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Stracke other H2Now managing director

Stracke other H2Now managing director

BMV Energy GmbH is entering the market as another player in hydrogen refueling stations. The owner-managed, medium-sized company together with Score founded H2Now GmbH in August 2023 and appointed Stefan Schwarzer as managing director to advance the establishment of refueling stations with green hydrogen, particularly for commercial vehicles. In November 2023, the Berlin-based company announced that the company will be co-represented with second managing director Andrew Stracke in April 2024. Stracke was prior to this a member of the executive board at Westfalen AG.

H2Now was brought to life jointly by the petroleum company BMV and Score, a gas station operator with headquarters in Emden, to bundle the synergies of the medium-sized companies. To the BMV corporation belongs a gas station network with 145 stations of the brands Sprint and Go. According to the management, there are “already established locations suitable for the addition of a hydrogen refueling station with the help of H2NOW, to become part of the Germany-wide hydrogen station network and be supported with extensive know-how in project planning, funding, realization and operation.”

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Starting points for a comprehensive hydrogen ramp-up

Starting points for a comprehensive hydrogen ramp-up

Industry congress GAT 2023 in Cologne

To establish a functioning hydrogen economy, the entire value chain must be addressed. It is important to keep in view the market and regulatory aspects as well as the technical aspects (standardization). At the event GAT 2023 in September in Cologne, it could be seen how intensively the industry is working on the implementation. Exciting here are, among other things, the conversion plans of the gas grid operators towards climate-neutral gases. The second phase of the GTP also shows the great interest on the part of municipalities and the industrial sector.

Dr. Kirsten Westphal made clear how the German association for energy and water economy (Bundesverband der Energie- und Wasserwirtschaft, BDEW) see the heating market of the future: “Instead of natural gas, in the future especially hydrogen and its derivatives will be employed,” said the member of top management at the event in Cologne. The hydrogen will come from domestic production as well as a considerable portion from imports. The BDEW is not worried that it will come to a deficit situation. “The studies show that sufficient quantities of hydrogen will be able to be made available,” stated Westphal.

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However, the ramp-up of hydrogen production requires the right framework conditions. Regarding this, the BDEW representative counts in addition to the acceleration and strengthening of the expansion of renewable energies in Germany also the quick notification of IPCEI projects (Important Projects of Common European Interest) for hydrogen production by the EU, which will then actually occur at the end of the year (see p. 20), as well as other supplementary funding programs to reach the electrolysis capacity target of 10 GW in year 2030.

On the import side, Westphal is calling on politicians to present an import strategy in the short term. Furthermore, the financing of import projects should also be flanked by measures such as Hermes cover (export credit guarantees) or capital subsidies.

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Establishment of a functioning H2 trading market

One aspect of particular importance, however, is to embed the ramp-up of hydrogen production in the development of a market. In each of the various phases in this, different political instruments are needed: to begin, more steering and support; later, a growing market and less support. The visualized goal is a functioning trading market in which hydrogen volumes are efficiently distributed according to market-based mechanisms.

But what characterizes the image of the targeted steady-state hydrogen market? In Cologne, the BDEW expert named a whole bundle of criteria:

  • Production and trade of hydrogen and its derivatives in Germany, the EU and globally in sufficient quantities
  • The combination of long-term contracts (particularly at import level) with competitive prices that reflect current market conditions as well as increasing spot deliveries
  • The trading of guarantees of origin, certificates and commodities on a uniform, standardized European market that includes an international connection
  • Competition for access to end customers as well as transparent price signals and sufficient market liquidity on the supplier side
  • A fully functional and comprehensive network infrastructure. Non-discriminatory grid access for all competitive players on the hydrogen market. H2 grid access is essentially based on the entry-exit system.
  • Climate-neutral hydrogen is used wherever there is demand. Demand is based on the market price.
  • Storage options ensure security of supply for hydrogen and derivatives and open up various ways to make the hydrogen market flexible. There is decentralized generation and purchase as well as central storage.

In all these projects are, according to Westphal, a transparent and reliable standardization as well as certification needed, to also create acceptance for hydrogen and its derivatives, which also needs a stable regulatory framework.

Standardization of particular importance

The establishing of standards is also the means of choice from the view of Dr. Thomas Gößmann. According to the Thyssengas chairman, it should be borne in mind that the approval offices have had little contact with the topic of hydrogen until now and therefore have no experience in most cases.

For Germany as an export country, the agreement on international standards is of particular importance, stated Oda Keppler, ministerial director at the German ministry for education and research (BMBF), at GAT. This applies, among other things, for the quality criteria for the product hydrogen, as otherwise the international trading of it could not be done.

