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Opportunity for green fuel

Opportunity for green fuel

Axpo drives H2 production in Switzerland forward

The Swiss energy corporation Axpo has identified hydrogen as a field for strategic growth. The H2 production facility at Kraftwerk Reichenau – the power plant on Reichenau Island – is one of several set by run-of-the-river hydropower plants that Axpo has planned for the coming years. Because Switzerland is striving for climate neutrality by 2050. Green hydrogen is playing a central role in this – particularly to decarbonize the heavy transport sector.

Axpo is the largest producer of green electricity in Switzerland. By 2030, the energy corporation wants to have installed in the domestic market alone 3 GW of wind power plants and 10 GW of solar. The energy supplier, however, also wants a part in shaping the future of green hydrogen in Switzerland and Europe. Because the Alpine republic currently has a total H2 consumption of 430 GWh, or 130,000 tonnes. In perspective: This corresponds to 0.2 percent of EU demand. And 85 percent of this consumption is alone attributable to the Swiss petroleum refinery Raffinerie Cressier.

First H2 production end of 2023 in Graubünden

Visible results can already be seen from the new strategic field. Axpo and Rhiienergie have installed at hydropower plant Wasserkraftwerk Reichenau in Domat/Ems an H2 production plant with a capacity of 2.5 MW. The plant is to go into operation at the end of 2023. The two companies have together invested the equivalent of over 8.35 million euros. The production facility will be directly connected to Wasserkraftwerk Reichenau, in which Axpo holds a majority interest, situated in the canton Graubünden.

At this site, up to 350 metric tons of green hydrogen are to be produced annually using hydropower. This is analogous to about 1.3 million liters of diesel. The green hydrogen will be delivered from the production plant directly to refueling stations. Alternatively, the green hydrogen could additionally help make energy supply for industrial operations more eco-friendly.

So far, likewise to Germany, hydrogen has not been widely used as a fuel in Switzerland. A network of fueling stations is only slowly being established, although the first H2 trucks are already on the roads. H2 mobility remains a niche area for now. Nevertheless, the current 53,000 heavy vehicles in Switzerland offer great potential for the growth of a future hydrogen market in the coming years. A demand of around 5 t H2 per truck per year from this market is quite realistic. If so, 30 percent of the vehicles would then require 80,000 t H2. At 5,000 operating hours per year, this would necessitate an electrolysis capacity of 1,000 MW.

Environmental and heritage protection prevent expansion

Not all of the innovative projects will see a successful implementation, as the resistance from some persons with an interest in nature and heritage protection is in some places simply too strong. One example is wind energy: The time for the planning and design phase of projects is enormously long; time and again, they do not advance. The result: In the whole of Switzerland, just 41 wind power plants are running. Axpo operates only one of these, through its subsidiary CKW.

But the protest is not limited to wind power alone: Earlier this year, an H2 project on the Swiss-German border was halted due to objections made by local residents (see H2-international Feb. 2023). “The hydrogen production facility at Wasserkraftwerk Eglisau-Glattfelden has been tanked as a result,” confirmed Axpo CEO Christoph Brand. Three private individuals had lodged protests. They did not want one truck once per day driving through their residential neighborhood and picking up the hydrogen, Brand explained. In addition, however, a power generation structure erected outside of the developable land zone will have to be demolished and placed elsewhere, as the court did not grant it exception approval from the zoning. The H2 plant when finished was to likewise have a capacity of 2.5 MW and produce around 350 tonnes of green hydrogen annually. That is now history. The green gas must come from elsewhere – from Northern Europe, among other places.


Fig. 2: The H2 plant under construction

Luka Cuderman, who as energy manager at Axpo is working on the strategic direction of the future H2 business, summarized the general requirements for an H2 production site once more. So the power plant itself needs sufficient space and connection capacity. Outside of the buildable land zone, according to his statements, certain constraints must furthermore be met in order to conform to zoning restrictions and be allowed there. Equally important are proximity to end consumers as well as a good connection to transport routes. “A secondary application such as utilization of incidental waste heat is a further plus,” stressed Cuderman.

The electricity price is the determining factor for H2 costs here. It accounts for more than half of the total cost. The investment costs, the capex, of the plant are in turn directly linked to the number of operating hours. An increase of this working time is only sensible under certain conditions, however, since operation at high electricity costs is uneconomical. “For the example of an electrolyzer with 2.5 MW, we assume 5,500 operating hours,” stated Cuderman. The cost of operating the plant, or opex, accordingly accounts for twelve percent of the H2 cost per kilogram. Grid costs do not incur for the operation if the H2 plant is directly connected to the power source. That is, however, not always the case.

