August 22, 2022 • Paul Rodden • Season: 2022 • Episode: 141
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In episode 141, Forbes talks hydrogen stocks, and green hydrogen is getting more and more popular across the globe. All of this on today’s hydrogen podcast.
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Forbes talks hydrogen stocks, and green hydrogen is getting more and more popular across the globe. All of this on today’s hydrogen podcast.
So the big questions in the energy industry today are, how is hydrogen the primary driving force behind the evolution of energy? Where is capital being deployed for hydrogen projects globally? And where are the best investment opportunities for early adopters who recognize the importance of hydrogen? I will address the critical issues and give you the information you need to deploy capital. Those are the questions that will unlock the potential of hydrogen, and this podcast will give you the answers. My name is Paul Rodden, and welcome to the hydrogen podcast.
In an article from forbes.com, the Trefis Team and Great Speculations contribute to write what’s driving the rally and hydrogen stocks. The team of hydrogen economy stocks, which includes the stocks of us listed companies that sell hydrogen fuel cells related renewable energy equipment and supply hydrogen gas has seen a solid rally in recent months rising by almost 40% since their last update in late June. The theme also remains up by about 11% year to date outperforming the broader s&p 500 which remains down by roughly 11%. Over the same period. There are multiple factors driving the themes recent outperformance firstly, the inflation Reduction Act which carries about $370 billion in subsidies and credits for clean energy investment in the United States was cleared by the House last week and sent to the President for signing, which now has been signed. This is the largest ever investment to fight climate change. And this could result in as much as $1.2 trillion in private investments into the renewable space by 2035.
This According to McKinsey. Moreover, the Russian invasion of Ukraine and other geopolitical issues have also resulted in a surge in energy prices. The elevated energy prices and uncertainty relating to gas supplies are serving as a wake up call for energy importing countries, particularly in Europe, potentially hastening the process of shifting to renewable energy and alternative energy sources such as hydrogen. Moreover, there might be macro factors at play as well. The US GDP has contracted over the last two quarters and US inflation has cooled off a bit to about eight and a half percent for July. This could cause the Federal Reserve to go a bit easier on its rate hikes, potentially helping high growth futuristic themes such as hydrogen. However, there are risks as well. Although hydrogen holds long term potential in decarbonisation, and reducing the dependence on hydrocarbons, particularly for heavier applications such as trucking and manufacturing. It remains a futuristic bet, given the high costs involved presently and lack of scale. Within their theme though, Bloom Energy, a company that produces solid oxide fuel cells has been the best performer with its stock rising about 37% year to date.
On the other side, fuel cell energy, which is a company that designs manufactures and operates fuel cell power plants has been the worst performer with their stock down by roughly 12% to date. Okay, so some really good insight onto how certain stocks are performing in the hydrogen market. But what’s timely about this article is what they had to mention about Bloom Energy. And most recently, on August 19, they released a press release that they had just announced a closing an underwritten public offering of 14,950,000 shares of Class A common stock at a public offering price of $26 per share. And so all in the gross proceeds from the offering before deducting underwriting discounts and commissions and other offering expenses payable by Bloom Energy were $388.7 million. Now that offering price of $26 was a bit inflated from the share price last week, which hovered at around 2550. But that being said, over the last six months, their share price has doubled, bottoming out in May at $12.13 per share. Next in an article from oil price.com Felicity Bradstock writes, green hydrogen is gaining traction across the globe. Green hydrogen operations are expanding even further as government’s pumped millions into the development of the sector. While the rise of green hydrogen production across Europe has been well documented. Some European countries are investing even more heavily in the industry, as other projects are popping up more in unexpected regions such as Latin America and Africa.
With several governments and major energy companies backing green hydrogen development, it is likely to become a major renewable energy source worldwide. Green hydrogen has been hailed as a major new clean energy source with the potential to replace natural gas as well as being used in hydrogen vehicles in competition with electric batteries. Although the cost of green hydrogen production is much higher than alternative renewable energies, experts expect greater investment in research and development as well as the expansion of hydrogen plants, which will make technology much cheaper and more efficient over time, much in the same way as seen in the solar and wind power sectors. Green hydrogen is produced using renewable electricity to power an electrolyzer. This splits water into hydrogen and oxygen. The gas is then burned to produce power and emits only water vapor and warm air making it carbon free.
