Hydrogen Fuel Cell Stocks

Hydrogen Fuel Cell Stocks

8 min read

Are you looking for the best hydrogen fuel cell stocks to trade? Over the past year, there’s been an increase in hydrogen fuel cell technology investments for heavy machinery. Hydrogen is also gaining traction in the production of steel and chemicals. And the aviation industry also sees it as a potential fuel. As global warming gains speed, dissatisfaction with non renewable energy sources also increases. As a result, increasing the demand for clean energy sources. There’s also significant pressure for renewable energy sources from socially aware investors.

Chart by TradingView.

BLDPBallard Power Systems
BEBloom Energy Corp
PLUGPlug Power

A fuel cell is a device that generates electricity through an electrochemical reaction. These cells are combined to generate electricity, heat, and water. Fuel cells have evolved and upgraded themselves to provide a plethora of services; ranging from providing power to homes to moving massive vehicles like forklifts etc.

A typical fuel cell operates by passing hydrogen through the anode of a cell and oxygen through a cathode. At the anode side, a catalyst splits the hydrogen molecules into electrons and protons. Then the protons pass through the porous electrolyte membrane.

And while the electrons pass through the circuit, they generate an electric current and excess heat. The only byproduct of a fuel cell is electricity, heat, and water. Because fuel cells create energy via chemistry, they can achieve much higher efficiencies than conventional energy production methods.

Why Are Fuel Cells So Important?

In 2018, the European Union initiated its attempts to promote hydrogen as a viable fuel. It envisioned that 14% of Europe’s energy could come from hydrogen by 2050.

The European Union is also pushed towards renewable energy as the EU alone spends more than $250 billion on fossil fuel imports. The union, therefore, is more inclined towards developing this fuel alternative and create local jobs.

Hydrogen offers several benefits making it a promising fuel for meeting global energy needs. As a fuel hydrogen has been around the world for decades. And therefore the falling costs of renewable energy generation have also made the possibility of green energy real.

The growth of the electric vehicle market has also served as a growth catalyst for hydrogen fuel cell stocks. The fuel cell electric vehicle market is expected to reach a market value of $15 billion by 2027; with a CAGR of 38% from 2020 through 2027. There’s also a huge market space for cars and electric vehicles in the US, Europe, and Asia. And the place also has a huge space for growth.

The United States alone have around 23,000 fuel cell-powered operational forklifts. And the US also has a growing trend of fuel buses in states like California, Illinois, Michigan, and others. The UK has also gone ahead to launch its green grants for its homeowners. The government’s initiative will help guide more people towards the climate change crisis in the UK.

The fuel-cell-powered car, popularly known as Mira, has gained much popularity also. As a result, other leading companies have also started to introduce their hydrogen fuel cell vehicles in the market; including general motors, BMW, Groupe Renaut, KIA Motors, among many others.

Best Hydrogen Fuel Cell Stocks

Three years ago, the global hydrogen market was worth 0.25 billion. The market is now expected to reach 0.38 billion by 2023 with a compound annual growth rate of 10%. The hydrogen fuel cell industry could be the next billion-dollar industry.

In fact, that could tremendously benefit investors who leverage its current growth. Therefore, investors need to choose the hydrogen company they invest in very carefully. Some companies have led the way with their good stocks.

Ballard Power Systems (BLDP)

Ballard power systems have grown to become a leading company in the energy sector. And the company has also recently been able to power more than 30 kilometers (18.5) million miles of commercial and medium-duty vehicle use on roads worldwide.

The stock price after this announcement tripled. Which sparked investor attention. The general perspective is that Ballard power systems are a safe buy, and the stock price is projected to increase even more.

Of the 816 hedge funds tracked by Insider Monkey, 20 of them held stakes in Ballard power at the end of the third quarter.

Bloom Energy Corp (BE)

Bloom Energy Corp is a big player in the energy industry. The company’s recent market capitalization was at $4.57 billion. In fact, the stock itself experienced growth of around 245%. Bloom Energy is a diversified corporation. Not only do they develop hydrogen fuel cells that run on only hydrogen gas as fuel, but they also work on manufacturing and selling a solid oxide fuel generator known as the bloom energy server.

