Paul Rodden • Season: 2024 • Episode: 370
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Welcome to The Hydrogen Podcast!
Episode 370, In this episode, Paul explores Hazer Group’s groundbreaking hydrogen and graphite production process, discussing its potential to revolutionize the industry. He also examines Germany’s hydrogen ambitions, its challenges in private investment, and its competition with Spain and the Netherlands for European leadership in hydrogen.
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Transcript:
Has the Hazer group unlocked the holy grail for hydrogen production, and will Germany overcome its private sector investment challenges to remain the European leader in hydrogen? I’ll go over these topics to give my thoughts 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.
First up today in an article in stockhead, Eddy Sunarto writes broker upgrade Hazers hydrogen and graphite breakthroughs drive valuation higher. Eddie writes Investment advisory and stockbroking firm Euroz Hartley has maintained its Speculative Buy recommendation for Hazer Group (ASX:HZR) , with a price target of $0.57 per share (versus current price of $0.40).
The analysts at Euroz noted that there are multiple growth opportunities for HZR.
The company has recently made significant progress, particularly with its Commercial Demonstration Plant (CDP).
The CDP is a facility designed to showcase and scale up Hazer’s proprietary technology for producing hydrogen and graphite from natural gas using a low-cost, low-emission process. The plant is intended to demonstrate the commercial viability of Hazer’s process.
Hazer has completed the CDP test program, running for an impressive 450 hours with 99.6% uptime, which represents the longest successful run to date. This achievement marks a crucial milestone, Euroz said, as it demonstrates the viability of Hazer’s patented hydrogen and graphite production technology.
Also Hazer announced a $5.1 million R&D tax refund, which supplements the company’s cash position of $8.4 million as of the end of September. This cash balance provides Hazer with more financial flexibility as it continues to advance its projects.
In a note from Euros, Investment advisory and stockbroking firm Euroz Hartley has maintained its Speculative Buy recommendation for Hazer Group (ASX:HZR) , with a price target of $0.57 per share (versus current price of $0.40).
The analysts at Euroz noted that there are multiple growth opportunities for HZR.
The company has recently made significant progress, particularly with its Commercial Demonstration Plant (CDP).
The CDP is a facility designed to showcase and scale up Hazer’s proprietary technology for producing hydrogen and graphite from natural gas using a low-cost, low-emission process. The plant is intended to demonstrate the commercial viability of Hazer’s process.
Hazer has completed the CDP test program, running for an impressive 450 hours with 99.6% uptime, which represents the longest successful run to date. This achievement marks a crucial milestone, Euroz said, as it demonstrates the viability of Hazer’s patented hydrogen and graphite production technology.
Also Hazer announced a $5.1 million R&D tax refund, which supplements the company’s cash position of $8.4 million as of the end of September. This cash balance provides Hazer with more financial flexibility as it continues to advance its projects.
Another crucial development for HZR is the progress made on its graphite product, which is produced in significant quantities as a byproduct of its hydrogen production process.
As Euroz pointed out, “Almost four times as much graphite is produced compared to hydrogen as part of the Hazer process.”
This is important because the graphite could become a substantial revenue stream for the company, particularly as Hazer moves towards commercialisation.
Hazer’s recent efforts to advance the graphite product include high-priority applications that require little to no post-treatment, which could result in higher margins.
Euroz highlighted the potential for higher-than-expected prices, noting that “The pricing for certain high-priority applications could be as much as 50% above our previous estimate of $300 per tonne.”
If realised, this would significantly boost the overall value of HZR’s projects, said Euroz.
Euroz’s valuation of Hazer at $0.57 per share is based on the assumption that Hazer will license its technology for ten hydrogen plants, but the valuation applies a 75% risk discount, reflecting the uncertainty of the long-term plan.
The analyst also notes that, should the graphite product achieve a higher realised price, the company could see a significant uplift in value.
“This could add ~$200 million of additional value for a plant owner or ~$7 million in royalties, further demonstrating the materiality of a higher realised pricing for the graphite product,” said Euroz.
Looking ahead, Euroz believes Hazer has several key catalysts that could drive its stock price higher.
The company is aiming for the installation of a next-generation reactor in 2025, which would further demonstrate the commercial viability of its technology.
There are also important upcoming events, such as potential licensing agreements for its Canadian project by the end of 2024, and progress on its expansion in markets like Japan, France, and Korea.
“The Canada project license agreement (~end-CY24) and FID (target CY25) could significantly advance HZR’s pipeline of commercial opportunities.”
However, as with any speculative stock, there are risks, particularly around the execution of its long-term plans, added the broker.
For instance, the commercial rollout of HZR’s technology is still in the early stages, and it may take time for the company to establish a solid track record.
Okay, so now, why is this hazer process such a big deal? Well, unlike traditional methods like Steam methane reforming, which are going to admit C02 The hazer process uses bio methane and iron ore as its key inputs. Now with the iron ore as the catalyst, this is what really breaks down their biomethane in their reactor and bonds with the carbon in the methane creating the graphite. So what does that mean for emissions? Well, traditional hydrogen production methods rely heavily on hydrocarbons, but they can emit up to 10 tons of CO two per ton of hydrogen.
But this hazer process is different. So by sequestering carbon as solid graphite, instead of releasing it as CO2, the hazer process avoids most emissions altogether. And since it uses biomethane, which is a renewable natural gas, the process can be even more carbon neutral or even carbon negative. If it’s cleaning up biogas, it would have otherwise been vented as methane into the atmosphere, and let’s not overlook the graphite that’s also being produced as a byproduct.