This contrasts with grey hydrogen production, which is powered by natural gas. Europe and the Middle East have already significantly expanded the green hydrogen market positions following major investment in the industry. The two regions are battling for the top spot as global demand for the renewable energy sources increases. In Europe we’re seeing even more investment in the sector than initially expected was Spain announcing a 50 million euro green hydrogen plant in Porto Yano and the UK promoting 150 million euro plant in the port of Felixstowe. This month. ScottishPower announced plans to construct a major green hydrogen facility in Felixstowe in the south of England to power trains, trucks and ships. The plant is expected to produce 100 megawatts of energy to power approximately 1300 Hydrogen trucks starting in 2026. The project comes as petrol and diesel prices in the UK are soaring, leading to an increased demand for alternatives. The company expects to receive financial support from the UK Net Zero hydrogen fund for the project, which could cost anywhere between 122 and $183 million.
But now projects are cropping up in more unexpected places. countries across both Africa and Latin America have announced investments in green hydrogen this year, as emerging powers work to achieve their position in global hydrogen markets. With a global hydrogen market expected to achieve $1 trillion by 2050. Everyone wants a piece of that action. One unexpected place that it is developing its green hydrogen capabilities is Brazil. This week, the National Institute of clean energies or AI N e L in Brazil, announced it was establishing a new green hydrogen Secretariat or S H V. Now the head of the s HV Luis filho hopes to support Brazil’s low cost Clean Energy sector through the development of the country’s green hydrogen operations. Earlier this year, the Brazilian chemical plant uni gel commenced construction of the country’s first green hydrogen plant and behavior in northeastern Brazil at a cost of $120 million.
It’s expected to be the world’s largest integrated green hydrogen and ammonia plant upon completion. Uni gel hopes to achieve an output of 10,000 tonnes a year of green hydrogen and 60,000 tonnes a year of green ammonia with operations starting in 2023. Another South American giant looking to break into the renewable hydrogen market is Chile. The country is already well known for its green energy production and making it well suited to green hydrogen production. The government has already announced a goal of five gigawatts of installed electrolysis capacity by 2025, and aims to produce the most cost efficient green hydrogen by the end of the decade. As demand for green hydrogen begins to increase in Europe and Asia. It is encouraging several Latin American countries to start developing their hydrogen capabilities to get ahead of the competition in the region. as the industry grows, as well as Latin America interest in the green hydrogen industry is also rising across the African region. Last year, the Namibian government announced an aim to export 3 million tonnes a year of green hydrogen to Europe. With investment coming from post pandemic economic recovery scheme. Namibia is helping to produce some of the world’s cheapest green hydrogen at $1.55 to $2.07 per kilogram. However, Namibia’s green hydrogen industry is still in its nascent stage with limited electricity access for much of the country’s population.
But the significant potential to develop Namibia is wind and solar resources, coupled with large areas of uninhabited state owned land make the country highly attractive for the development of a major renewable energy sector, which will likely include green hydrogen, as green energy operations continue to expand across regions with the existing production capabilities. We are seeing more new developments appear and unexpected parts of the world. Several Latin American and African countries have shown their interest in the development of their green hydrogen industries, as demand for renewable energy sources continue to expand across Europe and Asia. Okay, so an interesting article from Felicity and oil price.com. Now, I’ve received several emails from people stating that there’s too much coverage about green hydrogen. And really, there’s two reasons for that one, that’s just where the news is. And two, that’s where the investments are going. But there’s also something else I’m expecting to happen in the next few years. And that is a redefinition of what green hydrogen really is. So that instead of narrowing the focus of green hydrogen to just the electrolysis of water through renewable energy, we instead think of green hydrogen as anything with a low no or negative carbon impact number because then that really is what green or clean energy and hydrogen should be thought of. And then that opens up the door for many more technologies to come in and take advantage of these government subsidies that are coming out.
And so with keeping that in mind about redefining what green hydrogen is, I want to go back and talk about the Namibia part of this article. Now it’s true, Namibia has great access to a lot of sun and a lot of wind. But clean water is very scarce. And I’m not too sure that electrolyzing water out there is the best use of that renewable energy. But what Namibia does have is vast quantities of hydrocarbon making that country primed for methane pyrolysis.
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