With fuel cell stocks more than 40% off their 2021 highs – is it time to buy?
The size of the fuel cell market was estimated at $709m in 2019 and is projected to reach $4.5bn by 2027, this a rise of 26.8% yearly, on average. With this monumental surge in growth expect in the next few years the question is; is it time to buy fuel cell stocks?. Maxim Manturov, Head of Investment Research at Freedom Finance Europe, discusses why there’s been a recent growth in fuel cell stocks, what challenges the industry faces and the top five fuel cell stocks to buy in 2021.
Where has this growth come from?
The growth in fuel cell stocks has been mainly driven by the growing need to reduce dependence on oil and other traditional fuel sources. The government support through Biden’s policies also plays its part. As a result, many opt for green energy, and the demand for electricity and transportation systems is growing. Many countries are striving to reduce their overall carbon footprint in order to stabilize global warming without the need to reduce the demand for electricity. In countries such as China, Japan, the US, and others, the governments offer funds to people who buy fuel cell vehicles.
Hydrogen is also seeing some major growth and is gaining more weight in steel and chemicals production, while the aviation industry is also considering it as potential fuel. Significant changes occurred not only in companies and technologies, but also in governments; by 2050, hydrogen created from renewable sources can provide up to 25% of the world’s energy. Before that, however, its cost should drop to $2 per kg, which should put its price in line with that of other types of energy.
The core driver for fuel cell stocks in recent years lied in dramatic reductions in wind and solar energy costs, leading to the creation of the most desirable form of hydrogen. The costs are coming down as technology gets cheaper and the project scale are becoming larger, which reduces costs. However, better battery technologies might put the emerging hydrogen economy under pressure; moreover, much more infrastructure is needed before the fuel cells can become widespread. However, unlike batteries, hydrogen fuel cells do not require extended recharging, which is important in power plants and other facilities where there is no tolerance to long downtime.
To harness the full potential in decarbonizing the energy systems and create a real hydrogen economy, both the industries and governments will have to increase investment and push the market forward. Moreover, there are still a number of challenges that need to be addressed properly, including storage and, which is more important, production issues. Currently, hydrogen production is not environmentally friendly, as 95% of it is produced with fossil resources.
5 best hydrogen fuel cell stocks to buy
- Bloom Energy Corp (BE): The company currently views hydrogen as a viable energy option as it seeks to convert traditional power plants into zero-carbon facilities for its customers. Bloom also says it will deploy a 100% hydrogen-based system in South Korea.#
- Nikola Corporation (NKLA): Best known for its Nikola One hydrogen truck and some other hydrogen fuel cell projects, the company previously announced an investment of $50M into a project for green hydrogen production.
- Ballard Power Systems Inc (BLDP): This Canada based company manufactures hydrogen fuel cells for automobiles, as well as proton exchange membrane fuel cells.
- Plug Power Inc (PLUG): One of the largest companies in the hydrogen fuel cell industry, it manufactures hydrogen fuel cell systems that replace conventional batteries in cars and other vehicles and equipment.
- FuelCell Energy Inc (FCEL): A company designing and manufacturing fuel cell power plants. SureSource’s hydrogen fuel cell power plant produces supplemental hydrogen suitable for industrial production and transportation.