Summary: The more hours an electrolyzer can work, the more weight the electricity costs take on. So close to full load, the cost for electricity constitutes 80 percent of costs.

2,000 t H2 per year from Aargau

Axpo wants to advance the topic of hydrogen in its homeland in another way: At the industrial park Wildischachen in the canton Aargau in Northern Switzerland, a still larger production facility is to soon appear. It is designed to have up to 15 MW of installed capacity. Annually, 2,000 t of hydrogen is to be made available. The electricity required for production is coming entirely from the nearby run-of-the-river power plant Flusskraftwerk Wildegg-Brugg. With direct connection to the hydropower plant owned by Axpo, climate-neutral production of hydrogen will be ensured.

The H2 produced will then be delivered partly to the nearby refueling station of company Voegtlin-Meyer via a pipeline and partly to other refueling stations in the region. The green hydrogen is to be made available to private users, on the one hand, as well as used in H2 buses for public transport commissioned by the company PostAuto. With the produced H2 quantities, around 300 trucks, PostAuto vehicles or buses can be run per year.

The utilities provider IBB is designing the pipeline that will lead from the H2 production plant to the refueling station in Wildischachen. The waste heat resulting from the electrolysis process is to be utilized in the heat network of neighboring industrial operations. The location of the plant is therefore ideally selected, as it is in the direct vicinity of the Axpo hydropower plant in Wildegg-Brugg and of the refueling station of Voegtlin-Meyer. The construction and start-up of the H2 plant is planned to occur in the course of 2024. Which is when the fleet of PostAuto is to be supplied with green hydrogen. So in Switzerland as well, the niche for green fuel is starting to grow.

Author: Niels Hendrik Petersen

The hydrogen megatrend

The hydrogen megatrend

Dear readers

In recent years, hydrogen has managed to move out of its niche and onto the political main stage. Not just in Germany and Europe but across the world, the energy sector is bracing itself for change as we move from the fossil fuel age to a renewable era.

While some regions are only slowly preparing themselves for the real energy transition, many countries in central Europe as well as nations like the United States and Japan are right in the thick of it. The introduction of the Inflation Reduction Act saw the US roll out a huge financial package. Such a step has yet to be taken in China. The People’s Republic has long been at the forefront of electric transportation but the political framework for instigating a hydrogen economy remains a work in progress (see p. 48).

Germany, on the other hand, was at the cutting edge when it coined the term “energy transition” many years ago, an expression that now, around the globe, epitomizes this transformation process. And by phasing out coal and nuclear power and cutting back on oil and gas, Germany finds itself in a good position, but we are no longer at the forefront when it comes to tackling the climate crisis.

For a long while, Germany was ahead of the field when it came to the environment – leading on solar and wind technology as well as hydrogen and fuel cells. The hope is for a better result this time when establishing its own hydrogen and fuel cell industry than was the case for photovoltaics.

The German government recently adopted the update to its national hydrogen strategy, thus making clear its support for the course it set three years ago (see p. 14). What’s more, Germany is now getting a steering committee for hydrogen standardization so it can launch a standardization road map for hydrogen technologies (see p. 6).

With so much happening, it will come as no surprise that, in the German-speaking world especially, the word for “hydrogen” (Wasserstoff) has for many months been a popular term in online searches. Interest in hydrogen began to grow at the end of 2018 – well before the market started to ramp up, as research using Google Trends clearly shows (see p. 7). At that point, the number of inquiries using the Google search engine increased considerably, exceeding the 2004 level in early 2019.

Since then, the US corporation has recorded ever-higher numbers of searches for this particular keyword. In early and mid-2020 and early 2021, hydrogen inquiries overtook searches for the German equivalent of “photovoltaic” by a wide margin. Over the years, “hydrogen” almost always outperformed German inquiries for “fuel cell,” “electric mobility” and “digitization” (see cover graphic for German search results with keywords translated into English).

Globally the situation is a little different: Throughout the past two decades, a comparatively high number of Google users have looked up the word “hydrogen” in English – far more frequently than the English words “fuel cell,” “photovoltaic” or any spelling of “digitization.” Only “PV” enjoys a similar popularity to “hydrogen.”