For the success of the hydrogen economy, it is crucial, according to Gößmann, to involve the people. “If the country of engineers succeeds in taking the people with it, then we will also succeed,” the Thyssengas chairman is certain. It is also important not to focus too much on the color principle of the hydrogen. This is hardly comprehensible for many people anyway. “We are colorblind. We’re setting up the highway. It doesn’t matter to us who drives on it,” said the grid operator.

Dr. Frank Reiners is certain that the hydrogen economy will only really take off when the entire value chain is populated. According to the member of the management board of Open Grid Europe, however, pipeline construction is of particular importance. Germany as a hub has a special role and responsibility here, as many gas pipelines come on land or come together here. “We cannot afford to do nothing,” stated Reiners in Cologne.


Prof. Gerald Linke, chairman of the DVGW, said at the opening of the industry event GAT in Cologne, “The backbone network must provide all regions in Germany with access to climate-neutral hydrogen.”

H2 core network for all regions

The German association for gas and water standards (Deutscher Verein des Gas- und Wasserfaches, DVGW) welcomes the federal government’s initiative, in an amendment to the energy industry act (Energiewirtschaftsgesetz), to establish a legal framework for the rapid approval and construction of a hydrogen core network. However, to the DVGW, this approach does not go far enough. “The backbone network must provide all regions in Germany with access to climate-neutral hydrogen, as otherwise an exiting of entire economy sectors is imminent, especially the small and medium enterprises,” said the DVGW chairman Prof. Gerald Linke at the industry event.

In a second step, transformation regulation for gas distribution grids is therefore also needed. Without an extensive conversion of the existing gas distribution infrastructure, it will not be possible to transform the connections of 1.8 million industrial and commercial customers toward climate neutrality, stressed Linke.

The basis for the transport to end customers has been laid out in the so-termed Gasnetzgebietstransformationsplan (gas grid area transformation plan, GTP) by the DVGW together with the initiative H2vorOrt. In the current second planning year, 241 gas distribution system operators have participated, a significant increase compared to the 180 companies in the previous year. Currently, the GTP covers pipelines with a total length of 415,000 km (258,000 mi) and reaches 381 of the total 401 regional districts of Germany.

The planning process with the GTP is deliberately designed to be open-ended and includes the conversion, decommissioning and partial new construction of pipelines. Considered are all new, climate-neutral gases, so in addition to hydrogen also for example biomethane. The aim of the GTP is to accelerate the transformation at the distribution grid level and, by the individual planning of the grid operators in coordination with the other stages of the supply chain, to create a coherent vision for the whole of Germany. As part of the GTP planning, the grid operators are analyzing on the basis of their specific situations on site the demands of their customers, the decentralized feed-in situation, the development of hydrogen availability by upstream network operators and the technical suitability of their networks for hydrogen.


For the first time in Germany, the conversion of a long-distance gas pipeline to transport hydrogen has begun at OGE Verdichterstation Emsbüren

Municipalities and industry are planning with hydrogen

Part of the GTP is also a survey of end customers by the respective network operators. This revealed a clear preference for the use of climate-neutral gases. Only five percent of the nearly 1,000 surveyed municipalities see no need in the long term for the use of climate-neutral gases. Of the nearly 2,000 major industrial customers who responded, more than three quarters are relying on hydrogen in the future. And 29 percent already see the use of hydrogen as an option by 2030, while a further 30 percent expect this in the coming decade.

Some current projects show that these visions are already currently being implemented. For example, mid-October at Verdichterstation Emsbüren, a compressor station of grid operator OGE in Niedersachsen, was the start of the conversion of the first long-distance pipeline to transport hydrogen (see Fig. 3). As part of the project GET H2 Nukleus, this is to establish the core for a nationwide hydrogen infrastructure. With the changeover, the participating network operators want to enable customers from industry and SMEs to connect to the hydrogen supply.

Most of the municipalities surveyed, according to the DVGW poll, are counting on climate-neutral gases in the long term

Another project started at the beginning of November in Energiepark Bad Lauchstädt with the start of the second phase of the conversion of a natural gas pipeline for the transport of hydrogen. For the technically seamless operation of the grid of the future of transmission system operator Ontras Gastransport, a pig launcher was placed in position. The following months will be preparation for putting into operation the hydrogen pipeline. For this, the construction of a transfer station as well as setting up a system for purifying and drying the gas are necessary. Once Energiepark Bad Lauchstädt is fully operational in year 2025, test transfers of hydrogen will follow, scientifically accompanied by DBI-GTI (DBI Gastechnologisches Institut gGmbH Freiberg), an independent laboratory of the DVGW.

