Eastern Germany could be short 54 terawatt-hours (TWh) of hydrogen in 2045, based on a year-by-year analysis. As usual with forecasts, this is still dependent on many factors, such as the exact H2 demand in the individual sectors. But one thing is clear: H2 infrastructure will be lacking if the future becomes a major energy diversification scenario. In such a case, 48 TWh would then still need to be further distributed via transmission lines to neighboring regions. Prerequisites for this would be conversion of numerous pipelines from natural gas to hydrogen, as well as installation of new pipelines.
This assumption is supported by the study “Wasserstoffmarkthochlauf in Ostdeutschland bis 2045 – Eine Infrastrukturanalyse anhand der regionalen Erzeugungspotenziale und Bedarfe” (hydrogen market ramp-up in eastern Germany up to 2045 – an infrastructure analysis based on the regional production potentials and demands). Scientists from the Energiewirtschaftliches Institut an der Universität zu Köln (EWI), the energy economy institute at the university in Cologne, compiled this on behalf of Gascade Gastransport, the system operator for the German transmission network. The EWI team analyzes in the study two scenarios for the development of demand and supply of hydrogen in eastern Germany. The scenario Diversification supposes that hydrogen will play a much greater role in the substitution of fossil fuels, whereas the scenario Electrification assumes that energy consumption will be strongly electrified and hydrogen is much less significant.
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North-South dichotomy
“In eastern Germany, a difference in hydrogen demand is likely to develop between the North and the South, with the South being higher,” says Dr. Eren Çam. He heads the energy raw materials division of EWI and had put together the study along with three colleagues. This differentiation is especially visible from the blue and red regions in Figures 2 and 3 for the year 2045. “The regional differences and the increasing potential for H2 transits through the East of Germany could become decisive drivers of the growing hydrogen infrastructure.”
The calculated H2 deficits, or surpluses, provided in the study, together with the possible import and export demand in eastern Germany, give a picture of the future transport requirement. According to this, a strong domination of electricity-based energy usage shows a deficit in hydrogen capacity of only 2 TWh in year 2045. Hydrogen transits would then hardly be necessary.
H2 production has great potential in eastern Germany. In addition to green electricity-based H2 production, natural gas reforming or methane pyrolysis with capture of CO2 emissions could also be climate-neutral alternatives. This would make the region a net exporter of hydrogen by 2030. The researchers from EWI estimate the production potential at up to 366 TWh annually for year 2045. So an even greater need for pipelines would result.
Create incentives for investors
How the future hydrogen network should look is currently a matter of debate and depends decisively on how supply and demand develop. Among other things, this influences the technology and cost developments as well as possible funding and support mechanisms. These uncertainties make investments in hydrogen networks risky. On top of that, the production of green hydrogen via green power stations is, at this time, generally uneconomical.
Visions of the future network therefore range from individual islands to a comprehensive and highly meshed network. It is imaginable that it will be much like today’s natural gas network. “With the recently confirmed Opt-in-Erklärung (voluntary agreement by operators of hydrogen networks to be regulated), lawmakers have taken a step to increase the safety for investments and to ensure an expansion of future hydrogen networks in line with demand,” stated Çam. Accordingly, in a transitional phase, operators of hydrogen pipelines will be free to choose whether or not to be subject to network regulation.
Use of natural gas pipelines
In the study “Wasserstoffinfrastruktur – tragende Säule der Energiewende” (hydrogen infrastructure – backbone of the clean energy transition), Siemens Energy, Gascade and Nowega looked at the actual conversion of gas transmission networks to hydrogen in practice. “Contrary to a frequently held view, the transportable amount of energy with hydrogen is only slightly lower than that with natural gas,” it is stated in the paper. In summary, “the conversion from natural gas to hydrogen would therefore have only a minor impact on the transmission capacity of a pipeline.”
The upper heating value of natural gas is about three times that of hydrogen. However, when comparing the energy current or flux of two different gases sent through a pipeline, it is not only the volume that plays a role, but the three parameters density, flow velocity and pressure, according to the authors. They state, “Since hydrogen exhibits one-ninth the density and three times the flow velocity of natural gas, almost three times as much hydrogen as natural gas can be transported in the pipeline at the same pressure and in the same time.“ As a result, the energy density is hardly reduced. So modifying the natural gas pipelines for use with H2 makes perfect sense.
