US transport company Uber is currently setting up a fleet of up to 200 hydrogen cars in Berlin. The first automobiles have been giving rides in the German capital since fall 2022, though the Toyota Mirai 2 vehicles were provided not by Uber but by the SafeDriver Group, which is the prime contractor for Germany. The goal of SafeDriver owner Thomas Mohnke is to enable sustainable mobility before cities ban the entry of diesel vehicles to downtown areas.
Mohnke, who has been in the limousine business for 45 years, told H2-international that Uber doesn’t have any of its own vehicles; it merely brings drivers and cars together for the purposes of passenger transportation. “My role is to make recommendations rather than to instruct our subcontractors,” explained the SafeDriver owner. He continued, saying that he has his own fleet of 150 vehicles, 40 of which are hydrogen cars.
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Mohnke fully backs hydrogen as battery electric operation is “not really ideal” for shift work. In his opinion, fuel cell cars are “excellent,” especially because of their short refueling times. He revealed that for early 2023 a separate ordering function will be integrated into the Uber app that will enable customers to explicitly request a hydrogen car.
An interesting approach to furthering hydrogen education and the sharing of ideas is being taken by the startup Hyfindr. During the Hydrogen Technology Expo Europe in Bremen (see p. 9) mid-October 2022, the young company presented its new concept publicly for the first time: an internet platform with the goal of using the expertise of professionals from the hydrogen and fuel cell industry by setting out targeted technical questions that could – so the hope is – be answered by experienced people. At a time when Xing is in the process of closing its discussion groups, Tech Community could become a fresh forum that focuses less on quantity and more on quality. H2-international spoke about it with the two founders, Dr. Björn Lüssow and Steven Oji.
Hello Björn, hello Steven, you have just presented in Bremen your new expert forum Hyfindr Tech Community for the first time. How was the response?
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Björn: Very inspiring, Sven. Almost all of the people that we introduced the Hyfindr Tech Community to were immediately excited about it and signed up right after the trade fair. It is evident to every professional in the hydrogen industry that the development and implementation of projects is accompanied by numerous technical challenges. Our Tech Community makes it possible to resolve technical questions quickly and efficiently. I was particularly pleased with the positive feedback I received from students and young professionals; there is a huge demand for knowledge. Many want to work in the hydrogen industry and need digital tools to educate themselves. This is where we come in.
Before, you had only been granting access to the new platform to a small circle of people. Why the initial hesitance?
Steven: Every community lives on the engagement of its members. Only when members of a community are also engaging, which means in our case also really helping with technical questions, are others inspired to join in. No one wants to be a member of a “dead community.” For this reason, we started small, with a few highly motivated professionals that we already knew or suspected would help us. We first invited these people to a beta testing and then asked for feedback. We knew that not everything would be immediately optimal in the beginning.
Among other things, you offered online workshops in advance, where the various functions were explained to the initial participants. What was the feedback?
Björn: That’s right. And from this we also received reassurance. We held several video meetings with up to ten participants to personally present the goals of our initiative. Doing this was important to me for another reason: only in personal exchange can we really get a feeling for whether an initiative has usefulness or if we are making presumptions. Luckily, the feedback was – as already stated – very positive. We now have several hundred members already, who are diligently discussing technical topics.
I see. So please briefly explain exactly what you have actually built and now offer.
Björn: Gladly. Online communities are not just private test projects or hobbies these days; they now also have great relevance for professionals in many industries. The best example of this, in my opinion, is Stack Overflow. In this forum, hundreds of thousands of software developers freely help each other with programming problems every day. You can find there more than 23 million questions and answers, and the community is visited over 100 million times every month. The more high-quality content a member contributes, the clearer their expertise becomes in their profile. Software developers are now applying for jobs with the authority they’ve earned in the Stack Overflow community, and no longer with just CVs. I am very impressed by this community, and I asked myself why there was no comparable community for the hydrogen industry, as there are currently many questions to be answered in the hydrogen industry around the world as well.
What distinguishes your concept from Xing, LinkedIn or other forums?
