If you want to diversify your portfolio with energy stocks, how do you know which is the best investment? With the world moving away from the use of fossil fuels for transportation, energy and industry, oil and coal are no longer the safe investments they used to be.
Looking to the future, there are a few alternatives to fossil fuels, but how do you predict which will be the best investment (see also our guide to investing with $500) .
Maybe some like lithium look like good investments but have downsides such as toxic exposure if not extracted, transported or stored safely.
Hydrogen is the front-runner in the effort to provide clean renewable energy, so what are the best hydrogen stocks if you want to invest in the future of energy?
Plug Power
An industry leader in hydrogen fuel cell technology, Plug Power has deployed over 50,000 fuel cells globally. In North America, it has a hydrogen refueling network and plans to expand its hydrogen generation capability in the coming years.
Plug Power has been in partnership with Walmart (see also ‘How To Buy Walmart (WMT) Stock‘) since 2012, supplying the supermarket giant with hydrogen fuel cells for forklifts. It also counts Amazon, Home Depot and Carrefour among its customers.
Looking to the future of electric vehicles, operations in Europe include a partnership with carmaker Renault. While in Asia, a deal with South Korean electric vehicle manufacturer Edison Motors sees Plug Power supplying hydrogen fuel cells for buses.
In North America, Plug Power’s long term vision is to create a green hydrogen infrastructure, and it is planning to build new hydrogen production facilities.
The company also entered a deal with Certarus USA Ltd, a hydrogen platform, to supply 10 tons of hydrogen per day.
It owns one of the few end-to-end hydrogen ecosystems in the world, meaning it produces, liquefies, stores, transports and distributes the hydrogen. Earnings are predicted to grow 69.73% per year.
Pros:
- Pioneer in the production of hydrogen fuel cell technology
- Large hydrogen refueling network
- Long-standing partnership with Walmart
- Expanding its Asian and European markets
- Owns one of the world’s only end-to-end hydrogen ecosystems
Cons:
- Recently has been facing greater competition in the marketplace
Bloom Energy
Bloom Energy is at the forefront of innovation in the field of green hydrogen and its mission is to make affordable, reliable and clean energy.
The Bloom Energy Server is an on-site generator which uses solid oxide fuel cell technology to convert hydrogen into electricity.
This system works without combustion and is highly efficient, further reducing the environmental impact.
It can also be run on biogas or natural gas.
In 2021 Bloom revealed a new platform, the Bloom Electrolyzer which works with the same technology but with 15-45% greater efficiency than similar products on the market.
The company hopes this technology will help reduce the carbon footprint of heavy industry.
To further promote its clean energy agenda, the Bloom Electrolyzer can be partnered with solar and wind energy to provide green hydrogen. This can then be stored and turned back into electricity.
Partnerships include Samsung Heavy Industries to supply ship fuel cells and a deal with South Korea’s SK Group to supply power in a $4.5 billion agreement.
India’s largest energy conglomerate NTPC Limited adopted the Bloom Electrolyzer for the construction of its green hydrogen microgrid.
Bloom energy stock did not suffer as badly as the broader hydrogen energy market in recent times, being down 15% compared to the industry average of 19%. Earnings are forecast to grow 74.09% per year.
Pros:
- Company is at the forefront of green hydrogen innovation and technology
- Bloom Electrolyzer works without combustion & can be paired with wind and solar energy
- If adopted by heavy industries, it could help decarbonize them
- Successful partnerships in Asia and Europe
Cons:
- Shares down recently as part of broader slump in hydrogen energy
Ballard Power Systems
Ballard Power Systems has positioned itself well in the hydrogen market through innovation and partnerships. It developed a fuel cell with a proton exchange membrane that runs on hydrogen and produces zero emissions.
Other new technologies include working with ABB, a Swiss industrial giant, to develop a fuel cell that will power ships.
The company is also working with Chart Industries on a liquid hydrogen fuel cell. It has partnered with Hydrogene de France to produce hydrogen plants.
Expansion into the Asian market sees Ballard Power Systems partnered with Indian company Adani Group. Together, they will evaluate the prospect of commercializing fuel cells in India.
It has also joined forces with Tata Motors in India to produce electric buses.
Recent fossil fuel energy insecurity has focused attention on the production of renewable energy such as hydrogen fuel cells.
Ballard has benefited from this re-evaluation of the world’s sustainable access to traditional energy supplies such as natural gas and oil (see also ‘How To Invest In Oil With Little Money‘).
