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FuelCell Energy: A turnaround at last?

FuelCell Energy: A turnaround at last?

Here, I am cautious. The company, in my opinion, does not yet offer any convincing prospects, expressed in terms of expected growth, orders and sales through the use of its technology, which was also supported by the share price drop to 1 USD. From this very low level, the price has now turned around, driven by the news. It looks as if a gradual rise in the share price is now imminent. FuelCell Energy reports a number of projects in Africa, the USA and Canada. Nigeria for example, plans to generate at least 30 percent of its energy from renewable sources by 2030 (MoU with Oando Clean Energy).

FuelCell Energy speaks of projects, but so far without naming order values; however, it is clear that demand for FC technologies such as solid oxide fuel cells (SOFC) is increasing. In Canada, a project with FuelCell Energy as technology partner was nominated for the Innovation Fund Award. Together with the companies Kinetrics and Bruce Power, the energy production of Ontario Power is to be expanded by hydrogen. And FuelCell Energy is about CO2-free hydrogen in commercial vehicles and about using electricity from nuclear power plants for hydrogen production (surplus electricity). Although this is only a pilot project, orders for high-temperature electrolyzers from FuelCell Energy are expected in the future.

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Summary: The company has a healthy balance sheet structure and sufficient equity for financing. Unfortunately, FuelCell Energy does not yet have a long-term strategy that we can understand as to how FC technology and IP are to be used profitably. Cooperations such as that with ExxonMobil and IBM in the field of carbon capture sound very exciting, but how is money to be earned with such? The share will go its way, especially as support programs (Inflation Reduction Act) and the need for safe, clean energy form the basis for this. An own electricity portfolio (own plants, energy sales via PPA) will form the basis of the company’s earnings in the long term. A perfect FC/H2 share for traders.

Disclaimer

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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.

Immense potential on the Bosporus

Immense potential on the Bosporus

How is Turkey’s energy industry developing?

Sometimes a rooftop walk is all it takes to get an overview of the essential systems for the energy transition and climate protection: On the technology center of the Hamburg University of Applied Sciences, 26 men and women, mostly renewables professionals from the Turkish city of Izmir, stand between solar modules, red steel hydrogen bottles and a pilot plant for capturing carbon dioxide from the air. Everything they see provokes lively interest and copious photos, including the view across to the nearby research wind farm. Here, in the Bergedorf area of Hamburg, the delegation from the German-Turkish chamber of industry and commerce AHK Türkei is able to observe firsthand how the outdoor components work together with the equipment within the building – such as the electrolyzer and the methanation plant. In a way, it’s like the energy transition in miniature.

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Not that there won’t be such plants in Turkey, especially since the country published its own hydrogen strategy at the start of this year. Like Germany, Turkey intends to use hydrogen to defossilize its domestic industry. Yet the Izmir engineers are visibly impressed by the system integration and process optimization in Hamburg, resulting in detailed questioning of the scientists from the Hamburg University of Applied Sciences or HAW.

While, on the one hand, the trip is a technical information-gathering exercise, the visit by delegates from Turkey’s third largest city to key renewables projects and organizations in the Hamburg metropolitan region also acts a way to initiate joint energy transition projects. The area around Izmir has ambitions to become a center point for renewable energy and green hydrogen. Similar to Hamburg, the city on the Aegean Sea and its surrounding region is characterized by its port as well as its industrial and commercial activities. Other cities and regions in Turkey which want to position themselves for hydrogen include Istanbul, Antalya and the southern Marmara area.

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Fig. 2: Energiecampus Hamburg: Hydrogen. Photovoltaic system. Wind turbines (Curslack research wind farm)

In January 2023, Turkey’s ministry for energy and natural resources presented strategies for expanding hydrogen technologies – with a focus on green hydrogen. The intention is to reach a capacity of 2 gigawatts by the year 2030; this will then rise to 5 gigawatts by 2035 and 70 gigawatts by 2053. As a starting point, those targets seem rather low. It is likely, however, that these will be further increased. After all, Turkey does not only want to produce hydrogen locally to decarbonize its own industry but, as the AHK Türkei explained when asked: “Excess green hydrogen is to be exported.”

German-Turkish collaboration

In keeping with this aim, German economy minister Robert Habeck and Turkish energy minister Fatih Dönmez signed a letter of intent in October 2022 in Berlin “relating to closer collaboration on green hydrogen matters,” as a spokesman for the German economy ministry explained. “The conclusion of the agreement coincided with the fourth German-Turkish energy forum, an important platform for dialog between representatives from politics, business and civil society of both countries within the climate and energy field.”

To support Turkey in climate change mitigation, Germany is making EUR 200 million available through loans from the German state-owned investment and development bank KfW. According to the German economy ministry, the loans “are to be made available to the market via Turkish partner banks and are to be used in particular for funding renewable energy and energy efficiency in Turkey. The International Climate Initiative will make a further EUR 20 million available for improved financing terms, particularly for innovative climate protection measures.”