Steven: LinkedIn and Xing are primarily marketing channels and platforms to establish business contacts. On LinkedIn, people don’t ask technical questions. Or have you ever seen a question there like “Does every fuel cell stack really need a humidifier?” The following difference is also interesting. Groups, for example on LinkedIn, that were started for idea exchange mutate once they get bigger and bigger into a pure newsfeed. This reduces the benefit for the individual group member. No one can read all the new project updates on LinkedIn anymore. With a Q&A forum like the Hyfindr Tech Community, it is different, because the value for the individual member increases the larger the community becomes. With a large number of members, the probability of finding an expert or two for a specific question is higher. One person asks a question and the intelligence of the entire community answers. In a community like Stack Overflow, it is also often the case that someone has already had the same problem and can therefore let good answers to the similar problem be found. That is efficient, and that’s where we want to go with the Hyfindr Tech Community. It would therefore be great, Sven, if many of your readers registered as members and participated (community.hyfindr.com).
You two have been active in the hydrogen industry for a long time, but an internet platform is completely new ground for you, right? Björn, what did you do before this?
Björn: I worked at Mercedes for nearly twenty years. As a lawyer, I helped arrange small, and also very large, partnerships and M&A transactions over the course of more than ten years. I got my connection to the hydrogen industry in 2013, when I got to support in establishing the joint venture H2 Mobility. I figured at the time that hydrogen was our chance to get out of oil. An entrepreneur was what I’d always wanted to be. That’s why I initially studied business and earned the Diplom-Kaufmann degree before studying law. When I started my studies, I was actually much more interested in economics than law. Even though I have no training as a software programmer, I can assure you that I am truly immersed in the IT world from my independent study during the last three years in preparation for Hyfindr.
And you, Steven?
Steven: I represent more of the technical side of Hyfindr. Like most of our employees, I’m a passionate engineer. Like Björn, I worked for Mercedes-Benz for several years, where last I was developing FC systems. I did that afterwards in another company as well, before I devoted myself completely to the establishing of Hyfindr and everything associated with that. For many years of my life, for professional or private reasons, I lived in countries where energy supply via diesel was a necessary given. Already in my childhood years, I wanted to change this in some way, because it generates a lot of noise and pollution. It already disturbed me back then.
You then found Hyfindr together, which is already off to a pretty good start. Please briefly explain what exactly Hyfindr is.
Steven: Hyfindr.com is the rapidly growing B2B marketplace for the global H2 industry on which you can find many components, systems and services that are now needed to build this industry. We place particular value in that engineers especially can find all information relevant to the industry directly on the site. I had these problems myself when I was developing fuel cell systems. And it is still very difficult to find the right components. Here is where Hyfindr comes in handy. Products can be compared on the basis of technical criteria with just a few clicks, and price quotes can be efficiently requested from suppliers. This reduces negotiation costs for both the buyer and seller. Unlike a trade fair, Hyfindr.com runs 24/7, 365 days a year. Industry professionals visit us when they have a specific need. We like to point out to sellers of these products, “We drive in customer interest while you sleep!”
This new platform, Tech Community, is now only one of several mainstays of Hyfindr, right?
Björn: It’s true that we have developed several formats, but our B2B marketplace is at the core of our business model. Hyfindr Tech Community is not meant for economic advancement. With this, we want to contribute to making it easy for young professionals in particular to join the H2 industry. For this reason, marketing posts are also forbidden in our Community. It’s about helping each other solve technical issues. In our Hyfindr Knowledge Hub, there are already more than 30 neutral articles that convey the technical basics. Here, professionals can find out what they need to know before buying hydrogen tanks, filters or compressors. This collection of knowledge too we are continuing to expand, and it’s available free of charge on hyfindr.com.
How is the marketplace there developing so far?
Steven: The development is incredible. We launched it in September 2021, and since then we have been growing on average between 10 to 15 percent every month. In the meantime, more than 100 well-known brands have listed their products and services. Thousands of users visit us every week, who look at several pages. From this enormous amount of traffic, we also generate week after week numerous high-quality leads for the companies. So far, we have not unlocked, as I see it, even ten percent of the potential of Hyfindr, as we still have to become better known. The development, however, is pointing steeply upwards. Since June 2022, we have also been supported by no less a company than Google. We are one of very few companies in Germany to be included in the international program “Google for Startups.” This helps us a lot.
