Investing in Fuel Cell Stocks – Analysis and Guide

Investing in Fuel Cell Stocks – Introduction

While modern industry and western society are struggling to satisfy their own needs for energy, different technological solutions are being developed to preserve the environment. As a result, the pool of progressive ideas for resolving the energy question is getting deeper. So naturally, the debate over which solution is most efficient, profitable, and manageable to administer occurs as we speak. Fuel cell technology is one of the solutions that are gaining significant attention both as a technological achievement and as a financial opportunity on the market. Meaning, investing in fuel cell stocks can prove to be very lucrative as the technology goes mainstream.

A fuel cell is a cell that generates electric power using the constant flow of fuel (usually hydrogen) with the addition of air (oxygen). This particular battery uses renewable sources such as hydrogen and oxygen instead of mined metals or carbon-based fuels. As a result, it is making fuel cells significantly more environmentally friendly.

Fuel cells could prove a valuable addition to the variety of ideas regarding renewable energy production, which makes them an alluring technology to invest in. It requires only hydrogen fuel and airflow to create energy without toxic emissions, waste, or pollution.

Is fuel cell technology doable?

However, a debate is taking place concerning the possibility of executing this idea and implementing this technology. For example, will this technology eventually lose more funds than it generates or produces more toxic waste indirectly? One side claims that the technology could create a cleaner world, while the other calls fuel cells a lost cause. And both sides have a viable argument. A similar dilemma occurs with developing uranium technology. 

All of the above creates a complex situation that potential investors in fuel cell stocks should carefully analyze.

What is Fuel Cell Technology? What is it used for?

A fuel cell is similar to a standard battery because it has a cathode and an anode. Also, it gains electricity from the chemical interaction between the ions of the cathode and the anode. The difference, however, is that a fuel cell doesn’t use ions from metals.

The fuel cell can use all sorts of solutions for fuel and oxidants such as diesel, methanol as fuels and air, chlorine, or chlorine dioxide as oxidants. At present, however, hydrogen and oxygen are usually used as agents.

That’s what makes this technology revolutionary. Instead of using metals, a fuel cell receives a constant hydrogen flow (most often) as fuel and oxygen.

Oxidation reaction that generates ions (usually positively charged hydrogen ions) and electrons occur near the anode through a catalyst.

Through the electrolyte that fills the fuel cell, these ions travel from the anode to the cathode. In addition, electrons simultaneously flow from the anode to the cathode through external circuitry, which creates direct current electricity.

Near the cathode, a different catalyst causes a reaction between oxygen, ions, and electrons. Which in turn forms water and additional products in some cases.

Fuel cells can continuously generate electricity as long as there are additional amounts of fuel and oxygen.

One of the most convenient ways of using hydrogen as a fuel is blending hydrogen and natural gas. Thus, it increases the general supply of natural gas. In addition, the hydrogen easily transports through a vast network of pipelines constructed for gas transportation. Therefore, making it accessible, affordable, and efficient.

Power source for vehicles

Vehicles utilize fuel cell technology as a power source. This method of power production for the means of energizing cars and other vehicles is very ‘green’ as the only residue of fuel consumption is water. In addition, the eco-friendliness of this method makes it a far more attractive solution than vehicles that use gasoline or diesel as fuel.

Furthermore, the charging time for fuel cells is shorter than batteries, and they take less space. That gives a real advantage to fuel cells compared to batteries inside vehicles. It applies specifically to batteries inside large cars, like trucks, for example.

These qualities of fuel cells can make them invaluable in particular means of transportation, such as transportation by air and water, where batteries are not applicable. In addition, the fact that fuel cells produce zero toxic emissions can be a significant factor when it comes to large fuel consumers like ships and airplanes.

When it comes to motionless energy production, the surplus of power can generate hydrogen through electrolysis. This hydrogen can be put aside for use in the future, making the process efficient and sparing. The method of electrolysis includes using electricity to split water into hydrogen and oxygen.

Unlike batteries, fuel cells don’t take forever to recharge. Therefore, they are viable for power stations, as they cannot go offline for extended periods.

Even though hydrogen cells could have a pivotal role in solving the energy problem, the technology and its use have certain shortcomings.

Technology shortcomings

The first shortcoming of fuel cells is that hydrogen production via electrolysis for its further use in electricity production creates a loss of energy. Thus, it is making this technology less efficient than ideal.