Fig. 3: View of the electrolyzer in the CC4E

Largest solar plant in Europe

And because renewable electricity is needed for the production of green hydrogen, Turkey is planning to expand its wind power capacity to almost 30 gigawatts by 2035. An even sharper increase is proposed for solar energy, which is envisaged to grow from the 9.4 gigawatts calculated in 2022 to around 53 gigawatts in 2035. In early May, operation began at the biggest solar power plant in Europe, including Asia Minor, an event that went mostly undetected by the German public. The plant, located in the Konya province of central Turkey, has a capacity of 1.35 gigawatts and is also one of the largest facilities of its kind in the world. About 3 billion kilowatt-hours of electricity is expected to be generated every year at the photovoltaic plant in Karapınar. That’s enough to meet the needs of 2 million people in Turkey, the company Kalyon PV has reported.

With the help of sun, wind, hydropower, geothermal and biomass, the country could completely cover its own electricity demand in the future, according to an analysis by the Turkish hydrogen society NHA. Furthermore, it states that green hydrogen will first help decarbonize domestic industry, especially steel, cement and fertilizer production, so that the country is then ultimately in a position to export hydrogen, which is globally sought after as a base material and an energy storage medium.

German cooperation partners needed

“For Germany companies, there is potential in terms of know-how, project development and technological solutions,” explained the AHK Türkei. The actual size of the potential in the southeastern European nation, which, in any case, is more than twice the landmass of Germany, can already be seen in the current state of play for renewables: Despite its size and favorable wind conditions, the installed capacity of its wind plants, totaling 11.4 gigawatts in 2022, is still relatively modest. A chance, then, for the German wind industry to form business partnerships with Turkish companies? Yes, was the answer from the delegation in Hamburg, and by that the participants do not mean just large system manufacturers, but also small- and medium-size enterprises, suppliers and service providers.

“Following the announcement of expansion targets for offshore wind, the Turkish wind market is gaining new momentum and significance for the export of German technology and know-how,” confirms Jan Rispens, CEO of industry network Renewable Energy Hamburg, whose membership runs to around 240 organizations from the northern part of Germany. “For many years, Turkey has been a major wind market for German- and Hamburg-based companies.” For instance, Nordex, TÜV Nord and EnBW have operations in the country, be it through their own subsidiaries or by engaging in joint ventures with Turkish business partners.

But the changeover from traditional energy sources to renewable forms will take time. In the past, the country has spent vast sums of money on importing fossil fuels, primarily natural gas and oil. “Importing energy cost around USD 97 billion last year alone,” says Yıldız Onur, commercial attaché in the Turkish consulate general in Hamburg and who accompanied the Izmir delegation. As a result, costs compared with the previous year have risen by nearly 90 percent, she states, adding that it therefore makes financial sense to concentrate more on domestic energy production in order to lessen dependence on imports.


Fig. 4: Methanation plant in the CC4E

Closeness to Russia

Famously, one of the ways President Erdoğan’s government is seeking to produce more of its own energy is through the use of nuclear power. At the end of April, he inaugurated his country’s first atomic power plant, built by the Russian state enterprise Rosatom, which explains why Russia’s leader Vladimir Putin took part in the ceremony via video. As it happened, the event took place on the same day that polling stations opened in Germany as well as in other countries for Turkish expatriates to cast their vote in Turkey’s election. Erdoğan also took the opportunity of the nuclear power plant’s inauguration to announce the expansion of atomic power and the exploitation of new gas reserves.

Turkish opposition alliance CHP was, however, not opposed in principle to nuclear energy, and is also not against the exploration of new gas fields in the Black Sea. Nevertheless, the opposition did criticize the dependence on Russia and instead wanted to focus on “Turkish technology.” New coal-fired power plants, though, should not be built. According to its policy, the CHP is concentrating on pursuing a green energy transition in all sectors, including agriculture.

Although the May 2023 election mandated the old Turkish government – there is indeed no way of avoiding green hydrogen. At least that is the firm opinion of entrepreneur Ali Köse, not least because of the European Union’s Green Deal and the Carbon Border Adjustment Mechanism, a measure that would require companies in future to make equalization payments for carbon dioxide emissions. Köse is a founder and board member of the Turkish hydrogen association H2DER and CEO of the company H2Energy Solutions. His company’s goal is to make Turkey “fit” for green hydrogen and to export it to Germany. The company, for instance, is currently working on a hydrogen mobility project in Istanbul.

Köse has observed that other companies in this field are likewise sounding out the Turkish market. They are linking up and building partnerships. What is missing, however, is the framework that will provide planning certainty for investors. And, in his view, even the expansion of rooftop solar energy systems is still hampered by bureaucracy. “In Turkey, fewer roofs are fitted with PV than in Germany,” says Köse, who regularly travels between the two countries. “Due to the solar radiation level here, every megawatt of installed PV capacity generates roughly double the amount of electricity as in Germany.”