Compared to the earlier hype around hydrogen, what is different today from your point of view?
Björn: This time, I think it is a sustained development, as it’s not only prototypes or demonstration projects, but strategic investments being made worldwide. In some countries, the fuel cell industry is even scaling up already. However, the actual effects will only become apparent in the next few years, with sector coupling. I am firmly convinced that all doubts whether the hydrogen industry can develop into an economic sector similar to the oil and gas industry will fade within this decade.
Steven: With that, I can only agree. And as an engineer, I would like to add the following. The clean energy transition requires new technical solutions. With battery technology alone, we won’t be able to build all the solutions we need to become greener. Hydrogen and fuel cell technology are not the only, but a very important, building block of the energy transition. I’ve lived in South Africa and Nigeria next to chugging diesel generators that ran air conditioners and produced electricity for lanterns. We can’t go on like this as a planet. So I have a personal motivation as well to contribute with Hyfindr to making the growth of the global hydrogen industry faster and better. This mission drives me and also Björn.
Where do you see your marketplace and Tech Community in five years?
Steven: You could say that we have set out to become the Amazon of the hydrogen industry. With Hyfindr.com, we are building a digital supply chain for the global hydrogen industry so that it can grow faster. Professionals should be able to rely on Hyfindr as a place to find all the relevant products available. Everything starts very small, with one or two people who have an idea and pursue it consistently. That’s what we’re doing with Hyfindr.
Björn: With our Tech Community, we want to become the Stack Overflow of the hydrogen industry. I promise to tell you when we’ve reached a hundred thousand questions and answers in Hyfindr Tech Community, Sven. Once we do this, we will have significantly accelerated the hydrogen economy. It’s inconceivable to build a new industry, like the hydrogen industry, only with the tools from yesterday. Hyfindr wants to offer digital tools to promote the growth of this industry on a global scale. That’s what I work for.
For many years Swedish company myFC repeatedly made headlines with its specialist fuel cell applications – ranging from fuel cell systems for cell phones to electrically powered bicycles. In fall 2022 the disclosure was made that the company, which has been listed on the Nasdaq First North Growth Market since 2014, had filed for insolvency at the district court in Stockholm on June 30. Trading platforms indicated a liquidity squeeze as the cause.
The Scandinavian company had previously presented test models of an initial user-friendly portable charging device back in 2008 (see HZwei, April 2011). In 2011 it introduced Powertrekk, a hybrid device consisting of a PEM fuel cell and a lithium-ion battery for supplying power to mobile terminals. The Powertrekk 2.0 came “onto the market” in 2015 but failed to make a profit.
Investors at the stock exchange are betting on good instincts regarding companies, industrial branches and, above all, those shares that in the future will determine development and have an above-average growth. These companies must and should be excellent at earning money, which is a clearly defined criterion for an increase in stock market valuation. In view of climate change, these companies should also produce solution-oriented products that are good for humans and nature in the broadest sense possible. All of this applies to hydrogen and fuel cells.
The companies in this specialization must now prove that they can deliver results and from them develop robust business models. The investor who shares their vision and bets on these new future markets, however, needs a lot of patience and time. Because many companies in the industry are still at the very beginning in terms of the new megatrend hydrogen. Market-ready products need to come out, and this entails the building and scaling of production capacity and addressing the right markets.
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The venture capitalist or early-stage investor must see what capital is available to finance the R&D and follow up on the seed (financing). It takes time for the plant, so the company, to establish its growth dynamics and – metaphorically speaking – bear fruit (revenue, profit, orders).
The path will not be a straight line, since of course every company is subject to market storms (like plants are to the weather and the nature of the soil): supply chain issues, interest and inflation conditions, skilled labor shortages and numerous regulatory hurdles set by different countries. At the end of the day, all this will be overcome, as the world urgently needs all these technologies to move in the right direction, meaning to become more sustainable and, above all, address climate change technologically.
On the flip side: With some companies, the development is unfortunately sometimes worse before it gets better. You could say, a little bit of crisis is productive. The increase in energy prices across the world is in all honesty a turbo for hydrogen & co., as they’re becoming viable alternatives to fossil energy carriers.