The modern methods of power production are compatible with the process of electrolysis. That is due to the greenhouse emission released and the amount of fuel needed because of the low efficiency of generating power. However, if methods that create toxic emissions themselves produce electrolysis, the whole process becomes counterproductive from the environmental aspects of production.

The conditions of storage and hydrogen transport are rigorous due to the delicate nature of hydrogen (especially the combustibility of hydrogen). The temperature has to be low enough, while the pressure has to be high enough. That in itself spends considerable energy, which lowers the efficiency as well.

Furthermore, the infrastructure that should support this technology isn’t available and developed enough. Namely, the number of filling stations doesn’t nearly match the number of fuel cell electric vehicles. Around 25 thousand fuel cell vehicles were being used at the end of 2019, and only about 500 filling stations were available. As a result, the percentage of chargers for electric cars was much more favorable related to the total number of electric vehicles. That means that the technology of fuel cells still has a long way to go when it comes to production, organization of infrastructure, and the overall quality of use.

All of the problems that the fuel cell industry is facing reflect on the stock market. The shares of companies manufacturing fuel cell technology such as Plug Power and FuelCell Energy have faced losses. So while the stock does look like a promising future endeavor, investing in fuel cell stocks does not come without certain risks.

Fuel Cell Technology – The Contemporary Debate

The positive impact that fuel cells can make on the industry overall, with particular emphasis on car manufacturing (as that’s what has been attracting the attention of the investors the most lately), isn’t something that everyone agrees on.

There is a debate on whether fuel cells are an optimal solution to the energy problem regarding both a more efficient use of energy and energy consumption being eco-friendly. Thus, following all contemporary aspirations for creating a greener environment.

This debate is undoubtedly a positive factor for scientific and technological development. Even if it is disagreement, more dialogue creates a better and more rich basis of ideas, alternatives, and new creative ideas for the energy problem.

However, when examining whether this debate is as positive as the situation on the stock market, it is admittedly less so.

On one side, there’s Tesla’s Elon Musk, renaming fuel cells into “Fool Cells’, calling them stupid, costly, and unnecessary. The technology is admittedly still pricey. However, a significant effort is being made to create new technological solutions to make it more efficient. The production of fuel cells still doesn’t bring profit, even though the need for a cleaner energy production technology is growing by the day. The shares of companies producing fuel cell technology are unstable, volatile, and unpredictable as it is difficult to predict the fuel cell stock’s movement on the stock market.

Is fuel cell technology eco-friendly?

Apart from that, the eco-friendly nature of fuel cell technology is also under question. While fuel cells produce energy with mostly water as a by-product, the problem is stripping hydrogen for energy production. As a result, hydrogen has to be taken from another source. Depending on the source, there are different kinds of hydrogen used in fuel cells.

First, the so-called ‘grey’ hydrogen represents the most significant hydrogen produced in the United States. This kind of hydrogen used in fuel cells comes from natural gas derivation. The process itself releases carbon emissions that are not insignificant.

Besides that, there is brown hydrogen derived from coal, and pink hydrogen, which uses nuclear power to separate hydrogen molecules for water. There is also blue hydrogen that also comes from natural gas, similar to grey hydrogen. However, unlike grey, the producers of blue hydrogen have a system of storing carbon emissions. Thus, making the production process more environmentally friendly.

A significant part of the mentioned debate is the environmental issue as well. For example, if acquiring hydrogen that the producers use as an agent inside the fuel cell creates toxic emissions, what good does the cell itself do?

As with many environmentally friendly technologies, there is a paradox. On the one hand, tech developers invent eco-friendly pieces of technology, processes, or systems. But, on the other hand, producing this technology itself creates just as much pollution and toxic emissions.

Technology advancements

However, significant strides (and huge investments) are constantly being made to minimize any technology’s toxic effect, with tech developers and scientists continually searching for the most environmentally friendly method of acquiring or producing any material needed. Techniques are being perfected. New technology is being developed. That is all in service of reducing the adverse effects of modern industry. We should not meet such dedication (like the example of storing toxic emissions) with cynicism.

On the other side, there’s a growing tendency to switch to zero-carbon methods of energy production within governments as well. It isn’t only hearsay. President Biden and the administration of the U.S. government are taking significant steps to ensure that the green initiative is growing. Strict regulations, plans for future development, increased financial investments are clear signs that western governments take this issue seriously.