Author: Monika Rößiger

China’s picking up the pace

China’s picking up the pace

Sven Jösting’s stock analysis

In the past weeks, news reached us from The Central Country: China is repositioning itself in the field of hydrogen and intends to take the lead in various fuel cell and hydrogen markets around the world. When it came to the solar and wind energy sectors, or even battery-electric mobility, China stimulated them with its extensive subsidy programs and the People’s Republic quickly advanced to the position of global market leader. Will we now see the same development in the H2 and FC sectors?

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First, China defined, among other things through the CO2 footprint, the various colors of hydrogen for itself at the end of July and then, August 8, through six central authorities (standardization administration, NDRC, ministry of industry and information technology, ministry of emergency management and national energy administration), set corresponding guidelines. According to the Formation Guidance for Standard System of Hydrogen Industry, standards for the use of hydrogen in various markets and application fields are to be established by year 2025. This covers the various production processes of hydrogen, safety aspects, storage and transport, H2 infrastructure and various fields of application/markets.

This can safely be viewed as a framework in which the Chinese government could soon launch support programs for companies, provinces, universities and research institutes on a grand scale. Perhaps as early as 2024? For three years, we’ve been waiting for such a program – one with a volume that could be comparable to the US Inflation Reduction Act (500 billion USD, a trillion even?).

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As China has major problems in the infrastructure/construction sector, the swing in the direction of hydrogen and climate protection could represent the perfect counter: growth through sustainability. This should now become a reality in one to two years. China has long been by far the world’s largest producer and also consumer of hydrogen (natural gas-based). In the future, the hydrogen is to eventually become green, even if surely also the color blue (natural gas reforming with CCS) is used in the transition.

What does this have to do with the H2/FC shares discussed here?

China will be setting down specifications that will influence the entire H2 industry worldwide, is the expectation. The use of fuel cells in motor vehicles of various types (from commercial vehicles to passenger cars) could help this technology achieve a breakthrough, if for example a national quota were to be introduced like that previously made for battery-electric. The same goes for the corresponding infrastructure and, of course, also production, storage and transport.

Based on planning until now, China was to have 1 million vehicles with H2 drives on the road by year 2030. A suitable funding program could ensure that it becomes many millions. For comparison: South Korea plans to have around 6.1 million FC vehicles on its roads by 2040.

For such a ramp-up, many companies active in this field in China need to prepare themselves. Toyota and Hyundai, but also Ballard, Cummins and Bosch, with large investments in regional production facilities for among other things FC stacks, are already in position. It is only a question of time when the global industry of suppliers show their commitment here.

On the small scale, this can already be seen in individual provinces and major cities: Shanghai plans by year 2025 to build up the number of H2 refueling stations from the current 14 to 70 and the number of FC vehicles from today’s 2,500 to 10,000 (primarily buses and commercial vehicles). This allows the conclusion that Shanghai wants to be prepared for the plans (subsidies) of the central government.

Why is the year 2023 the start of the hydrogen megatrend?

Trend research is showing green – including with hydrogen. John Naisbitt in his bestseller “Megatrends” has shown through many examples that the number 20 has a special meaning. And exactly 20 years ago, in 2003, the book “The Hydrogen Economy: The Creation of the Worldwide Energy Web…” of visionary Jeremy Rifkin was published in German (the English edition a year before in 2002). After reading it, you’ll know what is possible in terms of hydrogen.

Today, it is real. The book was my entrée into this subject area. From trend research, we know that for a new megatrend to go from its starting to melting point, it takes an average of 20 years. We’re penning the year 2023. The stock market is in the starting blocks. Will Naisbitt and Rifkin be right? Looks that way.

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

Keep a cool head and it’ll come with time

Keep a cool head and it’ll come with time

© www.wallstreet-online.de

© www.wallstreet-online.de

Regardless of the many good news and developments around hydrogen, there must of course also be a critical consideration of the aspects that may, for example, hinder or delay rapid build-up of production capacity. In addition to adverse influences due in part to misunderstood or counterproductive regulatory measures (EU/Germany) are aspects such as the shortage of skilled workers, supply chain problems and financing. (more…)

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FuelCell Energy – Where are we going?

FuelCell Energy – Where are we going?

EuroFuelCell Energy should actually have generated a quarterly turnover of over 30 million USD in the second quarter, ending April 30th (fiscal year), but it was by then only about 16 million USD with a stated loss in the amount of about 31 million USD, or minus 0.08 USD per share. The management board nevertheless believes that they are on track to achieve a turnover of 300 million USD by 2025, and 1 billion USD by 2030. The order backlog was almost unchanged at about 1.3 billion USD. In the bank lies a formidable 490 million USD, for which a multitude of share placements (64 million new shares) is responsible – in proportion to the stock exchange value of 1.4 billion USD, a healthy basis, even if the question arises as to how these share placements were justified. (more…)