Of course, this kind of trend analysis isn’t rigorously scientific, but it does give a representative indication of the interest level in hydrogen now, and how that compares with the past. Our analyst Sven Jösting, who has been monitoring the stock market performance of hydrogen and fuel cell companies for many years (see p. 47), has for a long time talked about a “megatrend.”

To all the critics who say it’s just another hydrogen hype, I can confidently reply: It is extremely likely that this time we’re looking at a proper hydrogen boom. And we’re right at the start of it.

For it’s only early days as we still don’t have a functioning hydrogen market. Except, that is, if we look at hydrogen as an industrial gas for conventional applications (welding, medicine, etc.). Preparations are underway, however, by H2Global to set up a trading platform that will enable hydrogen to be bought and sold in large quantities in a similar way to how the European Energy Exchange operates.

It’s also true that we don’t yet have a market for electrolyzers or fuel cells. Unless, of course, you count the hitherto low production volumes and capacities. This is essentially negligible in view of the quantities and capacities that we will potentially need. Hopefully we’ll be able to report on the latest sales and installation figures in the February 2024 edition of H2-international.

Even in the mobility sector, sales are still extremely modest, which is why no real acceleration of the market can be assumed before 2025. That said, this will only initially affect the commercial vehicle sector, i.e., hydrogen trucks and buses. In all probability, hydrogen automobiles will only be produced and sold in significant quantities at the end of the decade – if that does indeed happen at all. It will take even longer for rail vehicles, ships and airplanes.

The outlook, however, is clear: As the world shifts increasingly away from fossil resources, so renewable energy becomes ever more important. The upshot is that we need a lot more solar power plants and wind turbines. And hydrogen will be essential in bringing this vast quantity of green power to the different energy sectors.

Admittedly, it’s a pretty basic description of the energy transition. Though it does plainly show that hydrogen, far from being just a megatrend, is something that the energy sector simply can’t function without.

 

Best wishes

Sven Geitmann

Editor of H2-international

Siemens Energy – “We don’t need a corporate turnaround”

Siemens Energy – “We don’t need a corporate turnaround”

That the wind subsidiary Siemens Gamesa will still cost its parent company a lot of money has been the case for a while. Too great are the problems with some wind turbine types (onshore), and integration also costs money until synergies properly take effect and cost reduction potentials can be leveraged. Siemens Energy itself still see financial risks with this in the area of 1.5 to 1.7 billion EUR. It could, at the end of the day, as well be two billion. Provisions amounting to 1.6 billion EUR have already been set aside for this purpose, which will come into use in the coming two years. The second quarter brought an overall loss of 2.9 billion EUR (minus of 4.5 billion EUR for the entire year is expected). That’s as far as the negative news.

The good news: Siemens Energy will well be able to cover these losses (liquidity at over 4 billion EUR), even if this will have a very negative impact on the overall result for the current fiscal year and it could take one to two years to return to positive figures. Look at the bigger picture: The order intake worth tens of billions is reason to celebrate. In addition, the risk has now been named, so the stock market will be able to include this in its investment decisions. Investors with time to allow should profit from the turnaround through again rising share prices.

The stock market adage “buy on bad news” is the perfect as a basis for the invest in Siemens Energy. Because Siemens Energy with an order volume of over 110 billion EUR is virtually flooded with orders relating to energy security, hydrogen and the like, but there are not many companies in the world that as a one-stop shopping partner are able to offer everything from a single source. Many of the business units are doing very well and are highly profitable.

If the share price weakens further, 13 or even 12 EUR would be the perfect entry price as well as usable for the price reduction of old stocks. In two years, I expect prices of over 30 EUR.

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: Sven Jösting

Cummins – Hydrogen as a driver of growth

Cummins – Hydrogen as a driver of growth

My recommendation to use the temporarily very weak prices in Cummins for continued and new buys has already paid off: The share price grew from around 200 to over 255 USD. And it will continue to, even though Cummins is increasingly focusing on new markets like hydrogen (engines, electrolysis, stacks for commercial vehicles, etc. – we reported).

Cummins can finance its own growth well from its own means through corporate earnings. On average, 34 percent of corporate profits are distributed to shareholders as dividends – in 2022, it was 6.28 USD per share. This was topped up by seven percent on July 11 to 1.68 USD per share for the quarter. The company’s growth rate of 26 percent per year on average over the past five years is solid. Cummins now sees turnover in the current fiscal year at 33 billion USD and expects an earnings per share of 19.80 USD, which corresponds to a growth of 31 percent. A good justification for further rising prices.