Such projects help to increasingly address the locational advantages of the continent. At GAT in Cologne, Prof. Thomas Thiemann of Siemens Energy summed up the situation as follows: “With its large pipeline network and storage facilities, Europe has a huge asset compared to other areas. We must exploit this advantage.”


Out of the surveyed industrial customers, 76 percent are interested in hydrogen

Study: Green hydrogen not more expensive than gas in the long term

End customer prices for green hydrogen in the medium and long term could be in the range of natural gas or the current subsidization threshold of natural gas of 12 euro-cents per kWh (Gaspreisbremse). That is what the study by Frontier Economics on behalf of the DVGW determined. If total costs are compared – so costs for acquisition, building renovation and operation, – then the cost for both single-family and multi-family houses with a gas boiler powered by hydrogen, depending on building type and efficiency class, lie at a similar level to an electrically run heat pump. In the study, the total costs of various energy carriers for households as well as for exemplary heat supply solutions were compared with each other.

For the cost comparison, indicative end customer prices based on production costs were used. In addition to the prices for gaseous energy sources, the DVGW study also compares the total costs that households may incur depending on the heat supply solution. Because if the goal is to meet the climate targets, heat generation for buildings in Germany must be fundamentally changed, according to the DVGW.

The aim of the investigation is, on the one hand, to put the end customer prices of green hydrogen in relation to alternative energy sources for households in the years 2035 and 2045. On the other hand, the analysis focuses on the total costs of different heat supply solutions for two selected building types in the efficiency classes B and D. Considered are green gas boilers based on biomethane and climate-neutral hydrogen as well as heat pumps.

Overall, the comparison shows that the cost ratios of the energy sources change over the period under review. While end customer prices for climate-neutral hydrogen in Germany are expected to remain above those for natural gas and biomethane until 2035, they could reach a comparable level by 2045.

Households in Germany would therefore have to pay between 12 and 17 euro-cents per kWh for hydrogen in 2035. The price of natural gas, on the other hand, taking rising CO2 prices into account, would be between 9 and 11 euro-cents per kWh, and that for biomethane just above, at around 10 to 13 euro-cents per kWh, depending on the biomass used in its production.

After 2035, end customer prices for hydrogen could fall and approach those of natural gas. The main drivers for this include the degression of costs for H2 production and rising CO2 prices in the context of emissions trading. In year 2045, according to the study, purchase prices for hydrogen could then lower to around 11 to 15 euro-cents per kWh.

Author: Michael Nallinger

The industry highpoint in autumn

The industry highpoint in autumn

Hydrogen Technology Expo total success

In autumn 2023 as well, the Hydrogen Technology Expo was again the event you had to be at. For the third time in a row, the British organizer Trans-Global Events Ltd was able to dramatically increase the number of exhibitors as well as visitors – which is why the trade fair halls of the Hanseatic city on the Weser (Bremen) will no longer be sufficient in 2024. The move to Hamburg this year is therefore inevitable and had been predicted early on by H2-international (see H2-international Feb. 2023).

The trend is unmistakable: More and more companies from the mechanical engineering, electrical and chemical industries are flooding the hydrogen market. Accordingly, a large number of completely new exhibitors could be found in the four trade fair halls in Bremen. Among them were numerous unknown names, but also heavyweights such as Saudi Aramco, ExxonMobil or ITM Power.

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After 180 exhibitors in the first and 350 in the second year, this time there were over 550 – in 2024, there should be at least 100 more. The number of visitors increased from 5,000 in the previous year to over 10,000.

Moving towards mass production

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Companies like the chemicals corporation Gore had explicitly “chosen this trade show in Europe” because “Europe is furthest along.” Nouchine Humbert, Global Marketing Director of W.L. Gore, told H2-international, “This is a market where we expect strong growth.” Referred to is particularly the electrolysis sector, because in comparison fuel cells need “many more square meters than electrolyzers.”

Sufficient production capacity is available to the North American company – in Japan. The production lines there are enough for another five years, asserted Rainer Enggruber, director of the division PEM/water/electrolysis products. Gigawatt announcements are therefore not a challenge for the membrane manufacturer, it was confidently stated.

New tubular reactor

An innovation was shown by the Hebmüller Group. Sales director Marc Hebmüller presented the prototype of the HydroGenMHD (see Fig. 1), an H2 generation device from One Scientific of Johnson City, Tennessee. The company Hebmüller is the European licensee of the US system developer that developed this compact tubular catalyst, in whose magnetohydrodynamic chamber hydrogen is generated upon splitting off of oxygen from water vapor.

