The start of a supercycle?


The recent rise of green hydrogen stocks is no flash in the pan, writes Chris Stebbings.

With the UK government last year announcing that green hydrogen was to be central to the country’s ‘green industrial
revolution’ and the EU’s hydrogen roadmap forecasting €500bn ($604bn) being invested in the transition to a hydrogen-based economy by 2050, hydrogen is now seen by governments around the world as a key component of a carbon-neutral future.

Indeed, 20 countries that collectively represent around 70% of global GDP are placing hydrogen strategies front and centre of their plans for decarbonisation. It is perhaps unsurprising, then, that hydrogen fuel cell and electrolyser makers at the forefront of this transition have seen their valuations soar during 2020.

Plug Power, for example, is up c.700% while French electrolyser developer McPhy is up a remarkable c.820%. Large industrial companies are also moving into the space by taking stakes in relevant companies.

US firm Cummins last year moved into the renewable energy sector by acquiring fuel cell and electrolyser technology manufacturer Hydrogenics. It swiftly followed this up by acquiring a minority investment in Loop Energy, a fuel cell electric range extender provider, and signed a memorandum of understanding with Hyundai Motor Company to collaborate on fuel cell technology.

Earlier this month, Plug Power and South Korea’s SK Group announced they would form a strategic partnership to accelerate hydrogen as an alternative energy source in Asian markets, with SK Group investing €1.5 billion($1.8 billion).
Almost all the hydrogen produced globally stems from methods based on fossil fuels.


Therefore, a network of electrolysers running off renewable power is needed, and electrolyser manufacturers such as ITM Power, which is soon to build the world’s largest electrolyser factory in Sheffield and has attracted an investment from Linde/BOC as well as Italy’s biggest gas grid company Snam, stand to be central players.

Electrolyser manufacturer Ceres Power has also attracted Bosch as a partner and 18% shareholder alongside Waichei, which owns 20%. The list of partnerships with hydrogen economy companies is expanding at a rapid pace yet we expect this trend to continue as global businesses continue to shift their focus to a cleaner, greener source of energy.

Causes for concern

Despite all the positive sentiment, some investors remain wary. Over the last 40 years, there have been a number of false starts for fuel cell stocks, with the most recent being during the tech bubble of the late 1990s. This is when Canadian company Ballard’s share price rocketed to a record high of C$165.05 (€112.25) in September 2000 until it dropped to just C$15 (€10,20) two years later after expected consumer demand failed to materialise. In the past few years, common concerns have surrounded the efficiency and costs of the fuel cell, the questions of whether incumbent oil majors will allow this transference from hydrocarbons to green energy to happen, and the level of government support. Some also have questions about the specifics surrounding hydrogen: its safety, the availability of pure enough hydrogen and the lack of a hydrogen infrastructure.

Yet all these concerns are being answered. The fuel cell’s efficiency has improved dramatically over the past decade and costs are falling (by as much as 90% in some cases) as partnerships such as Ceres/Bosch move into the mass production phase.

Oil majors have also been hugely disrupted by increasingly ambitious carbon emission targets set to accelerating time frames – and this is prompting them to become investors in hydrogen economy companies.

Nevertheless, we should remember this is still a maturing industry. Today, many hydrogen companies are still at an early stage of revenue development and few are consistently profitable.

Filling vital gaps

Yet these companies are growing rapidly, not least because there are so many applications for clean hydrogen now and in the future. Although battery storage is likely to cover certain parts of the transport and power sectors, hydrogen is well suited to fill a number of important gaps.

Sectors such as steelmaking, residential and commercial heating, road freight, shipping and aviation have no low-cost, convenient alternatives to fossil fuels, and collectively account for around 34% of global energy consumption.
Hydrogen’s low losses during storage and transportation and high energy-to mass ratio make it an ideal fit across these sectors. And even before green hydrogen is widely available, there is also scope for fuel cells to be used in off-grid generation, distributed generation, and back-up power.

One specific vertical where fuel cells are particularly suitable is EV charging, highlighted by AFC Energy’s recent
partnership with ABB. Ammonia, which is readily available, provides the source of hydrogen for AFC’s fuel cells and therefore means that deployment for EV charging is available now.

Despite previous hype cycles, green hydrogen is steadily shifting to being a major part of the energy mix – so we could be in a what investors term a ‘supercycle’, instead. Recently published forecasts from the EU, the Hydrogen Council and Bloomberg New Energy Finance suggest hydrogen could grow from the current 2% of the energy mix to 13–24% by 2050. With the same economies that adopted batteries now embracing fuel cells, there are opportunities for investors amongst the many hydrogen companies at the forefront of this transition. This time the hype could finally be justified.

About the author

Chris Stebbings is Director at capital markets and investments firm LGB & Co.

This article was originally published in issue 2 2021 of The Guide, an online publication that provides a gateway to the extensive on-demand content produced by Enlit Europe. For more information, visit:

Want to know more about hydrogen in European markets?

Attend this webinar on 17 Jun 2021, 14:00-15:00: Decarbonising the European gas markets – Hydrogen as integral element of Europe’s Internal Energy Market. With Doug Wood (Board member – EFET), Ilaria Conti (Head of Gas – Florence School of Regulation), Felicia Mester (Senior Policy Advisor – Hydrogen Europe) and more.