Share price decline despite good figures

Cummins reports for the second quarter a turnover of 8.6 billion USD (plus of 31 percent) and profit of 720 million USD, which came out lower than expected, however, and allowed the share price to sink from over 255 USD to 230 USD – thus already back to buy level, as the guidelines are unchanged.

Together with Air Liquide, Cummins Engine acquired Canadian company Hydrogenics in 2019 for 290 million USD. In the transaction, Air Liquide retained at that time a 19 percent share in the company. This share Air Liquide has now sold to Cummins for the equivalent of about 156.5 million USD, making the value of Hydrogenics as per today the equivalent of over 823.7 million USD. Cummins plans with subsidiary Accelera, in which Hydrogenics is consolidated, to build an annual electrolysis capacity of 3.5 GW in the next years. A diversity of large orders – 500 MW in China, 500 MW in the USA, 500 MW in Spain and 1 GW in Belgium – are already in the books of Cummins or Accelera.

Considering that Plug Power intends to build 5 GW of electrolysis capacity within a few years and is currently valued on the stock exchange with a good 6 billion USD, Cummins should consider placing its subsidiary on the stock exchange, possibly while also retaining a majority shareholding, like Thyssenkrupp did with Nucera. The consequence in this purely theoretical consideration: Capital inflow of over 2 billion USD, with which, on the one hand, the price for buying Hydrogenics is covered (flows back in); in addition, an extraordinary profit beckons; and thirdly, Accelera via the stock exchange would receive new growth capital (for acquisitions?) – just as a thought experiment.

Hydrogen-powered engines

The automotive expert journal WardsAuto reports on how advanced Cummins is in its work to bring engines to market that run on hydrogen. There is to be a new version of the successful B6.7 diesel engine that with its powertrain burns hydrogen and can be used in heavy trucks. After all, there are already restrictions in place in California that prohibit already starting 2024 the operation of diesel trucks on, among other places, port grounds. Vehicles produced before 2010 will soon no longer be allowed on the roads of this state. A winning pass to all manufacturers of alternative drives – so employment of the fuel cell or direct injection of hydrogen as well as battery-electric systems.

With this, the new B6.7H 6.7-liter hydrogen engine (range of 483 km, or 300 mi) can quickly become a slam dunk if hydrogen and the corresponding infrastructure are available. So it is very suitable that the US government via the Inflation Reduction Act has provided 8 billion USD for the construction of six to ten H2 terminals distributed across the US – in addition to the many individual programs offered by states such as California.

Summary: Cummins Engine is working on a variety of platforms for the use of hydrogen in many applications such as heavy transport and rail but also for electrolysis, whether PEM or alkaline. The stock market will increasingly let this show in the company valuations. A real H2/FC blue chip is what Cummins has developed into.

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: Sven Jösting

Ballard Power – Platform partnership with Ford

Ballard Power – Platform partnership with Ford

The press conference for the second quarter delivered a number of results that allow a very optimistic outlook for the future of the company. Ballard is positioning itself perfectly in its most important markets: buses and trucks, rail vehicles, maritime transport and stationary energy. This involves optimizing the production processes of all important components, cost reductions (scaling), local-for-local strategies (supply chains in the specific countries where Ballard maintains production) and ramp-up in the various regions of the world in which the company operates. A few examples:

In buses, the Canadian company is ahead of the pack in the fuel cell segment with a formidable market share of still over 70 percent. Recently, the largest single global order came in from customer Solaris for 96 FC buses (52 of them for public transport company Rebus in Güstrow near Rostock). In the next two years, it’ll be an astounding 10,000 FC buses (Europe and USA), a large share of which is sure to be Ballard. The USA is just beginning to pick up speed in this regard, and Ballard sees itself well placed to accept larger orders from, among other, New Flyer (have market share of about 66 percent in transit buses). Individual orders from municipalities have now grown from units of 1, 2, 5 to 100 FC buses.

The China card

In China, a lot is finally happening at the government level regarding hydrogen (see above). The chance of a comprehensive funding program starting in 2024/25 is increasing. Will China do it in dribs and drabs or, similar to the US government with the Inflation Reduction Act, launch a mammoth hydrogen program (investment incentives, subsidies for H2 production)? China could use hydrogen as a climate-friendly economic stimulus package for itself, given the current problems in the construction sector and with the infrastructure programs. In addition, new markets within electric transport can be established that could supplement or alternatively replace battery-electric ones, which would deliver a turbo boost to the world market for fuel cells.

