg).
- Blue hydrogen is produced in the same way as grey hydrogen, but the CO2 produced is not released into the atmosphere, it is filtered and stored (USD 1.5-3/kg).
- The green hydrogen, the ultimate end goal in H2 generation, is produced by electrolysis from water, and only by using green power (hydro, wind or solar). It produces "net zero" greenhouse gases, but in terms of production costs we are still at the highest levels (USD 3-7.5/kg).
Summa summarum, hydrogen technology is also on the rise, but it would not be the first "hype" here, as science has been talking about a breakthrough for decades. We believe that this will now definitely happen, the technical foundations are too far advanced. However, opinions are still divided primarily on the areas of application. At present, it is probably an illusion to assume that hydrogen technology will soon become established in passenger cars. The power consumption alone speaks against it. According to experts, an H2 car consumes twice to three times as much electricity as an electric car for the same distance. Further problems follow on the heels of this: transport to the H2 filling stations must be carried out by trucks designed for this purpose, filling stations are very expensive and the filling itself is not without problems. In addition, the maintenance and purchase costs of an H2 car are also higher, fuel cells combine a fairly high level of complexity, which tends to result in higher bills for the garage owner. For the reasons mentioned, it is probably no coincidence that larger car manufacturers have already abandoned the H2 hope. The question remains whether electricity, batteries and raw materials (e.g. lithium) will be sufficient when there are only electric cars on the roads. We claim "no", despite all "prophecies of doom" alternatives to the electric car will be needed and maybe in the future hydrogen will be used for passenger cars. One fact is clear: Hydrogen will play a fundamental role in other areas for the time being, e.g. in industry and commercial vehicles (trucks, forklifts, railways, large "sledges" on the water and in the air). Not to forget the exorbitant potential in real estate; in Japan, for example, over 400,000 households are already equipped with fuel cells. This means that "green" assets with a hydrogen connection will also remain in demand. But choosing the "right" stock is often a torture...
Should one invest in PLASTIC OMNIUM, the French automotive supplier and hydrogen tank manufacturer? Does one rather invest in railway companies like STADLER RAIL or ALSTOM, where the first "hydrogen trains" are already planned or in operation? Would AIR PRODUCTS or LINDE be the investment solution, the former from France as the world's largest hydrogen supplier (mainly grey H2) or rather the German counterpart, where even hydrogen filling stations are already being developed? Or is the focus on the "old established" companies of the first hour, decorated with great know-how, like the US specialist BALLARD POWER SYSTEMS, maybe a POWERCELL from Sweden, a NEL from Norway or the rather more speculative PLUG POWER, which wants to cover the whole hydrogen value chain? Then there would be, among many others, the interesting Chinese WEICHEI POWER or ITM POWER from the "Brexit country". You see, among other things, that many names are immediately already enriched with the designation "Power". Unfortunately, most of the smaller, specific hydrogen companies still have one thing in common... they still don't earn any money with their exemplary and often highly developed technologies or products. So, does the growth story continue and are earnings just a matter of time, or is it shaping up to be more of a "shot in the dark"?
We believe that it is possible to invest in hydrogen in a way that suits your investment strategy and risk profile. For the speculative investor we prefer BALLARD POWER SYSTEMS at prices of approx. USD 17 or POWERCELL at prices of approx. EUR 21, perhaps WEICHEI POWER. For balanced portfolios, we recommend quality stocks such as LINDE, AIR PRODUCTS as well as SIEMENS ENERGY, which we have already recommended and which is increasingly focusing on hydrogen. Read our detailed recommendation on page 8.