The chicken-and-egg problem
Who takes the first risk? At present, attempts are being made to resolve the chicken-and-egg problem via pilot and demonstration projects with the larger aim of achieving a greater scaling as well as a cost reduction of the technology. The findings of the EWI study indicate that H2-Startnetz, the starter hydrogen transmission grid to be developed by 2030 as an IPCEI project (Important Projects of Common European Interest), will cover a majority of the transport demand in 2030 and will be needed for the two hydrogen demand scenarios.
Medium-term, the sole financing of pilot and demo projects will not, however, be sufficient to stimulate sustained supply and demand of hydrogen and to drive forward commercialization, the EWI researchers concluded. Additional support for supply and demand is therefore needed.
The costs for the green hydrogen that is to fill natural gas pipelines in the future depend mainly on two components: the electricity costs, including all related taxes and levies, and the investment costs for the electrolyzer. Investment costs could be lowered through targeted support measures such as grants or interest-free loans, the scientists explain. Innovative methods of electrolyzer production could also be promoted. Especially since the expansion of production capacities results in learning and scaling effects. And a higher degree of automation could reduce costs.
Contracts for Difference
On the electricity cost side, legislators have also taken the first steps. H2 producers are exempted from grid use charges under certain conditions. In addition, the levy imposed on electricity consumption by the renewable energy law (EEG-Umlage) is as of July 1, 2022 no longer in effect – the operators of electrolyzers benefit from this of course as well. More difficult are the actual costs to purchase power. With the recent sharp rise in electricity prices on the stock exchange, the economic viability of green hydrogen is also becoming more difficult.
What will help in the long term is therefore only the expansion of renewable energies. In the short term, targeted support measures, such as Contracts for Difference, can also help to secure a maximum electricity price or a hydrogen purchase price for producers. This is quite a common means of establishing a new technology in a market economy.
It therefore makes sense initially to establish smaller independent networks in industrial centers, such as the chemical production triangle Chemiedreieck Leuna-Buna-Bitterfeld, or in large urban areas, for example Berlin, to connect local demanders, producers and storers. In the next step, these island networks can be connected to each other and to possible import points on the coast or to neighboring regions. In the long span, a Germany-wide network arises that enables trans-regional cooperation and cross-border trade.
On the demand side, green hydrogen can have various potential uses, for example in fuel cell trucks, trains or buses, to reduce greenhouse gas emissions particularly in public transport, to name a few examples from the mobility sector.
Which regions benefit particularly? On the one hand, it is primarily the industrial centers, for example chemicals and steel, which are facing the need to transition to climate-friendly production. On the other hand, regions in which production capacities for electrolyzers are being built. Last but not least, new jobs will be created at these places and additional tax revenue will be generated.
Which players can drive development forward?
In the case of pipeline-based H2 transport, natural gas transmission system and distribution network operators might easily also become future operators of a hydrogen network. They have the capability to convert existing natural gas pipelines to hydrogen pipelines – even if this requires major investments. In addition, they are practiced in the transport of gaseous energy carriers as well as the operation of regulated supply lines.
Analyses of the EWI additionally suggested that energy suppliers could play a central role on the distribution side. Because they have a decisive competitive advantage. Through their core competencies of electricity generation and electricity trading as well as their often broadly diversified power generation portfolios – including green electricity production stations – they have the necessary expertise to couple electrolyzers to power networks.
In April 2022, the German association for gas and water standards DVGW founded the “H2-Kompetenzverbund der deutschen Energiewirtschaft” to promote the use of hydrogen and the market ramp-up of H2 technology in Germany by pooling expertise. In this uniting of various institutes of the DVGW research network, the Engler-Bunte-Institut of the Karlsruhe Institute of Technology (DVGW-EBI), DBI Gas- und Umwelttechnik GmbH of the German fuel technology institute in Leipzig (DBI-GUT), the German fuel technology institute in Freiberg (DBI-GTI) and the fuel and heating research institute Gas- und Wärme-Institut in Essen (gwi) working in cooperation.
DVGW chairman Gerald Linke explained, “Without effective sharing and broad communication of research results, the mammoth task of converting our energy supply to climate-neutral sources cannot be accomplished.” Spokespersons of the new association are Gert Müller-Syring and Dr. Jörg Nitzsche, both from DBI.
Today, we’re feeling the effects of what we did or allowed in the past. Not just with the energy and climate crisis but also in daily life. Whoever earlier installed a private PV system or heat pump may be enjoying the present, since they do not have to worry about staggering increases to their electric/gas bills.