For Ballard and its joint venture with Weichai (49:51), this allows a lot of possibility. CEO Randy MacEwen said: “We are believers in the long-term market opportunity for China. It is the largest market for production and use of hydrogen today and based on my recent visits there, I expect that to continue through 2030 – 2050. There is an enormous level of activity.”

Wisdom Motor sends 147 FC trucks to Australia

With Wisdom Motor – headquarters in province Fujian in China –Ballard has already started a strategic partnership in May 2022, which also includes the companies Templewater Group and Bravo Transportation (trucks and buses). Wisdom Motor in turn signed a cooperation agreement (MoU) with the Australian companies Pure Hydrogen and HDrive in November 2022, where Wisdom would supply over a five-year period 12,000 heavy-duty hydrogen-powered trucks (among them rubbish trucks).

Now, the first order has been completed, which entailed the delivery of 147 hydrogen-powered trash collection vehicles. Order value: 63 million USD. Supplier of the modules/stacks: The joint venture of Ballard and Weichai in China – exclusive even. Could this already mean that Ballard via the China JV is now supplying 2,400 FC modules per year here from this deal alone? The FC capacities of the JV currently correspond to 20,000 units per year, so this order is a very good start looking at the future.

Investments in China will be adjusted

Originally, Ballard wanted to establish its own MEA production with an investment volume of 130 million USD in China, among other things to counter import tariffs. This investment will be postponed for now, until there is clarity on the subsidy program. They are sticking to the plans, but don’t want to invest in land and all that until the FC market gets going there. However, they have concerning the supply chain all of the important connections already and can quickly act at the opportune time. To put it another way, this allows the interpretation that Ballard is first investing more in markets (USA, Europe) where the company expects to have better chances of winning orders in the near future. All this can also quickly be modified, however, if China accelerates its hydrogen strategy through subsidies and incentives.

Platform partnerships as a turbo

Ballard has been working for a long time on building so-called platform partnerships. This refers to customers who know how to use the fuel cell know-how (stacks & modules) for their own benefit and integrate this into their own hydrogen strategy, and acquire the FC modules exclusively from Ballard. They fully rely on Ballard in this regard and the company’s experience as well as the quality of its FC products. For Ballard, this means being able to deliver large quantities of modules/stacks to these partners in the future. In the bus sector, these are companies like Van Hool or Solaris, and with rail vehicles, Siemens Mobility and Stadler, to name a few examples. There could probably become 30 or more such partnerships, which means enormous and, above all, secure sales potential in the medium to long term.

Selection procedure of Ford speaks for Ballard

Ford Truck has decided, after comprehensive market analysis, to employ Ballard FC modules for its trucks of the F-MAX series. Two 120-kW FCmove XD modules be employed per truck. First, a letter of intent (LoI) was signed and the delivery of some modules for test purposes agreed on. From this will then come a large series. You can compare this with Bosch and Nikola, where Bosch supplies the FC modules.

This is an accolade for Ballard that underlines its expertise. Ford Truck builds, in addition to heavy trucks, many other vehicles such as construction vehicles and tractors that could in the future have Ballard inside. The truck production in Turkey is to be the first Ford site for this. Over 10,000 vehicles roll off the assembly line here every year.

Ford can itself install the Ballard modules perfectly on its own truck chassis, is the plan. It will surely take another year or two until, after test runs, the first large orders are given over to Ballard. The foundation, however, has now been laid. What would happen if Ballard were to supply 1,000, 5,000, 10,000 or more FC modules in a year – alone for this one platform partnership? According to Ballard: “As Ford’s fuel cell F-MAX truck platform matures, we anticipate this partnership to evolve into a long-term scaled-deployment-level module orders and supply arrangement.”

Canadian Pacific (CPKC) too has ordered for its production facility in Kansas City 20 FC modules for use in various locomotive types in order to gain experience from the test operation. They are also working together with railroad company CSX to make locomotives H2-ready or break away from diesel operation. A very large order can come out of this. Further orders are expected further in the course of 2023.

Figures

The reported loss for Ballard lay, as expected, at minus 0.10 USD per share for the quarter. The order volume rose strongly in terms of value to 147.5 million USD and will continue to do so. In the bank still lies a good 815 million USD in liquid assets. The ratio of sales development between the first and second half of the year is described as 30:70 percent, so the current second half of the year promises positive surprises regarding this. Really exciting will then be 2024/25.

