Why invest in hydrogen?
First of all, we will try to understand why the hydrogen sector attracts many investors in the stock market today. Indeed, hydrogen has already been used for a long time in the industrial sector with more than 55 million tons produced worldwide. It is used in the refining of fuels, in the manufacture of certain chemicals and other uses.
Yet, we know that the global hydrogen market is currently estimated to be worth more than $130 billion. A hydrogen council, which was created in 2017 by some major industrial groups including Air Liquide, Alstom or even Daimler, estimated that its growth could reach 2,500 billion dollars and create more than 30 million new jobs by 2050.
According to the organization's estimates, the hydrogen market could supply no less than 10 to 100 million cars and 500,000 trucks by 2030 and its annual demand could increase tenfold by 2050. It is estimated that hydrogen will account for 18% of total energy demand by 2050.
The success of hydrogen is due to the fact that it is a gas that is widely acclaimed by environmentalists and many large groups as an effective response to climate issues. It is therefore considered to be the energy of the future. As we will see below, there are already many stocks that allow you to invest in hydrogen on the stock market.
Hydrogen: What is it?
Hydrogen is a simple chemical element and the lightest gas in the universe. It is composed of one proton and one electron. It is an odourless, invisible and non-toxic gas that is found in all organic matter and in the water that covers most of the surface of the planet.
But hydrogen is of particular interest to scientists and industry because it seems to be the ideal fuel, both the cleanest and the most efficient, since it does not pollute the soil or the water table and is not harmful to the ozone layer.
However, hydrogen is not strictly speaking a direct source of energy, but rather an energy vector because it can be used to produce energy in an almost unlimited way because it is found in abundance on Earth. Indeed, hydrogen is found in plants, in hydrocarbons such as oil and gas, which come from the combination of carbon and hydrogen atoms, and also in biomass, especially agricultural and forestry waste.
Stocks to watch in the transportation-related hydrogen sector :
Thanks to its role as a renewable and ecological fuel, hydrogen seems to be particularly interesting for the transport sector since many companies in this sector are already interested in it by developing, for example, ranges of vehicles running on hydrogen. Indeed, we know that a single handful of hydrogen could allow a vehicle to travel a hundred kilometres. The companies in this sector that you can invest in to bet on hydrogen are :
- Toyota : This Japanese manufacturer has created its first hydrogen vehicle, the Toyota Mirai, and has promised an autonomy of around 650 kilometres. One of the advantages of this type of vehicle is that it can be recharged in 5 minutes and costs 60 to 72 euros, unlike electric recharging which takes much longer. This vehicle works like the electrolysis system with a hydrogen tank that feeds a fuel cell which, through the meeting between hydrogen and oxygen, produces electricity by rejecting only water. It is this electricity that then powers the electric motor.
- Michelin and Faurecia : In the French market, the two companies have decided to create the hydrogen joint venture Symbio in 2019, which has received €140 million for its launch. This company aims to create new-generation fuel cells in significant quantities with the ambition of holding a 25% share of the global hydrogen mobility market by 2030.
- Nikola Corporation : this American company which was founded in 2014 and entered the Nasdaq stock market recently already has a total market capitalization of over $13 billion as of September 2020. This is because this company specializes in building heavy-duty alternative-powered vehicles but has not yet commercialized its vehicles.
- Daimler : On the European market, the company Daimler Truck also presented its Mercedes GenH2 in 2020. This truck is indeed equipped with a reserve of hydrogen contained in liquid form and at a minimum temperature of -253° C. Thanks to this feat, this truck is the very first hydrogen-powered model that can expect a range of 1,000 kilometers and consists of two electric motors that are themselves connected to two fuel cells containing up to 40 kilos of liquid hydrogen.
- Alstom : Hydrogen is also relevant to the public transport sector, as demonstrated by the launch of the first fuel cell train in 2020, which has successfully completed its operational tests. Alstom, which is the manufacturer, has already committed to several European countries with the aim of extending and equipping the rest of the European rail network with hydrogen trains. The group already has 40 orders, which are expected to enter service in 2022.