This could also have been the case for the German energy supply, but both the impedance of the expansion of renewable energies and the apodictic trust in the gas industry have now maneuvered Germany into a rather disagreeable position.
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Kurt-Christoph von Knobelsdorff, managing director of the German administrative agency for hydrogen and fuel cell technology (Nationale Organisation Wasserstoff- und Brennstoffzellentechnologie GmbH, NOW) found clear words on the matter during the FC industry networking event Marktplatz Zulieferer in Berlin. He said that the proponents of the energy transition had placed too much emphasis on natural gas and electrification while neglecting the alternatives as well as a timely expansion and reconstruction of the corresponding infrastructure.
The NOW director outlined the vision of a climate-neutral society and confirmed that there is a great deal happening in all areas right now, but at the same time outright stated that the Federal Republic of Germany has long ceased to be a leader in renewable energies. Most recently with the Inflation Reduction Act that US President Joe Biden presented in August 2022 (see also pgs. 54 to 64) has the US “moved into the fast lane.”
In China, incidentally, electrification has been ramping up for a while, so the number of hydrogen fueling stations, for example, is now increased fivefold. On the other hand, here there is “really too little,” according to von Knobelsdorff: “We needed to accelerate the path to a hydrogen economy, but there hasn’t been much to see.” Instead, he dejectedly noted, “The Energiewende people squandered away the time.”
Indeed, many millions of euros and dollars are now being invested in H2 technology, both on the part of the government, in research and development as well as in support measures, and on the part of companies, in company acquisitions and in technology purchasing (see p. 8). But as a result of the old constraints of the fossil fuel age, it is currently difficult for Germany to fulfill the envisaged role as a lead market anytime soon.
The persisting forces that continue to urge that we should not place too great a burden on conventional industries, because they stand in global competition, are still influential. The hesitators, who would prefer to reactivate nuclear or coal power instead of fully committing to renewables, still occupy central decision-making positions.
Progressive sections of the government and the business community, on the other hand, have long since recognized the hour. The will to streamline and shorten approval procedures is there. Also the willingness to invest sufficient available money in not only new technologies and production capacities, but always also in order to take sustainability aspects into account, is there. Nevertheless, too little is still being done.
From an unideological point of view, it is not comprehensible why at the opportune time of the end of the German fuel supply tax reduction as well as the 9-euro train ticket, a temporary speed limit for the autobahn would not be introduced, in order to provide more freedom this way. Even if savings in the oil sector only indirectly affect other energy sectors, this would have been a clear sign of how simple energy saving can be. Even speed lovers would in the current situation have the understanding to drive a little slower for a few months so that no one has to freeze at home.
Starting on new paths would immediately offer a chance at new degrees of freedom for all of us. In doing so, however, it is crucial to not repeat the mistakes of the past. Up to now, it has been the case that technological leaps have usually not produced the hoped for savings. For example, the introduction of LED lamps did not lead to the hoped-for energy saving effects in all places, because the lights were sometimes switched off less often.
We can no longer afford such rebound effects. If the massive production of electrolyzers just leads to other resources being exploited and us becoming dependent on other nations, then it would help us very little.
It is already apparent today that there will be fierce global competition for certain resources. For example, cobalt, which is needed for electric cars, is found almost exclusively in the Congo. However, catalyst materials like platinum, ruthenium and iridium are also only minable at a few locations around the world. And lithium, which is also needed for the battery inside fuel cell vehicles, is still not recyclable to a sufficient quality.
Against this background, it is essential to recognize that less is more. Less use of all these resources is better for the environment and also reduces the risk of new dependencies. The same applies of course to energy consumption.
So that the vision of a climate-neutral energy supply does not remain an illusion, a more attentive approach is required overall – with resources, with energy, with the environment and with fellow human beings. If this is successful, we will indeed emerge from these crises much stronger. Climate-neutral energy is not a dream but a huge opportunity for us all.
The interest rate hikes in the USA, necessary to combat inflation and already in prospect, is putting stock markets around the world to the test. Such a damper, since this economic development will affect the growth of companies, as consumers will be more inclined to reduce their expenditures. That’s sure to the case in many instances, as rising costs for energy and food are placing a heavy burden on numerous households. In the US, consumers, which account for nonetheless two-thirds of the gross national product, are the basis for the economic growth that is therefore based on demand by them. But the US Inflation Reduction Act promises a lot of good things for the H2 and FC sectors in particular.