The technology itself is proving to be more than appealing, converting biogas to power with zero emissions and pollution. If the fuel cell producers achieve a breakthrough regarding hydrogen production with less toxic emissions, the appeal will only grow. Most importantly, a constantly evolving market that reinvents almost annually for energy producers, electric vehicle manufacturers, and new intelligent tech developers.

The impact of regulation on the future of investing in fuel cell stocks

The fuel cell stock has seen a significant rise after president Biden came into office, after which there was a decline in the price of the stock. 

Time will tell which side of the debate will prevail. The one that disputes fuel cell technology and its potential to positively contribute to the energy industry and the industry in general. Or the one that strives to develop a cost-efficient way to exploit the advantages that this technology could ensure fully. Such as portability, efficiency, sustainability, and renewability (if more hydrogen extraction methods develop).

If the latter is correct, we could see a significant shift in the methods of global production of technology and the overall quality of our planet’s environment. Also, we could see it in the movement of prices on the stock market.

Fuel Cell Technology – Environmental Aspects

The environmental contribution that fuel cells can make is multi-layered.

The challenges that the fuel cell industry faces remain. With regards to meeting the ever-growing demands for a safe and green way of production and functioning of technology. Hydrogen is not easy to get without making toxic by-products. We are still waiting for a solution to make the eco-friendly fuel cell stand out as purely positive. As long as the process of producing hydrogen from chemical bonds relies on fossil fuels, that solution will elude us.

However, there is a vast area in which fuel cell technology contributes to a better and less toxic future. Or at least, it contributes to the transformation process that the global industry is going through. It seems that fuel cell technology could be that one step that connects the industry today (still young in its tendency to become more responsible) and the future industry—the one where all of our recent strides and aspirations have been accomplished.

The key to this transformation is the latest project that oil companies have embarked on, with aspirations to unite their funds and infrastructure with fuel cell production. There are several reasons for this project.

Environmental aspects of production

It is becoming evident that including environmental aspects of production is a trait of our age. Companies and producers that don’t adapt to this are risking falling out of the course of today’s industry. It could cause several negative implications. Firstly, the company could negatively image in an era of information, social networks, and the rising initiative culture. Secondly, rising restrictions and regulations concerning responsible production and conducting business overall could damage the company financially and practically. Any company that manufactures technology gains more than it could lose by becoming more accountable and joining the global environmental change. Big producers of technology are in it for the long run, and oil companies are no different.

Oil companies want to include a more environmentally friendly technology in their production process. Therefore, fuel cell technology appears as a first choice, as this technology can use the fuel that oil companies can already access.

Some companies are making strides to invest in private funds that contribute resources for expansive, environmentally friendly hydrogen infrastructure plans.

Others are investing in hydrogen reserves even though they already have massive amounts of fossil fuels stacked for use.

Certain Chinese oil companies are investing in blue hydrogen production and ammonia transporting technologies. Namely, they are devising a method of converting hydrogen to a liquid form as ammonia for transportation.

It would seem that the green initiative is taking hold of the industry, and the companies are recognizing it as a wave of change that they better be a part of. And rightly so.

Still, the question of hydrogen’s cleanliness remains.

Clean hydrogen fuel – a goal for the future

Is there a method of producing hydrogen fuel for fuel cells that is clean enough, safe enough, carbon-ridden enough? It seems that a new way of keeping the Earth clean while producing this state-of-the-art fuel is near a breakthrough.

Namely, the goal is making hydrogen through electrolysis by using renewable and nuclear energy solutions. Renewable energy sources include wind-provided energy, solar-provided energy, energy originating from hydro potential, and geothermal energy.

If modern technology could achieve this goal, we would have a new, efficient battery created by completely clean production methods. It would have zero toxic emissions and is the next step in a new generation of technology. Thus, specialized in providing humankind with limitless clean, sustainable energy.

Considering that sustainable sources are being developed already and that nuclear power sources are being closely watched, improved, and carefully considered, this technology would represent a continuation of a single mission – a cleaner world altogether.

The problem that this process is facing is, as always – cost. It isn’t sufficient that an energy source is clean. It isn’t enough that it’s clever either. If producing energy costs more than selling it, there isn’t any economic merit in such an endeavor.