It really is a valuable resource, and it’s used in batteries or industrial lubricants, and you can also use it in advanced materials like composites and electrodes. You can also refine it to create graphene and other highly advanced products like carbon fiber and carbon nanotubes. Now the hazer group is scaling its technology with its commercial demonstration plant in Western Australia. This facility is proof of concept to show how the hazer process works on an industrial scale.
Now, if it’s successful, it could pave the way for widespread adoption of this technology globally, especially in regions with abundant biogas resources. The process is particularly appealing for industries looking to decarbonize while adding value. Imagine turning waste gasses from landfills or wastewater plants into clean hydrogen and sellable graphite.
Next in an article in Reuters, Germany’s green hydrogen ramp up reliant on public money. Eon says The development of a green hydrogen market in Germany still depends to a large extent on public spending, utility E.ON on Friday, The share of projects under construction or equipped with final investment decisions has risen to 9% from 3% of the 2030 target of 11.3 gigawatts (GW) of electrolysis capacity, E.ON said.
But the only factor speeding the process was support pledged under government schemes, it said in results of research it conducted with the EWI energy research institute.
Germany wants to build up electrolysis capacity to produce its own green hydrogen from wind and solar power to clean up the carbon footprint of industries such as steelmaking and cement and replace fossil fuels.
E.ON said rigid or missing hydrogen regulation means would-be investors lack visibility over the new value chain.
High electricity prices also make future hydrogen costs look prohibitively expensive, it added.
If Germany does not manage the move to hydrogen, its industry may miss chances to compete successfully with the likes of the United States and China in global markets, Domestic electrolysis capacity has risen around 68% from the spring to 111 megawatts (MW), the six-monthly research showed.
E.ON also said that the Berlin government’s targets for sufficient import facilities may be achievable.
The government expects hydrogen demand of 95-130 terawatt hours (TWh) per year by 2030, of which 50%-70% will be imported.
Plans for a core hydrogen pipeline grid, complementing those for seaborne imports, have attracted a 24 billion euro ($25.31 billion) loan from state lender KfW
And a quote from eon, the run up of hydrogen economy remains weak, also saying that only the support pledges under the important projects of common European interest are boosting increases in production capacity And in investment decisions.
Okay, so will Germany lead Europe in hydrogen? And will it outpace its competitors, like Spain, the Netherlands and Norway? Well, Germany was one of the first countries to launch its national hydrogen strategy, and they did that back in 2020 when they committed 9 billion euros to ramp up their hydrogen development. 7 billion of that was earmarked for domestic hydrogen production, which they aimed for 10 gigawatts of green hydrogen capacity by 20, 32, billion went to strengthen international partnerships, particularly with countries like Morocco, Saudi Arabia and Chile, which have the renewable energy resources to produce green hydrogen at a lower cost. Now, Germany sees hydrogen as the backbone of its plan to decarbonize industries like steel, chemicals and transportation, and companies like Tyson Krupp and Siemens energy are at the forefront of hydrogen innovation, from electrolyzers to large scale industrial applications. Now, Germany already has the largest hydrogen pipeline network in Europe and is actively expanding it. Hydrogen refueling stations are popping up faster in Germany than in most other European countries, making it a leader in hydrogen powered mobility. The German government is also playing a key role in the European hydrogen backbone project, a plan to connect hydrogen infrastructure across the continent, and this cross border network could help Germany import and export hydrogen, strengthening its leadership position. But. About its competitors? Well, let’s look at the Netherlands. It has major ports like Rotterdam and strong offshore wind energy capacity. The Netherlands is a natural hub for hydrogen imports and distribution. There’s also Spain, with their abundant solar and wind energy resources. They make it a clear cost effective producer of green hydrogen, and the country is gearing up for large scale exports. There’s also Norway and Denmark. Both countries benefit from vast renewable energy resources and are positioning themselves as exporters of green hydrogen. But as this article pointed out, there are challenges remaining, including the heavy risk factor being tied with these hydrogen projects. There’s also the renewable energy constraint, meaning Germany doesn’t have enough domestic renewable energy to meet its hydrogen ambitions, so they have to rely heavily on imports, and that’s going to create potential geopolitical vulnerabilities. And there’s also the cost of green hydrogen. Producing green hydrogen is still expensive, and achieving cost parity with hydrocarbons will require massive scaling and innovation. There’s also coordination across Europe. Germany’s leadership hinges on its ability to collaborate effectively with other European countries. This is overlapping projects, or lack of coordination could slow down that progress. Now, even with all of those challenges, all signs still point to Germany leading Europe’s hydrogen expansion. But if they’re not able to overcome a lot of these challenges, countries like Spain or the Netherlands might overtake it with lower costs and faster execution.
All right, that’s it for me, everyone. If you have a second, I would really appreciate it. If you could leave a good review on whatever platform it is that you listen to Apple podcasts, Spotify, Google, YouTube, whatever it is, that would be a tremendous help to the show. And as always, if you ever have any feedback, you’re welcome to email me directly at info@thehydrogenpodcast.com. So until next time, keep your eyes up and honor one another. Hey, this is Paul. I hope you liked this podcast. If you did and want to hear more. I’d appreciate it if you would either subscribe to this channel on YouTube, or connect with your favorite platform through my website at www.thehydrogenpodcast.com. Thanks for listening. I very much appreciate it. Have a great day.