Summary: The calm in the share price development of Ballard should end in 2024 at the latest and lead to a gradual rise in the share price that finds its foundations in the rising number of orders for the FC products in all the various platform partnerships, markets and regions. A turbo could be China, when clarity on subsidization is created. Therefore: Buy and leave alone. No hasty reactions. Think about Facebook, Amazon and Google in the first years: There were only “logical” huge losses – until the business models started to soar – the shares as well.

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: Sven Jösting

Bloom Energy – Capital increase accomplished

Bloom Energy – Capital increase accomplished

Bloom Energy was able to increase its turnover by 24 percent in the second quarter to over 301 million USD. The right growth, meanwhile, is to take place – as in every year contingent on project completions – again in the second half of the year – principally in the fourth quarter. The ratio is assumed to be 30:70, so 70 percent of sales – with increasing trend – will wind up in the second semester.

The expectation of delivering in the fiscal year a total turnover of 1.4 to 1.5 billion USD has been validated. The non-GAAP profit margin is to come out to 25 percent for the whole year. The cash on hand was able to be raised as per June 30, 2023 to an astounding 923 million USD. This includes net proceeds from a convertible bond in the amount of 560 million USD.

New business model: Series 10

For industrial customers requiring at least 10 MW of energy output, Bloom offers to make this scalable to purchase via electricity and heat supply contracts – term of at least five years –– without having to themselves invest in technology/hardware. The customer receives energy at a fixed calculable price and that reliably 24/7. For this, Bloom can continue to employ natural gas but also biogas and hydrogen, depending on availability. In addition, Bloom is determined to use waste heat – for example at data centers – wisely. Consider that data centers in particular require a lot of energy for cooling the servers, but at the same time the resulting waste heat (process heat) is also useful. Specifically:

  • The customer receives a secure supply of energy at a fixed price over an extended period of time. Up to 0.099 per kWh at the lower end.
  • If there is a need for more energy, the system can be expanded to the requested amount through further delivery of additional Energy Servers within 50 days after the signing of the contract.
  • No upfront investment required. Bloom provides the Energy Servers and infrastructure for the customer at no additional cost.
  • Installation, service (maintenance) and management of the Servers is carried out by Bloom Energy.
  • The systems are designed so that they can run on natural gas, biogas and hydrogen – according to customer requirement and availability. Also the switch from one energy source to another is no problem.
  • The energy can be requested directly by the customer, but also alternatively through a provider that supplies the customer with energy according to need. Bloom cooperates with energy suppliers of all kinds for this.

Heating

More than 50 percent of the energy used in the business realm is process heat. This area is one of the most important in terms of decarbonization. Rising energy prices are an additional challenge. On the other hand, the increasing digitalization is leading to higher power requirements for data centers and associated networks. Up to 40 percent of the energy required there is used to cool the systems. That energy is primarily electricity. This is also the case with air conditioning and appliances for cooling or freezing. Hydrofluorocarbons (HFCs) are employed in these, which are very destructive to the climate – 100 times more damaging than CO2.

Here, Bloom can make a start by employing CHP (combined heat-and-power), as the Energy Servers give off a large amount of heat. From this point of view, the heat is a perfect usable waste product, which can be used by the industrial customer for its process heat. The waste heat can equally be used in return for air conditioning and chilling/freezing. At the end of the day, all this is achieved without the use of HFCs.

All this saves money and reduces CO2 emissions as well as energy requirements. This is already being utilized in Europe, but now with the Inflation Reduction Act, the USA is on track to use this potential for itself. Bloom is in talks with many potential industrial customers on the subject.

Summary: You can bet on the fourth quarter of this year already today. It must be, based on the forecasts, overall very positive in terms of a) the profit margin and b) expected turnover: 400 to 500 million USD. The third quarter is expected to remain at the level of the second quarter and so not offer any surprises. Further speculation should focus on the introduction of high-temperature electrolyzers in 2024, as a further boost to sales and order volume could derive from this.

Bloom is still experiencing losses but will enter the profit zone in 2024/25 – and with high sustainable growth, is my expectation. Furthermore, the topic of hydrogen (production, application, tax incentives via Inflation Reduction Act) will have increasing importance for Bloom. The stock market will have no choice but to show the long-term prospects in its valuation. Bloom seems to me to be very well positioned in the field of energy and hydrogen. Target: More than 50 USD in two years. Collect and leave alone. The stock market anticipates all this.

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: Sven Jösting