Pros:
- Innovative development of a proton exchange membrane fuel cell with zero emissions
- Partnership with Swiss company to produce fuel cells for ships
- Expansion into the Asian market via partnerships with Tata Motors and Adani Group
- Company can capitalize on the loss of security of traditional fossil fuel energy
Cons:
- Sales in 2021 were disappointing
Air Products & Chemicals
Air Products is a global leader in the supply of industrial gases and also in the processing technology and equipment for liquefying natural gas. It is also the world’s largest supplier of hydrogen gas and has 60 years of experience of hydrogen production.
It aims to lead in solving the world’s environmental and energy problems through clean hydrogen, carbon capture and gasification.
To achieve this dream, it has in Louisiana a $4.5 billion blue hydrogen project and a billion dollar net-zero hydrogen project in Canada.
While a joint venture with Saudi Arabia involves a $7 billion carbon-free hydrogen project which could produce 650 tons of gas every day.
The company has a $30 billion capital investment plan for the next ten years, which includes mega hydrogen production plants to further extend its lead in the global market.
Their profit margin of 19.9% for 2021 was better than the industry average of 9.1%.
Air Products and Chemicals pays a yielding quarterly dividend of 2.72% which has consistently increased over the last 40 years. Analysts predict a growth in Air Products earnings per share of 13% over the next year.
Pros:
- World’s largest supplier of merchant hydrogen
- Global leader in liquefying gas technology and equipment
- Huge investment projects in North America & Saudi Arabia
- Consistent growth over the last four decades
Cons:
- Does not deal purely in hydrogen production
Fusion Fuel Green
For those investors who want to diversify their portfolio geographically, Fusion Fuel Green could be worth a look.
As Europe leads the US in green hydrogen production, this Ireland based company seems well positioned to take advantage of modern climate policy.
The company claims that their solar-powered electrolyzers are capable of producing green hydrogen as cheaply as gray hydrogen. It has its own green hydrogen farms and sells the fuel via long term purchase agreements.
Fusion Fuel Green also sells its solar-powered electrolyzer technology to customers who wish to produce green hydrogen themselves. They plan to invest €600 million in their own projects between now and 2025.
They are collaborating with Toshiba Energy Solutions to evaluate the use of Toshiba’s
membrane electrode assemblies, which are a core component of proton exchange membrane electrolyzers.
Pros:
- Benefitting from the EU’s lead in pursuing green hydrogen energy production
- Owns its own hydrogen farms
- €600 million to be invested in its own projects till 2025
- Collaboration with Toshiba Energy Solutions to pursue technical and commercial opportunities
Cons:
- Makes less than $1 USD in revenue
Buyer’s Guide
The energy market is in the midst of a large transition away from fossil fuels and toward clean and renewable sources of energy. While there will be losers in this changeover, there will inevitably also be winners.
To find a hydrogen stock to invest in, you will need to look at certain aspects of the company and do some research into their key metrics. Below are a few factors to consider.
Innovation & Development
Innovation in the hydrogen sector has pushed some companies to the forefront of the market. Plug Power has been a pioneer in hydrogen fuel cell technology and created the first viable market for fuel cells powered by hydrogen.
Bloom Energy is also pushing the boundaries of innovation and development in the hydrogen fuel cell industry in its effort to make reliable and clean energy which is also affordable.
The Bloom Electrolyzer built on the success of the Bloom Energy Server but increased the efficiency, making it up to 45% more efficient than other electrolyzers on the market.
A fuel cell developed by Ballard Power Systems features a proton exchange membrane that runs on hydrogen and produces zero emissions.
It also collaborated with Chart Industries to develop a liquid hydrogen fuel cell and worked with a Swiss company to make ship fuel cells.
Air Products and Chemicals, has a $4.5 billion blue hydrogen project in Louisiana. Blue hydrogen is when natural gas is split into hydrogen and carbon dioxide. This is done either by Steam Methane Reforming (SMR) or Auto Thermal Reforming (ATR).
The carbon dioxide is captured and stored underground to mitigate any negative effects on the environment. This is opposed to gray hydrogen, which is produced in the same way, but the carbon dioxide is released into the atmosphere.
Fusion Fuel Green claims that they can produce green hydrogen as cheaply as gray hydrogen through their solar-powered electrolyzers.
Partnerships
Plug Power has a partnership with Renault, the French car manufacturer, and with Edison Motors, based in South Korea. In the US, it has teamed up with hydrogen and natural gas platform Certarus USA Ltd.