Marc Hebmüller explained: “This innovative technology employs a unique system where superheated steam is subjected to a catalyst and intense magnetic fields generated through the MHD process. These magnetic fields induce controlled plasma dynamics within the feedstock, facilitating the dissociation of molecules into hydrogen gas and oxygen gas.”

Stack based on circuit boards

A completely new concept for the production of fuel cells was presented by Bramble Energy: a fuel cell stack based on printed circuit board technology. The British company founded in 2017 relies here on the plastic FR4, which provides the necessary stability, and copper as a heat as well as electricity conductor. Between two circuit boards is one membrane each, which means that bipolar plates can be dispensed with entirely. Instead, a monopolar plate constitutes a single cell, of which several are then stacked.

The technology readiness level Carsten Pohlmann, director for business development (see Fig. 2), puts at TRL 9, and the price per kilowatt at 100 USD. First tests in a Renault demonstrator and with a 100 kW system for a double-decker bus are already underway.


Carsten Pohlmann presented in Bremen for the first time the circuit board cell from Bramble

The next Hydrogen Technology Expo Europe will take place October 23 and 24, 2024 on the fairgrounds of Messe Hamburg. It therefore will overlap by one day with WindEnergy.

 

Weichai Power: Strong share price increase

Weichai Power: Strong share price increase

The share price of Weichai Power has risen by almost 50 percent in the last few weeks. The reason is the partnership with BYD in the electrification of large vehicle fleets. A perfect joint venture, it seems. Weichai Power with BYD could – my guess – be pushing the door open to fuel cells, since alongside battery-electric trucks and other commercial vehicles, the fuel cell is perfect for long-haul journeys.

Weichai has a joint venture with Ballard Power in China (51:49), with a capacity of already 20,000 FC modules per year. And Weichai will be one of the main beneficiaries when in China a large subsidy program for fuel cells and hydrogen comes – maybe 2024 or 2025. Weichai is China’s largest diesel engine manufacturer, which is now moving towards e-mobility – comparable with Cummins Engine in the USA. Weichai is also cooperating with Bosch.

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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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Nikola Motors: Capital increase at the right time

Nikola Motors: Capital increase at the right time

Short sellers are working massively against the company at the stock exchange. There were shortly even nearly 200 million shares sold short (on Nov. 16 still 193 million). But now, a price change upwards seems very likely. The reason could lie in the comments made at the press conference on the third quarter results, which Nikola – in my words – sees as being on the right track. The company amassed about 250 million USD in liquidity in the third quarter, and now has available 705 million USD in capital access.

The damage due to recalled battery-electric trucks was reported as 61.8 million USD (warranty reserve), where Nikola not only resolved this problem, but employed batteries from a still unnamed supplier that possessed advantages over the previous model, was the comment from the company. Additionally, the truck will be equipped with more features that will give the driver more options during use, for example from a distance using a smartphone app, the truck could be already prepared with heating in the winter and air conditioning in the summer, before the driver gets in. The battery-electric truck will, after the retrofitting in the first quarter, again find its way to customers.

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Now orders can come

There are 277 letters of intent for the purchase of the hydrogen-powered truck. In the fourth quarter, 30 to 50 of them are to be delivered and between 11 and 19 million USD turnover generated. With the battery-electric truck, meanwhile – despite the recall – an individual order of 47 units will be gained. In the next two years, Nikola is determined to deliver on average 250 to 300 trucks of both types per quarter.

The cash burn is at 100 million USD in the quarter, where for the current quarter, the financial effects of the recall on the battery-electric truck are still to be felt (61.8 million USD, of which about 38 million USD is capital that will be used). And the better the scaling of the truck production goes, the more cost-effective they can be manufactured, in order to at the end of the day come out with a good profit margin. Consider this: Money is the future will be earned especially with electricity and hydrogen and not with e-trucks per se. Nikola is at the start of its (success) story.

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California setting the pace

Nikola is concentrating, for good reason, on the US state California. Firstly, the best subsidies (up to around 408,000 USD per truck) are there; secondly, the time pressure for shippers to replace diesel-powered by CO2-free trucks is very high. Already starting 2024, in California only the last-mentioned will be allowed at port facilities, so there will be new registrations only for battery-electric or hydrogen trucks. We’re talking about over 30,000 trucks alone in this market segment – a winning pass for Nikola Motors, since in the Inflation Reduction Act are provided also 2.6 billion USD in subsidies specially for port facilities and also drayage trucks as well as for the H2 infrastructure.