Share price performance of the companies discussed
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Source: www.wallstreet-online.de
The Inflation Reduction Act already in force stands for the topics of energy security, decarbonization and electromobility in the USA and of course provides massive support to companies that are active in the field of hydrogen and fuel cells there. And it is specifically these companies that we cover here in this stock analysis, as they – worldwide – are on the verge of tremendous, sustainable corporate growth. Which of course also has a positive effect on the associated share prices.
Thus, there will not only be losers on the stock market, but also winners with technologies and business models that are good for the climate. And that stand for falling energy prices, when hydrogen as an energy carrier becomes available in ever larger quantities at ever lower prices and competes with fossil energy carriers. At the end of the day, this is then even one of the many ways to counter inflation via falling energy prices, which should please Federal Reserve chairman Jerome Powell, even if inflation in the US is, at the moment, still being combated with rising interest rates.
The shares discussed here might even end up among the winners, since stock traders do not orient their actions only according to the general economic situation, but also assess an individual case or an entire industry according to its outlook. Institutional investors, such as BlackRock, even set this as an investment focus.
Investors with a medium-term investment horizon need not be alarmed by this if they hold shares in the hydrogen economy and should maybe even have bought again, bit by bit, since the trend of this market is very predictable – in a positive sense. On top of that, many of these – examples are Ballard Power and Nikola Motors – are at a low price level. Where – despite rising interest rates – medium-term, the share price is more likely to go sharply up than further down, if the companies would only implement what they themselves forecast. But that’s just my personal view of things.
Of course no share can escape a general stock market trend (a bear market due to interest rate expectations), but there are at all times winners and losers. The former will be found on the stock market in the hydrogen sector, because all the arguments are in their favor. And many stocks in the US H2 and FC sectors are trading at crash levels, when looking at the share prices from the turn of the year 2020/21 in comparison. Which are also in total contradiction to the milestones achieved in the meantime.
American climate bill finally passed
The Inflation Reduction Act was the result of a very close vote. In the US Senate, the bill passed with 51 votes to 50 and with ex officio Senate president and US vice president Kamala Harris breaking the tie. On August 12, 2022, the bill passed in the House of Representatives with 220 votes to 207. After its signing by President Joe Biden, the law is now in effect and will lead to the implementation of many a climate-related funding program in the USA. A leg up for companies that are engaged in this topic, and above all for many, if not all, of the companies discussed here.
Drawn-out process
This was initially preceded by a no vote from Joe Manchin. And so he was the only Democratic senator to deny support for the Biden administration’s comprehensive plans regarding climate change and thus blocked important decisions, since a stalemate was created between Republicans and Democrats in the Senate. It was like he was the finger on the scale. But now Manchin has agreed to the program upon certain conditions. In addition to the provisions for measures against climate change, there will also be a debt reduction (minimum tax for companies, closing of certain tax loopholes, price negotiations for medications, and more).
In total is a formidable 369 billion USD, which is to be invested in e-mobility, solar power and wind energy (production facilities/projects for solar panels and wind turbines, R&D) but also to promote energy efficiency measures as well as carbon capture. Hydrogen especially is a topic of importance. Here, the range extends from a tax credit of 0.60 USD per kgH2 (base rate) for the production of green hydrogen up to a 3 USD per kgH2 production tax credit if the facility for green hydrogen meets additional criteria. The aim is to promptly make green hydrogen competitive with hydrogen obtained from natural gas.
Additionally, the act includes funds for research and development of, among other things, electrolysis technologies to make the production of hydrogen more efficient. Forecasts see the H2 price at 1 to 2 USD per kgH2 by year 2030. Instead of claiming tax incentives (tax credits), there is also the possibility for companies to opt directly for payments (grants). Which is good for their liquidity.
On the topic of decarbonization, there will be tax incentives for carbon capture measures (storage/deep well injection = CCS). Here, 85 USD per tonne of CO2 will be granted. If CO2 is stored in the earth under gas or oil fields or even experiences another use in industry, it’s 60 USD per tonne of CO2.