In India, NTPC Limited, the country’s largest energy conglomerate, used Bloom Energy’s Electrolyzer for the construction of its green hydrogen microgrid. The company also agreed a deal with South Korea’s SK Group to supply power in a $4.5 billion agreement.
Ballard Power Systems has also formed alliances with companies based in India. Mostly notably with Tata Motors to produce electric buses, but also with the Adani Group. Ballard and Adani will evaluate the commercialization of hydrogen fuel cells in India.
The company also worked with the Swiss industrial giant ABB to develop hydrogen fuel cells that could be used to power ships.
Air Products & Chemicals entered into a partnership with Saudi Arabia in a joint venture to produce 650 tons of gas every day as part of a $7 billion carbon-free hydrogen project.
It has recently opened a state of the art refueling station in Shandong, China.
Fusion Fuel Green entered into a collaboration with Toshiba Energy Solutions in order to evaluate Toshiba’s membrane electrode assemblies. These are a core component of proton exchange membrane electrolyzers used in hydrogen production.
Market Expansion
Plug Power intends to expand its hydrogen generation capability in the future, which includes building new hydrogen production facilities. This is part of its long term vision to create a green hydrogen infrastructure.
The company already owns one of the few end-to-end hydrogen ecosystems in the world. In effect, this means it produces, liquefies, stores, transports and distributes the hydrogen.
Bloom Energy hopes that its Electrolyzer will be adopted by heavy industries, e.g., cement, chemical or steel as it reduces the amount of carbon dioxide released into the atmosphere. The decarbonization of heavy industries would be a huge win for the hydrogen industry.
Air Products and Chemicals is already the world’s largest supplier of merchant hydrogen gas. It also has 60 years of experience in hydrogen production. Neither of these preclude the company from having expansion plans, which it certainly does.
It wants to solve the environmental and energy problems the world is facing and intends to do this through clean hydrogen, carbon capture and gasification.
Hence, its billion dollar net-zero hydrogen project in Canada and $4.5 billion blue hydrogen project in Louisiana.
Fusion Fuel Green is well-placed to expand its hydrogen production in Europe, which is fully supporting the transition from fossil fuel to clean renewable energy.
Combined with their commitment to invest €600 million in further projects, expansion is highly likely, given that they have their own green hydrogen farms and claim that their solar-powered electrolyzers can produce green hydrogen as cheaply as gray hydrogen.
Frequently Asked Questions
Is Hydrogen Stock A Good Investment?
Hydrogen is one of the most promising alternatives to fossil fuels and has huge potential. It has the capacity to provide a net-zero world in terms of carbon dioxide by replacing natural gas and decarbonizing heavy industry.
The fact that it is emission-free is a huge draw for investors as governments all over the world push for a transition away from fossil fuel energy and toward clean, renewable energy.
Although green hydrogen is still relatively expensive to produce, the costs are coming down and this trend will continue as more research and development is applied to hydrogen production.
There are already companies such as Fusion Fuel Green, who claim their solar-powered electrolyzers are capable of producing green hydrogen for the same cost as gray hydrogen.
What Are The Challenges For Hydrogen?
There are a few challenges that need to be overcome before hydrogen takes over as the fuel of choice in the long term.
The production costs of hydrogen from renewable sources which results in low carbon or near zero emissions are relatively high. Other less expensive methods of hydrogen production such as by fossil fuel feeds produce high amounts of CO2.
Producing green hydrogen through electrolysis which produces low or zero emissions is energy intensive and therefore expensive. The production costs of electrolysis technology are also high.
Gray hydrogen is by far the most widely produced globally, but there are associated carbon emissions. Blue hydrogen production does contain carbon emissions, but these are either captured or utilized. However, storage then becomes an issue and an expense.
The future of clean energy most likely lies at the feet of hydrogen fuel cells. In and of themselves, they contribute no emissions, but the production of hydrogen to fuel the cells still has a way to go before it can be considered clean.
Green hydrogen is expensive to produce so although the processes are there to make a net-zero world, the price is still high economically. However, there is hope that the use of solar and wind energy will make green hydrogen more affordable in the future.
As an investment, hydrogen is a good bet and these are among the best companies in the production of hydrogen and its use as a fuel for clean energy. The hardest part may be which one to choose to add to your portfolio,
We hope this guide has helped you choose the best hydrogen stock.
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