Completely new markets will emerge, according to the trend research, in a timeframe of 15 to 20 years, when the inflection point that signals the start of vigorous growth arrives. The US investment bank Goldman Sachs expects annual turnovers of 1 billion USD worldwide in only a few years – a very high growth potential. Just look at the development of companies like Apple, Google, Amazon, & co., which required many years of positioning in their markets (with high start-up losses) but ultimately experienced an overproportional gain in value on the stock market.
In their early days, these companies needed, and burned through, a lot of capital. Investors followed their visions and new business models, and supported them with their use of capital. The stock market values the visions through the increase of market capitalization along with growing share prices.
So consider, as a co-venturer and investor, the first hours to be filled with many risks (price swings, book value losses), which however at the end of the day may have overproportional gains in store. Regarding hydrogen and fuel cells, we are facing radical developments and growth prospects. Approach this field with the caution of a start-up investor. The ROI, however, can be substantial in one to three years. We bet on the hydrogen horse in the early phase, in 2018/19, and with our correct assessment came out very successful. At the time, the industry was at its beginning. Today, much is set and real. Hydrogen on the stock exchange is the next megatrend.
Individual FC markets speed ahead: Commercial vehicles
The first truly big market for the use of fuel cells and hydrogen is the commercial vehicle sector. This encompasses trucks and buses, but rail vehicles also benefit from this development. The IAA Transportation fair in Hannover September 2022 clearly indicated where commercial trucks are heading (see p. 32). For heavy trucks, fuel cells will assume an important part in long hauls within the next few years. But there are also many approaches that would allow even vans to run on hydrogen, in which batteries would – still – have merit.
In addition, there are a series of research projects to enable hydrogen (liquefied or gaseous) to be used directly in an internal combustion engine – or even e-fuels as well. Much is running in parallel. What’s still missing is the ramp-up of production (scaling) and the establishment of the necessary infrastructure (H2 fueling stations). Intense competition in this is brewing, which might make batteries less competitive considering the price of the raw materials, their availability and the cost of electricity.
Hydrogen will not only be available in ever greater quantities, but also lead to increasingly favorable share prices, if it is brought via pipeline or packaged in ammonia to Germany. Besides Goldman Sachs (see above), Citicorp also expects high turnovers: over 140 billion USD p. a. from fuel cell systems (also from supply components like compressors). Is there need for more arguments?
A look into the future
Let’s look together into the crystal ball for 2023: The clouds of the past two years are gradually dispersing, and it is clearing up. First rays of sunshine can be seen. In accordance with this metaphor, for the shares from the hydrogen and fuel cell sector, 2023 will in all likelihood be a good year with prices rising again, and for the following year, the effects of the H2 ramp-up allow a continuous H2 and FC boom to be expected. The stock market anticipates all this.
We will then leave the low price level, since companies will be able to deliver, implement concrete projects, leverage existing scaling effects and significantly expand their number of orders. At the end of the day, decent money can be made with fuel cells and with hydrogen. A gradual upward trend is emerging, which is picking up speed and raising in tempo, as many countries are clearly defining what they intend to do in terms of hydrogen (support programs, etc.) and the competition amongst them increases. We are standing at the H2 station and are now being picked up. Stay tuned.
Disclaimer
Each investor must always be aware of their own risk when investing in shares and should consider a sensible risk diversification. The FC companies and shares mentioned here are small and mid cap, i.e. they are not standard stocks and their volatility is also much higher. This report is not meant to be viewed as purchase recommendations, and the author holds no liability for your actions. All information is based on publicly available sources and, as far as assessment is concerned, represents exclusively the personal opinion of the author, who focuses on medium- and long-term valuation and not on short-term profit. The author may be in possession of the shares presented here.
Author: written by Sven Jösting December 12th, 2022
The outlook that CEO K. R. Sridhar gave at the press conference on the figures for the third quarter of 2022 sparkled with optimism for the company. The total output capacity in SOFC fuel cell stacks would reach 600 MW within the year. The capacity of the electrolyzers would lie at 1.3 GW that year. Both figures should experience a doubling in 2023, after the new factory in Fremont, California commences production in the third quarter of 2022. There, Bloom has a highly efficient setup regarding the manufacture of both of its stack types (SOFC and SOEC), as the new production facilities can produce these simultaneously or in alternation. I imagine the stacks that will be produced are those that will give the highest margin according to the market environment and demand.