Clean hydrogen will not turn into a viable option on the market until its price becomes acceptable.

However, the goal exists. Hydrogen Energy Earthshot initiative has created a project called ‘1 1 1’. This project refers to the pursuit of decreasing the price of clean hydrogen to 1 dollar per 1 kilogram within one decade (therefore, three ones).

The cleaner future

That only demonstrates how much cost-efficiency is essential when evaluating the benefit of a particular product for the tech developer.

Fuel cell technology will become the number one portable power source for most moving vehicles within a decade if we reach the’ three ones’ goal. Both big as and small. New power plants, batteries of a different kind, size, and application. If the technology proves to be cost-efficient as much as it is environmentally friendly, the significant factors of the industry and geopolitics will instantly join the game. That means more infrastructure support, charger stations, a bigger market, a more severe mass production.

As you can see, fuel cell technology’s viability on the market still depends on future discovery and the fruit of labor that many researchers are doing as we speak.

Investing in Fuel Cell Stocks – Current Geopolitical Events

Investing in fuel cell stocks isn’t a sure game. Therefore, it’s wise to analyze several factors predicting what ‘behavior’ the stock market could manifest.

There’s certainly reason to feel a kind of controlled optimism when investing in fuel cell stocks.

The investment projects of the British and the U.S. governments show a clear intent to include this technology in the overall energy plan for the future.

Namely, The British government published a future investment of 4.2 billion dollars intending to put 4,000 electric or fuel cell-based buses in use. Germany and New Zealand are discussing hydrogen-fueled projects similar to this one.

President Biden’s Office is secluding 15 billion dollars from their 2.2 trillion dollar infrastructure investment. Instead, its use will be in the examination of processes that involve hydrogen production.

The previous Trump administration also supported the production and development of hydrogen-based fuel cells. In addition, the Energy Department has assigned 150 million dollars for the hydrogen fuel cell study. That includes 17 million dollars for the infrastructure of fuel cell technology and storage of hydrogen.

A considerable investment plan focuses on electrolyzers that use current to split water into hydrogen and oxygen. The funds reserved for this research amount to 100 million dollars. Breakthrough in this technology would also ensure a renewable source of hydrogen, contributing to the clean planet mission.

A potential for investing in fuel cell technology

When it comes to potential investors, they can always feel encouraged when they follow the money trail. Such investments can only improve the situation on the market. Developers will work tirelessly to create new and better technology. Companies will produce more units, develop more severe business models, open new projects and initiatives. With these kinds of investments, infrastructure becomes better organized and more seriously approached. 

The encouraging element also lies in the very nature of fuel cell technology. Its great variety of applications and utility are essential for this technology’s appeal to the stock market.

The electric vehicle industry is slowly beginning to resemble a gold rush. However, since significant government officials announced a complete switch from carbon-based to non-carbon-emitting cars by 2030, that being quite soon technology-wise, it seems that there is no way out anyway.

This shift is not only a change in the technology production process. It’s a change of perspective, a whole different approach to a business policy, and it’s insisted upon here and now. The global market is only waiting for the moment of complete implementation – clean energy, efficient technology, safe transport with zero toxic emissions.

However, there is also a particular financial risk to consider when investing in fuel cell stocks.

The potential financial risk to investing in fuel cell stocks

Until a viable infrastructure network supports the fuel cell technology, one can not consider it implemented. So it’s a situation where supply invokes the creation of the demand on the market.

Other than that, the price of different kinds of hydrogen remains pivotal for the stock price. As a result, the stock will not carry a label as a safe investment until hydrogen is affordable enough for producers.

Green hydrogen price relies substantially on the cost of wind and solar-based production of energy. If wind and solar become cheap enough, green hydrogen will become accessible and cost-efficient. That will make it competitive in the energy market.

The price of green hydrogen is moving in a good direction overall.

The Energy Department recognizes $2 per kilogram as the highest number. Regardless of the kind of hydrogen used for it to be considered affordable.

Green hydrogen costs between 5 and 6 dollars per kilogram, while most gray hydrogen costs about $2 or less in the U.S. So for a price that buys you 1 kilo of hydrogen, you can get two gallons of gasoline, roughly speaking.