Additionally, the competition for Nikola in this truck segment will be sparse for years to come. The look at the already approved vouchers for e-trucks is cause to celebrate: 96 percent of the vouchers of the California’s HVIP program for hydrogen-powered trucks and 50 percent of the vouchers for battery-electric trucks are attributable to Nikola. After all, Nikola is to have received approval of already over 400 vouchers for the two truck variants. A respectable success.

Lawsuit against Milton won

The lengthy legal dispute with company founder Trevor Milton was won. On October 20 came the decision. Milton must now pay 165 million USD to Nikola, which includes procedural costs Nikola first had to pay and now receives back. It should be noted here that there is still no indication of when the money will flow. Nikola still has to pay a portion to the SEC itself, as they reached a settlement of 125 million USD and must itself fulfill it. If 165 million USD flows from Milton soon, Nikola’s liquidity will rise, as the SEC payments will be divided over the next years.

Goals ambitious but realistic

Currently, Nikola can produce 2,400 trucks of either variant per year. In order to be profitable, sales of 1,000 trucks in 2024 and 1,500 in 2025 are needed. These targets are considered realistic from the company’s perspective, if Nikola delivers 250 to 300 truck per quarter. In my view, there will also be some large orders. Beyond this, declarations like the letter of intent (LoI) with Anheuser-Busch (800 trucks) will also flow into the orders on hand, is my expectation.

Nikola Motors – The Tesla of trucks?

For this hypothesis, I earned a lot of criticism. One cannot compare a startup like Nikola, though, with the success story of Tesla. One can say: Tesla started small, then came Elon Musk. The company reported heavy losses for many years and was even on the verge of bankruptcy before the breakthrough came. In the first three years, Tesla earned money, but not with the e-cars but with  emission rights that could be sold to other car manufacturers. Tesla solved the chicken-and-egg problem by providing the electricity for the battery-electric vehicles itself by establishing a charging network made of its own Supercharger stations. Who would have bought a car from Tesla if there had been no charging option – as a package, even free of charge for years?

Nikola is doing the same – only for trucks with the help of electric charging stations and H2 refueling stations. Nikola wants to earn money with electricity and the self-produced or purchased hydrogen. In the USA are waving high subsidies of three USD per kg. Tesla continues to address the market for e-cars, but Nikola the segment for trucks. Both companies can be considered disruptive – they change markets and business models. Both are first movers.

Tesla and its CEO was met with much skepticism, but they proved that change is possible. Nikola is doing the same – only for commercial vehicles. Whether both can be compared with regard to the development of their valuation or share prices time will tell. For Nikola I am extremely optimistic.

Chief financial officer leaves the company

Stasy Pasterick was just six months in office as CFO. She is going over to Universal Hydrogen in the same capacity. It will be interesting to see who her successor will be.

Capital increase secures the company

On December 6, 2023, Nikola’s plan to raise fresh capital on the stock market became known. It entails a convertible bond of a nominal 175 million USD with 8.25-percent coupon (green bonds) with maturity December 2026 (0.90 USD conversion price per share) and 100 million USD in new shares at 0.75 USD per share. The share price fell from around 1 USD probably because – no guarantee – a hedging took place, so the price was depressed, as one can retain and stock up on the share after the capital raise. The share also fell because short sellers wanted to use the capital increase as a negative for themselves.

In accordance with experience, this measure will have already been successfully implemented by the time you read these lines. With it, Nikola is then thoroughly financed and will ultimately have 500 million USD in the bank. That the share price is rising above 1 USD again is also in the nature of things, because the financiers (investment banks such as Nomura) will most likely not accept a delisting of the share (it will come to this if the price sinks below 1 USD for a longer time).

Summary: Nikola is well on the way to positioning itself as a first mover in CO2-free trucks in the USA – first in California, later across the whole country and in parallel in Canada, where likewise large subsidy sums up to 380,000 CAD per truck are waving. Comprehensive funding programs are acting as a turbo, as the buyers of the trucks can comply with the regulatory pressure and are financially incentivized as well. The H2 infrastructure is being established by the company itself, but will be financially accompanied by business partners such as Voltera (EQT) and is receiving a boost by a 7-billion-USD program of the Biden administration, in which seven hydrogen hubs are to be established in the USA. The stock market will not be able to avoid newly valuing Nikola as a startup: In the right market at the right time. Maybe Nikola will even be the H2 share that develops the most price potential. What’s the phrase? No risk, no fun.

Nikola’s management team is considered excellent. CEO Stephen Girsky pointed out that this includes top managers who no longer actually have to work in a start-up, but who are happy to contribute their expertise to make the company’s vision a reality. This is the right approach – out of conviction and with experience.

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.