The whole program therefore covers perfectly a variety of different areas for decarbonization in the US and that address climate change through technology and market-based approaches. Comparing the program with similar ones in Europe, the US is really stepping on the gas, while Europe unfortunately still seems rather reserved with its programs. Even the 1 to 2 billion EUR set aside in Germany for subsidized purchase of hydrogen from around the world via the project H2-Global pale in comparison to the plans of the US. For the US companies discussed here, like Bloom Energy and Plug Power, the planned new programs are to be seen as a turbocharge for the individual business fields and will have a very positive impact on their share price performances – maybe not tomorrow, but in the future will there be positive effects.
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.
The figures for the second quarter should be published August 15, 2022 at the latest, but Hyzon surprisingly reported that certain sales in China were not followed through in time to be able to be booked (“revenue recognition in China”) and that there are “operational inefficiencies” at Hyzon Motors Europe B.V., the subsidiary in Holland. Earlier statements (balance sheet publications) are therefore invalid or obsolete for the time being. This is a real shock after all the news about orders, corporate partnerships, production ramp-up and the recent acquisition in Germany.
Craig Knight has left Hyzon
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Hyzon has time from now to October 14, 2022 to file the necessary figures for the second quarter as well as the corrections for the previous quarters with the SEC (US Securities and Exchange Commission) and Nasdaq. After that, there is an optional extension of 180 days if the deadline cannot be met.
“The Company’s Board of Directors (the “Board”) appointed a committee of independent board members to investigate, with the assistance of independent outside counsel and other advisors, certain issues that were brought to the attention of the Board by Company management. These issues include revenue recognition timing, presentation, internal controls and procedures, primarily pertaining to its China operations.”
Hyzon
That the board chairman, Craig Knight, is immediately leaving the company, having been relieved from his post, suggests that something major must have gone wrong. The new chairman will be Parker Meeks, who was previously chief strategy officer – a McKinsey man with an impressive career. He will temporarily lead the company as interim CEO until a suitable new CEO is found.
Acquisition of the ORTEN Group
The expansion of the company is proceeding according to plan despite the aforementioned problems, as the production facility in Rochester, NY and Chicago, IL demonstrate, as well as the start of MEA (membrane electrode assembly) production in the US and the current job ads for new personnel suggest. Hyzon has additionally received a funding decision and can now apply for state subsidies for trucks in the US (California and New York).
In order to better position itself in Europe, Hyzon has acquired the ORTEN Group (ORTEN Betriebs-GmbH and ORTEN Electric Trucks GmbH), one of the pioneers in the conversion of used and new diesel to battery-electric and hydrogen-powered trucks. With this, 80 employees have moved over to Hyzon, and it is also a good complement to the activities in Holland. Hyzon Europe ORTEN makes mainly trailers and truck conversions for the beverage industry of up to 26 tonnes load weight. Hyzon is thus also entering the battery-electric sector, like Nikola Motors has already. The aim is to be able to offer the shipper or truck buyer several options. The retrofitting of existing vehicles (chassis of diesel trucks) seems an important optional step. Thus Hyzon is addressing the right market and wants to be active not only in Asia but also in Germany and Europe.
DB Schenker intends to rent out Hyzon trucks via hylane
Cooperation with Schlumberger
Major corporation Schlumberger is known mainly for oil drilling, where it is one of the heavyweights. Now the two have started a joint development program in which Hyzon’s FC stacks are to be put into use in various heavy devices and vehicles as well as oil drilling platforms (rigs) for Schlumberger. These can be energy systems on drilling platforms as well as other heavy-duty equipment. The goal is to operate a drilling platform completely with hydrogen energy-wise (2.5 tonnes per day).
In the fourth quarter of this year, there will be a first joint showcase project, according to the press release. Typical 4-MW diesel generators are to be replaced by fuel cell systems. With such partnerships, new emphases are to be set. It’s an accolade for Hyzon to be running a test series with a company like Schlumberger and perhaps then receiving larger orders. I would rather have seen a company like Cummins Engine in this position, only theoretically. But for Hyzon, this is a good and important step by which to bring its own FC technology to a wide audience.
In addition, there will be a memorandum of understanding that will be filled with content from a concrete project. In the coming twelve months, the Schlumberger subsidiary Ensign Energy Services Inc. will integrate a Hyzon FC system into an existing oil platform. Side note: Hyzon developed its own fuel cell technology throughout more than 20 years of research and is therefore not dependent on suppliers of such.
It is clear to us that the company, after all matters have been clarified, is executing its corporate strategy as planned, as already indicated by the presence of the interim CEO at specialist conferences. The share will certainly remain very volatile, owing to the existing uncertainty. Should after deduction of all possible losses and after balance sheet adjustments, among other things, the cash on hand still amount to over 300 million USD – it was over 400 million at the end of the first quarter – the stock exchange should take this into account in the valuation of the company.