The profit margin in the fourth quarter of 2022 could even exceed 30 percent, as the effects of the Inflation Reduction Act with its many incentive programs are now revealing themselves in the USA. Additionally, Bloom is fulfilling the major order from SK Ecoplant in South Korea according to plan, which has a worth of over 4 billion USD. The stacks and energy servers are being paid according to a take-and-pay arrangement. Bloom is fully on track with deliveries and can increasingly turn to US customers as well.
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One sign of how well this cooperation is going is the announcement that SK Ecoplant has paid the second outstanding installment in the amount of 311 million USD for the intended stake in the company (that’s 23.11 USD per share, cash inflow expected in the first quarter of 2023). SK Ecoplant is getting Bloom shares in the equivalent amount. The already held convertible preferred stock from Bloom is simultaneously being converted into common stock. After completion of the transaction, SK Ecoplant should hold an over eight percent share in the company.
A big shareholder like SK Ecoplant can only be wished for, because it not only brings capital but also enables increased orders and customer relationships. (Perhaps GDS Holdings in China?) With over 670 million USD in the bank (after the most recent capital increase to 26 USD per share) and the 311 million USD from SK Ecoplant, Bloom has enough liquidity to support its growth with its own means, it was mentioned by the management board at the annual press conference.
Boom SOFC systems in ship transport
In the area of ships of various types (cruise, container, bulk carrier), Bloom expects a new, robust field of activity. Working with MSC (Mediterranean Shipping Company) means concrete business with cruise ships, in which the SOFC systems from Bloom are all-rounders, meaning they can use LNG as well as green ammonia, green methanol and hydrogen as propulsion energy for the ship. This makes the system from Bloom extremely interesting for many maritime transport companies. This is a major competitive advantage that should not be underestimated. Substantial orders are expected as early as 2023.
Order from Taylor Farms
Recently, an order was obtained from the leading US food producer Taylor Farms in relation to a vegetable production facility in California. The company would like to make itself un-dependent on the public grid through an FC power plant (microgrid) and become more environmentally friendly in terms of energy. For this, 6 MW in FC output will be combined with 2 MW in solar power and 2 to 4 MW in battery output. With this, they can be energy autonomous and on the way to low costs and environmental-friendliness. From the associated press release can be read that Taylor does not want to stop at one FC power plant, but wants to eventually expand this to other production facilities.
Power outages fill order books
Not least in California should the energy networks become more reliable and natural disasters (forest fires, etc.) be better withstood. Here alone, the grid-independent FC power stations from Bloom have an enormous growth potential, as weather conditions there are responsible for power outages of 1,700 to 5,000 MW per year and cause major damage. Energy security is a societal good for which Bloom can provide the right answers and technologies.
The turnover increase in the third quarter of 41 percent compared to the previous quarter, to 292 million USD, is remarkable. That was expected, since 70 percent of the revenue was coming in the second half of the year. What’s new is that Bloom sees even 40 percent of turnover for the year coming in the fourth quarter. By our calculation, that would make a plus of 400 million USD. Wow! That would then be a total turnover of 1.1 billion USD for 2022 – everything along the line of expectations and a little more.
Summary
With this guidance, it only makes sense to buy more than once. Maybe Bloom Energy will one day have a higher worth than competitors like Plug Power. An exciting 2023 is just around the corner, and the unfolding fourth quarter will serve as fertile ground. The numbers will come in during the first week of February 2023.
Disclaimer
Each investor must always be aware of their own risk when investing in shares and should consider a sensible risk diversification. The FC companies and shares mentioned here are small and mid cap, i.e. they are not standard stocks and their volatility is also much higher. This report is not meant to be viewed as purchase recommendations, and the author holds no liability for your actions. All information is based on publicly available sources and, as far as assessment is concerned, represents exclusively the personal opinion of the author, who focuses on medium- and long-term valuation and not on short-term profit. The author may be in possession of the shares presented here.
Author: written by Sven Jösting December 12th, 2022
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