Solid oxide fuel generators use natural gas. However, the process of deriving energy is through the electromagnetic process and not through combustion. The company’s stock price underwent a noticeable increase after their announcement that the hydrogen fuel cell market can be a viable energy source.

ITM Power Plc (ITMPF)

ITM power focuses itself on the design and also towards the production of hydrogen energy solutions. ITMPF promises itself to be a profitable stock on both a short-term and long-term basis. In March 2020, the stock experienced some cratering as a fallout of the COVID-19 market reaction.

Plug Power (PLUG)

New York-based plug power is known to be the biggest player in the hydrogen fuel cell industry. The company is engaged in making hydrogen fuel cell systems that replace conventional batteries in cars.

Plug Power shares have also seen a phenomenal rally in their share price. And the company has also been able to secure a memorandum of understanding to help develop, build, and market electric fuel cell light commercial vehicles.

What Is The Future Outlook For Hydrogen Fuel Cells?

Recently, oil stocks and auto companies have also started teaming up with fuel cell energy stocks like Ballard power systems and Plug Power. Chevron and Toyota recently announced that they’re teaming up to build hydrogen cell infrastructure.

In 2020, Airbus announced that it was looking at concepts for hydrogen-powered aircraft and that the aircraft manufacturer plans to bring a similar aircraft into existence by 2025.

Nikola (NKLA) also builds both battery and hydrogen-powered semi-trucks; the company also claims that its fuel cells can start at lower temperatures than batteries.

Companies like Quantum scapes are working on creating solid-state batteries with faster charging times and longer rates. Apple’s investigating options to use hydrogen fuel cells in mobile devices as an alternative to conventional battery charging technologies for longer battery durations.

One of the reasons why fuel cell stocks have risen to fame over the last couple of years is the steep drop in wind and solar power costs. These renewable energy forms help create the most desirable form of hydrogen; providing fuel cell companies directly. As technology becomes cheaper, greater economies of scale are achieved.

Green Energy

Oilfield supplier Baker Huges (BHI) joined plug power and chart industries to establish a private fund that provides capital for large-scale, clean hydrogen infrastructure projects.

Saudi Aramco, the world’s largest oil company, has massive oil reserves. However, the company’s still making waves in the hydrogen space. Along with Saudi Aramco, Royal Dutch Shell, Norway’s Equinor, and BP have all announced hydrogen initiatives.

There’s also been large-scale governmental support for the development of greener energy. The British government announced a $4.2 billion plan in March to help deploy 4000 electric or hydrogen-fueled busses. Germany and New Zealand are also looking towards hydrogen fuel cell development.

The Biden administration in the US has introduced a 2.2 trillion dollar infrastructure package. One that seeks a staggering $15 billion for research priorities that include carbon capture and hydrogen.

Data centers prefer hydrogen fuel cell technology. It’s also the top choice for major technology companies data centers because of the need for data centers to have an uninterrupted power supply and be more efficient.

Disadvantages Of Hydrogen Fuel Cells

Hydrogen extraction is an energy-intensive process. And hydrogen needs to be extracted by water via electrolysis or separated from carbon fossil fuels. The energy can also be gained from the hydrogen itself.

As a result, the extraction also typically requires the use of fossil fuels. Hydrogen fuel cells still require a considerable amount of investment to become a viable energy source.

They also require political support and governmental investments to improve and help mature the technology. The cells are currently at a much higher cost than other energy sources. This include solar panels.

Hydrogen storage and transport are also more complex than fossil fuels. There are additional costs to consider for hydrogen fuel cells to be a source of energy. Despite being a remarkable innovation and a great solution to reversing the impacts of climate change, Hydrogen fuel cells still need some time for development to come into direct competition against normal fuel cells.

Bottom Line

From an investor’s point of view, looking towards the long term, hydrogen fuel cell stocks can be a great investment to make. They have a future positive growth trajectory. As fossil fuels continue to deplete, hydrogen fuel cells may become our only option. Many companies and organizations have realized this and are steadily working towards ways to shift to renewable energy sources for their operations.

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