Even though the price of green hydrogen is still above the designated point, it’s actively dropping. It has fallen 50% since 2015 and is expected to drop an additional 30% by 2025.

Investing in fuel cell stocks – a long game

Current geopolitical events indeed point towards a bright future for fuel cells as a form of technology. However, that doesn’t mean that the fuel cell stocks will bring outstanding profit to the investor any time soon. In the long game, it can serve as an additional diversification of one’s portfolio.

Data certainly looks promising. Current estimations show that the market value of hydrogen fuel cells is expected to approach $13.7 billion by 2026, while its current worth is $2.5 billion, according to the information from 2020.

Investing in Fuel Cell Stocks – How To Do It?

As fuel cells are only at the beginning stage of infiltrating the market, there’s still not a staggering variety of companies that have public stock. However, the potential investor can invest in companies developing, creating, and manufacturing products related to fuel cells by acquiring their stocks by stock exchange platforms like NYSE or the Nasdaq.

Top Fuel Cell Stocks To Buy

FuelCell Energy Inc (NASDAQ: FCEL)

This company is based in Connecticut and is a significant manufacturer of fuel cell power plants. The company’s large fuel cell power plant, Sure Source, produces extra hydrogen that exceeds the power production demands—making it suitable for transportation. Therefore, the company has diverse operations, which gives it significant allure to the stock market. Apart from that, their power plant coordinates with the State of California Low Carbon Fuel Standard. Hence, having it labeled carbon negative by the California Air Resources Board (CARB).
In 2020, FuelCell Energy received a significant investment of $8 million provided by the U.S. Department of Energy to produce a hydrogen-based power plant.

Company Website: https://www.fuelcellenergy.com/

Bloom Energy Corp (NYSE: BE)

This company is based in California, USA. It was founded in 2001, emerging as a front participant in the energy industry. The company’s market cap is $4.57 billion, while the stock is up 245% year-to-date. The company has serious plans, stating hydrogen as a viable solution for sustainable energy. In addition, it aims to provide the service of transforming traditional energy plants into zero-carbon emissions plants for other clients. That shows significant diversity of operations.

Apart from that, the company is planning to station a 100% hydrogen-based system in South Korea. A move that significantly diversifies their geographical position. The company holds numerous partnerships and is already selling 120 megawatts of fuel cells in South Korea. This endeavor earns them over $1 billion in income.

The company has a net worth of $176.1 million. Showed great production in 2020 and is one of the most promising energy-related stocks for the coming period. The current stock price is $24.46, and the estimates are it will get to $36 within a year, depicting a +47.18 progress.

Company Website: https://www.bloomenergy.com/ 

Nikola Corporation (NASDAQ: NKLA)

Nikola is one of the most well-known electric car producers in the world. In addition, the company produced a famous hydrogen-powered truck, Nikola One.
Nikola recently established a partnership with Arizona Public Service Company, aiming to develop further solutions for hydrogen-powered transport services.

Company Website: https://nikolamotor.com/

Ballard Power Systems Inc (NASDAQ: BLDP)

Ballard Power Systems produces hydrogen fuel cells for automobiles. The company is based in Canada, and it has a separate operation directed at making proton exchange membrane fuel cell products.

Company Website: https://www.ballard.com/

Plug Power Inc (NASDAQ: PLUG)

The company is based in New York and is an essential player in the fuel cell market. Plug Power produces hydrogen fuel cells that substitute traditional batteries in cars and different devices. This business model is highly lucrative, and it represents the core of the world’s transformation to more eco-friendly solutions.
The company is entering a partnership with the French car manufacturer Renault that aims to develop and manufacture commercial electric vehicles that are fuel cell-powered. Place them on the market and make this company a stock to wait for in the coming period.

Company Website: https://www.plugpower.com/

Investing in Fuel Cell Stocks – Conclusion?

Even though fuel cell technology is yet to have its breakthrough, positive signs indicate its ultimate success.
Doubters like Elon Musk may prove right when it comes to fuel cells as technology still faces significant challenges yet to be overcome.
However, there are also reasons to believe that the great utility of this technology will push developers towards finding a suitable solution for its implementation. This would fulfill the optimistic predictions of many experts surrounding this technology and the companies exploring, designing, and selling it.
Optimistic investors have something to hope for – an impressive energy-producing technology, a bright, clean, and toxic-ridden future, and last but not least, a potential score.

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