16th Aug 2023
The energy landscape is on the brink of a profound transformation. With climate change looming large, a global shift towards renewable and cleaner energy sources is underway. This transition extends across multiple sectors, but it is in transportation where some of the most drastic changes are taking place. Two key contenders, hydrogen energy and electric power, are vying to lead this evolution.
This comprehensive article navigates the intricate terrain of these energy alternatives, focusing on the promise of hydrogen energy. Furthermore, we delve into the investment potential in the sector, spotlighting some leading companies that offer compelling propositions.
Understanding electric and hydrogen energy in transportation
A fundamental understanding of both electric and hydrogen energy in transportation sets the foundation for our discussion. Electric vehicles (EVs) operate on rechargeable batteries that supply the electric motor with power. Charging an EV is similar to charging a mobile device, with charging stations now more prevalent due to increased adoption 1.
On the other hand, Hydrogen fuel cell vehicles (FCEVs) generate electricity through a different process. Hydrogen gas stored in high-pressure tanks combines with oxygen from the air in a fuel cell to produce electricity. The electricity then powers the motor that drives the vehicle 2.
Although EVs currently dominate the market thanks to more robust infrastructure and greater public awareness, FCEVs hold certain advantages. For instance, they offer faster refueling times and longer driving ranges than most EVs, making them particularly useful for commercial and heavy-duty transportation, where prolonged operational time is critical 3.
Investment themes in hydrogen energy
Hydrogen energy’s role in the future of transportation is becoming increasingly impossible to ignore. With a worldwide initiative towards zero-emission technologies, the allure of investing in hydrogen is clear. Let’s explore some reasons why:
Government Support: Hydrogen’s growth has received a significant boost from the government’s policies worldwide. The European Union, for instance, plans to install at least 6 GW of renewable hydrogen electrolyzers by 2024 4. Similarly, Japan has outlined a comprehensive Hydrogen Strategy aiming to cut emissions by 46 percent by 2030 and achieve carbon neutrality by 2050 5. Such policies will bolster the hydrogen market’s growth.
Technological Advancements: Technology plays a crucial role in making hydrogen energy competitive. Innovations are continuously reducing the cost of hydrogen production. For example, advancements in electrolysis technology have made ‘green hydrogen’—hydrogen produced using renewable energy—a viable option 6.
Broad Application: Hydrogen’s potential extends beyond passenger cars. It’s applicable to larger vehicles like trucks, trains, ships, and even airplanes. This flexibility signifies a vast addressable market and broad usage scenarios, from public transportation and logistics to maritime and aviation applications 7.
Energy Storage: Beyond transportation, hydrogen serves as a large-scale energy storage solution, working seamlessly with renewable energy sources. With the world rapidly adopting renewable energy, the demand for efficient and large-scale storage solutions is on the rise, positioning hydrogen as a promising solution 7.
Hydrogen energy companies to consider
The business landscape is teeming with companies exploring hydrogen energy. The following examples, however, have set themselves apart with their innovative solutions and potential for growth:
Ballard Power Systems Inc. (BLDP): As a global leader in proton exchange membrane (PEM) fuel cell development and manufacturing, Ballard Power Systems is paving the way for FCEVs. Their PEM fuel cells have been deployed in a diverse range of vehicles, including buses, commercial trucks, and even trains. As hydrogen infrastructure improves, Ballard’s expansive product portfolio may see increased demand 8.
Plug Power Inc. (PLUG): With its focus on hydrogen fuel cell systems, Plug Power is a standout player in this field. Their flagship product, GenDrive, is a hydrogen-based fuel cell system designed to replace conventional batteries in electric material handling vehicles and ground support equipment. As the demand for cleaner and more efficient power solutions escalates, Plug Power’s innovative systems could gain more traction 9.
Bloom Energy Corporation (BE): Bloom Energy’s solid oxide fuel cells (SOFCs) represent another exciting technology in this domain. Their energy servers can generate electricity from a wide array of renewable and traditional fuels, including hydrogen. By offering a cleaner and more reliable energy source, Bloom Energy could capitalize on the broader shift toward renewable energy 10.
Final thoughts
Investing in the future of transportation demands an understanding of the driving forces behind both electric and hydrogen energy. While the electric power market has a head start in terms of infrastructure and market penetration, the potential for hydrogen is undeniably vast. Companies such as Ballard Power Systems, Plug Power, and Bloom Energy are exemplars of how businesses can leverage this potential to drive growth and innovation.
It’s crucial, however, to remember that investing carries inherent risks, including the potential loss of principal. Comprehensive due diligence and careful consideration of one’s personal risk tolerance and investment goals are essential before venturing into any investment.
1 https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-an-ev
2 https://afdc.energy.gov/vehicles/how-do-fuel-cell-electric-cars-work
3 https://globalxetfs.co.jp/en/research/a-tag-team-effort-battery-hydrogen-fuel-cell-evs-both-needed-to-reduce-emissions/index.html
4 https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/electric-power/070820-ec-wants-6-gw-of-electrolyzers-for-green-hydrogen-in-eu-by-2024
5 https://www.euronews.com/2021/10/25/japan-s-hydrogen-power-play
6 https://www.sciencedirect.com/science/article/pii/S2352484722020625
7 https://hydrogencouncil.com/wp-content/uploads/2020/01/Path-to-Hydrogen-Competitiveness_Full-Study-1.pdf
8 https://www.ballard.com/about-ballard/newsroom/news-releases/2021/03/18/fuel-cell-electric-vehicles-powered-by-ballard-have-now-driven-over-75-million-kilometers-enough-to-circle-the-globe-1-870-times
9 https://www.plugpower.com/fuel-cell-power/gendrive/
10 https://www.bloomenergy.com/blog/everything-you-need-to-know-about-solid-oxide-fuel-cells/