I would say: Buy on bad news – but only for investors with a very speculative attitude and traders who know how to use daily fluctuations in the share price to their advantage. The course will have to be a bumpy ride – a roller-coaster ride. Perhaps a competitor is also using the situation to get on here and take advantage.
Investment banks like JP Morgan have of course revised their estimates downwards following the latest publications, though do not advocate selling now and completely breaking up with Hyzon. Is a 400 to 500 million USD loss in value at the stock market justified by the current situation of uncertain information? After all, Hyzon has many high-profile investors. In addition, blocks of shares held by insiders account for more than 60 percent of shares issued.
We’re going crazy: On the one hand, the important trust in the company is lost until clarity (figures, financial statements) is achieved. There may be adjustments for certain financial transactions (stock purchase by Holthausen and transformation of Hyzon Motors Europe B.V.?), if therein lies the problem – and only if. What’s clear: Class action lawyers may be able to take advantage of the situation. Rejoicing are the short sellers, who in the meantime had bet about 20 million shares on a price drop. On August 5, 2022 alone, the share price fell by over 38 percent. Now short sellers can profit massively from this, while some others might also think of tucking in until the time the company provides clarity.
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.
Startups in the hydrogen and fuel cell industry, such as Enapter, Lhyfe and Clean Logistics, have received fresh equity via the stock exchange to implement their business plans and to evolve robust company stories from mere visions. The stock exchange is indeed also the right place to spread the investment risk over many shoulders (institutional and small shareholders). Investors willingly provide the necessary capital so that they can push along the company’s growth with their own strength.
At a premiere celebration for Clean Logistics’s fyuriant (see p. 36), André Steinau, managing director of GP Joule Hydrogen, announced to H2-international that its parent company had just reserved 40 assembly stations for 40 fyuriants:“We will solve, with the production of H2, the building of H2 refueling stations and the offering of vehicles, the well-known chicken-and-egg problem.” Shortly afterwards, CL and GPJ signed a framework agreement for the supply of 5,000 H2 trucks.
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Further share issuances have a high probability of following, in order that the company can perfectly finance things itself. The company often has, through the IPO and the stock market listing, quite generous company valuations, calculated by the total number of shares multiplied by the stock market price. Here, it must be taken into account that the number of freely available shares – the free float – almost always comes out to be very low and the overall valuation of the company on the stock exchange therefore corresponds instead to a theoretical value, since the vast majority of shares are held by the company’s founders and management.
An investor in these stocks will have to think about how long they plan to hold the investment. Because these companies will initially write losses, as a result of the use of capital obtained via the stock exchange. There must first be a building up of production capacity, which must be done from scratch. In addition, specialist personnel are needed to turn the plans into reality. Is it therefore possibly better to realize quick price gains after the IPO (initial public offering)? Can the companies constantly come up with (good) news, which is a prerequisite for higher, so raising of, share prices?
In a nutshell: The abovementioned shares are better acquired as a package via a fund, since with the spread of risk over many different stocks in the area hydrogen and fuel cells, the overall trend and a whole industry can be better assessed than in the case with individual stocks. In such funds are of course also heavyweights that are blue chips at the stock exchange and, with their lower volatility, provide a balance to the strong price fluctuations of the small stocks.
Examples here are Siemens Energy, Linde, Air Liquide, Weichai and Cummins. Because clear is: Small companies in the startup range with the designation small- or microcap are much more volatile in their price performance than stocks with very high market capitalization. With a fund, this volatility is balanced out or minimized, since investors participate in the overall trend of this strongly growing segment by raising the prices.
Additionally, a sensible strategy may be to not make a one-time investment, but rather to build up an invest over a longer time period, for example monthly tranches. This would make use of the so-called cost-average effect (dollar-cost averaging). You gain a good average price course over time from the fact that the fund is always valued differently, so you receive more or fewer shares for the same monthly investment amount. With a horizon of ten years or longer, you are statistically always right, as this time period will see some bull markets and some bear markets and you can buy again at sometimes high and sometimes low prices along the course and obtain a very good average annual return.
Also to consider: For hydrogen and fuel cells, the megatrend on the stock market is just beginning. This means that such investments have above-average potential to increase in value and can be dubbed “sustainable.”
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.
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