- Airbus : Finally, in the aeronautics sector, the Airbus group also intends to take advantage of the government's objective to launch the first zero-emission hydrogen aircraft before 2035. In September 2020, the group indeed announced its strategy in order to commercialize this aircraft in time by qualifying the project as a strategic priority. It should be remembered that the Airbus group has already used hydrogen propulsion systems for its space equipment.
6 European stocks to watch in the hydrogen sector :
As far as the European market is concerned, these six hydrogen stocks will be followed closely:
- Enel: The Italian energy giant's subsidiary Enel Green Power recently teamed up with a transport player to develop a hydrogen valley with medium-term objectives. Lombardy is thus becoming the spearhead of hydrogen development in Italy with the introduction of hydrogen-powered trains from 2023 onwards, which will run on a 104-kilometre line, as well as the construction of hydrogen production facilities powered by renewable energy.
- Iberdrola: This other energy leader, this time Spanish, has also recently committed itself to hydrogen thanks to a partnership with the fertiliser producer Fertiberia in the production of green hydrogen. The aim of this partnership is to invest nearly 1.8 billion euros before the end of 2027 in order to develop 800 MW of green hydrogen and enable Fertibieria to produce 100% green ammonia for its fertilisers. This will enable the company to reduce its natural gas requirements at its Spanish production site by more than 10%. The project includes the implementation of a green hydrogen complex for industrial use in Puertollano, to be commissioned by the end of 2021. 150 million and includes a 100 MW solar photovoltaic plant, a lithium ion battery system with 20 MWh of storage capacity and a 20 MW hydrogen electrolysis production system.
- SolarPower Europe: This company recently partnered with WindEurope to launch the Renewable Hydrogen Coalition to give voice to business and opinion leaders to position Europe as a world leader in renewable hydrogen produced by electrolysis and based on 100% renewable electricity. The company is supported by Breakthrough Energy and will build a high-level interdisciplinary network of innovators, entrepreneurs and business leaders in the renewable hydrogen community. The renewable hydrogen coalition is announced alongside the European Commissioner for Energy, Kadri Simson, under whose authority the European Commission presented a European hydrogen strategy in July with the aim of producing 10 million tonnes of renewable hydrogen by 2030.
- Air Liquide : This group is the world leader in liquid gas and offers a range of products that covers both the industrial sector with nearly 71% of its revenue, the health sector with 17% of its revenue, electronics with 8%, engineering and construction with 2% and science and new energies with 2%. The group markets air in liquid form and several types of gas in cylinders or tanks and is a major player in the energy, digital and environmental transition. It is committed to decarbonizing its hydrogen production and developing green hydrogen through electrolysis.
- McPhy Energy : McPhy Energy is specialized in hydrogen since 2007 and manufactures equipment to absorb and store electricity in solid form on magnesium wafers with hydrogen and to reuse surplus electricity. The company covers 4 strategic sectors with industrial hydrogen, hydrogen energy storage, hydrogen injection into the natural gas network and hydrogen vehicles. The company also equips service stations with hydrogen pumps, which represents a profitable investment and more than 2 million euros of its turnover. The share price gained more than 560% in 2020 after the announcement of numerous contracts and according to the development prospects of the hydrogen sector in Europe.
- Engie : Finally, the third largest energy company in the world today is also interesting in the hydrogen sector. This company created by the merger between Gaz de France, which specializes in the transport and distribution of natural gas, and Suez, which is considered the world leader in energy and the environment, was formerly known as GDF Suze and took the name of Engie in April 2015 with the French state as its main shareholder. The French government holds almost a quarter of the company's capital (24.1%) and the company currently employs 153,090 people in more than 70 countries and has a turnover of €60.6 billion. Engie is currently negotiating the sale of its stake in Suez to Veolia, aims to produce 960 tonnes of green hydrogen by 2024 to reduce its carbon footprint by 8,000 tonnes of CO2 in an electrolysis production project funded by a European programme, and is listed on the Brussels, Luxembourg and Paris markets.