Hydrogen Investments 2020

There are several ways to participate in the Hydrogen boom. The stock market offers direct investments in Hydrogen stocks, Hydrogen indices, Hydrogen investment funds, and various certificates.

Selected Hydrogen Stocks

Hydrogen Index Certificates

You can also buy factor certificates on the following Hydrogen Indexes

The oil of the future

As a very CO2-neutral or low CO2 energy carrier, depending on its production, hydrogen could make a Western contribution to achieving the goals of the Paris Climate Conference in 2015. The great advantage of this versatile energy source is that its production can be completely climate-neutral, provided that renewable energy sources are used.

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Another significant advantage of hydrogen is that the colorless and odorless gas can also be used to store energy. For example, the surplus electricity from wind and photovoltaic plants can be used in the future for the electrolysis of water to hydrogen, so that the “oil of the future” can then be stored in tanks and converted back into electricity when needed. Accordingly, the production of hydrogen can also be seen as an optimal supplement for all green electricity plants. Up to now, green electricity producers have had to disconnect their sustainable plants from the grid in phases with strong wind or strong sunshine and very low power consumption.

Hydrogen shares are very trendy

While investors, who before the corona crash had bet on companies in the fossil energy sector, are now still sitting on book losses of sometimes more than 50 percent, the shares of the leading hydrogen companies have long since returned to double-digit growth. This divergent development clearly indicates that in the meantime more and more investors have realized that hydrogen could possibly be one of the leading energy carriers of the future.

The euphoria about the long-term potential of hydrogen technology thus caused the share prices of the three most sought-after companies in the sector to climb quickly out of their corona low again. The share prices of Ballard Power, PowerCell and NEL are currently already around 35, 65 and 58 percent above their March lows.

The sector offers a rich selection of companies

In connection with hydrogen, the Norwegian hydrogen filling station operator NEL, the Canadian world market leader for fuel cells, Ballard Power, and the Swedish company PowerCell, which cooperates with Volvo and Bosch, among others, are often mentioned. However, the universe of companies working in the field of hydrogen and fuel cell technology is much more comprehensive.

The US group Bloom Energy, for example, has specialized in the development of solid oxide fuel cells or high-temperature fuel cells and is considered a technical pioneer in this field. As the name suggests, the operating temperature of such fuel cells averages 650 to 1,000 degrees Celsius. The British company Ceres Power is also active in this segment.

Another exciting company focusing on hydrogen-based energy supply is the US company Cummins and FuellCell Energy, among others. The Plug Power group, which installs fuel cells in forklift trucks, is another hydrogen specialist from the United States.

However, the innovative companies in the hydrogen sector are by far not all from the USA, but of course also from Germany. SFC Energy from Munich, for example, with its development for off-grid and stationary power generation, as well as 2G Energy with the installation of combined heat and power (CHP) plants, have established an excellent reputation in the industry.

In addition, Hexagon, ITM Power and McPhy Energy, three other specialists in the industry, are located on the European continent. While the French group McPhy and the Norwegian company Hexagon are increasingly focusing on hydrogen storage, the British electrical engineering group ITM Power wants to build the largest hydrogen production plant in Europe together with the British-Dutch energy giant Shell.

Blue chip companies also rely on hydrogen

Investors, who find the classic hydrogen champions too “niche” and too small, can also rely on European blue chips, who also want to advance hydrogen technology with great commitment. For example, Air Liquide, Linde, Daimler, OMV, Total & Shell have joined forces in a consortium called H2-Mobility to build a comprehensive hydrogen infrastructure to supply fuel cell cars.

The British-Dutch oil multinational Shell goes even further and recently announced that it will build the largest hydrogen production facility in Europe, covering the entire value chain, i.e. from hydrogen production to storage and transport.

“We believe in the importance of hydrogen and are convinced that the investment will pay off. Together we have the ambition to make the Netherlands the world leader in hydrogen”, said Marjan van Loon, Shell’s head of the Netherlands in an interview with Handelsblatt.

Not only individual shares offer opportunities

In order to participate in the long-term opportunities offered by the hydrogen industry, investors do not necessarily have to invest in individual shares, but can of course also rely on a diversified basket of shares. Investors can choose between index certificates from providers such as Vontobel or Morgan Stanley, which track the performance of companies in the industry, or ETFs that invest in companies active in the alternative energy sector. But whether with individual shares, certificates or ETFs, there are currently good opportunities for long-term investors to gain a foothold in the promising, climate-friendly and sustainable hydrogen and fuel cell industry.

Why invest in H2 Hydrogen Stocks?

Modern economies are true energy guzzlers. Electricity is needed everywhere, buildings must be heated or cooled, vehicles must be powered. At the same time, there is great concern about global warming. The fossil fuel era, in which coal, oil or gas provided the necessary energy, is coming to an end. In the search for alternatives, the fuel cell is a promising approach. As a rule, it is hydrogen that powers the fuel cell. That’s why hydrogen stocks are all the rage in 2020, and despite the Corona crisis, the year confirms that the hype won’t die down anytime soon.

On the contrary: according to many analysts, companies that deal with environmentally friendly power generation by electrochemical reaction in fuel cells in the narrower and broader sense have a bright future ahead of them. So is it high time to take a closer look at hydrogen stocks and fuel cell stocks? To answer this question, you need to take at least a cursory look at what a fuel cell is and how it works.

The fuel cell works by converting the chemical reaction energy provided by a supplied fuel into electrical energy (so-called galvanic cell). So, the fuel cell is a technical device in which – in short – air and a fuel together in a chemical reaction produce electrical energy. It is not a battery that is charged. Rather, the device produces electricity as long as the fuel is supplied.

In principle, the fuel for this technology can be anything from methane to natural gas to carbon. In the current discussion, however, the term fuel cell almost always refers to a hydrogen-oxygen fuel cell. The fuel is therefore hydrogen. The focus is on hydrogen not least because of its environmental compatibility. The CO2 emissions are zero. In a hydrogen-powered car, only a few droplets of water come out of the exhaust. The fuel cell is not a new technology. Some companies, such as Ballard Power, have been in the field for a long time. But after a few decades of plodding along, a bit of a gold-rush atmosphere has broken out over the course of 2019. Not least when it comes to electric mobility. Automaker Hyundai, for example, launched the Nexo model. Powered exclusively by a fuel cell, the vehicle has a range of 700 kilometers. The electric motor can’t keep up with that.

Other advantages include fast refueling. The few liters of hydrogen required per filling are filled within a few minutes. Unlike the lithium-ion battery, the fuel cell engine also shows no drop in performance in winter when temperatures are low. However, with prices starting at around 70,000 euros, the vehicles are so far only something for the well-filled wallet. In addition, the supply of hydrogen filling stations is still limited.

But the ball has started rolling. Several companies are getting involved in the field, which includes not only the production of hydrogen, but also the provision of the necessary infrastructure, such as hydrogen filling stations, or the hardware, such as the fuel cell itself. The small investor can also participate in the development of each of these sub-sectors. In any case, the interest of professional investors has been aroused. The year 2019 witnessed a whole series of corporate investments in the sector.

Energy company Cummins Inc, synonymous with diesel engines for most of its century-long history, bought Canadian fuel cell maker Hydrogenics Corp. for $290 million in September. Truck maker CNH Industrial NV, controlled by Italy’s billionaire Agnelli family, agreed to invest $250 million in Nikola Motors, a startup that wants to put hydrogen trucks on the road. Robert Bosch GmbH, the world’s largest automotive supplier, announced in April that it would mass-produce fuel cells by 2022 in collaboration with Powercell Sweden AB.

So, given the dynamics of the hydrogen and fuel cell market, the question is: With which stocks can you participate in the development? The question should actually be: Which listed companies are active in the hydrogen and fuel cell market? Roughly speaking, a distinction can be made between hydrogen producers (some of which use different technologies) and manufacturers of the associated equipment and the necessary infrastructure. Hydrogen shares come from listed companies whose business involves the use of hydrogen as a so-called energy carrier. Hydrogen is therefore not itself the driving fuel, for example of the electric motor, but provides the necessary electricity.

Fuel cell shares come from listed companies whose business is the production of the fuel cells themselves. At the level of the individual company, it is not always possible to distinguish between hydrogen shares and fuel cell shares. Some companies are active in both areas. Typical examples would be Air Liquide or NEL ASA, which we take a closer look at. Then there are major players like Norway’s Hexagon, which specializes in hydrogen infrastructure solutions. Still others, such as the long-established German company Elringklinger, are actually automotive suppliers, but also produce fuel cells and components for hydrogen-powered vehicles.

As already indicated, there has been a strong positive development in hydrogen shares and fuel cell shares within the last two years. Will this positive development continue in the following years? In a moment, we will introduce you to five more stocks that could be interesting for investors. How can I trade hydrogen stocks and fuel cell stocks? For a long time now, the classic purchase of shares has not been the only way to participate in the performance of company shares. In the following, we will introduce you to another option for trading hydrogen stocks in addition to traditional stock trading.

If you want to participate in the performance of individual companies in the segment over the long term and without much effort, you can invest in shares in the classic way. In this case, the investment horizon is relatively long (at least several months, usually even years), but you do not have to make any effort other than keeping an eye on your portfolio. If you want to diversify more, then first see if there is an index that contains stocks that are relevant to you. In the hydrogen fuel sector, the E-Mobility Hydrogen Index created in mid-2018 is a good choice.

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