Fuel Cell Industry Frenzy
With the lingering volatility in the markets due to the pandemic, some industries have outperformed others by making huge financial gains. Within the energy industry, stock prices have skyrocketed even with wary financials. Technologies within this industry, such as fuel cells, have recently become more relevant after decades of being in the shadows of many other innovations. Fuel cells are similar to batteries that never run down. Hydrogen fuel cells are produced in sustainable ways due to the abundance of Hydrogen. (Energy.gov, 2021). With many companies needing different ways to generate sustainable forms of energy with fuel cells, companies such as Plug Power have risen to the top.
Surprisingly, Plug Power has reported negative sales in March and a negative revenue last year, while its stock has risen almost 750% this past year (Mackintosh, 2021). Large companies like Amazon and Walmart have become frequent customers of Plug Power, using their hydrogen cells to power their forklifts with the intention of going green, despite Plug Power having very low ESG ratings. An ESG rating is meant to attribute a value towards the environmental, social and governance aspect of a company. A higher score indicates that a company is taking the necessary steps to ensure that they are operating in the most socioeconomic way possible, which includes being environmentally friendly. With Plug Power's sustainable energy source, a low ESG rating can seem confusing. Though, in order to retain customers, Plug Powers offers warrants for their stock which is the main contributor to the huge increase in stock price. Plug Power has also established a new partnership with Renault, a European automobile manufacturer, to produce energy-efficient vehicles using hydrogen, and test fleet deployments of this technology can be out as soon as the end of 2021. The car itself combines hydrogen and oxygen to generate electricity in order to operate the motor, fortunately the only byproduct of this process is heat and water. Later when hydrogen gets used up, hydrogen stations will allow cars to charge up in approximately 10 minutes (Union of Concerned Scientists, 2021). This initiative aims to make Plug Power more profitable and to increase the use of hydrogen-powered electronics/vehicles. Plug Power was one of the key companies within this industry that was able to generate discussion of alternate clean energy resources. Companies such as Nikola are also able to follow within Renault’s footsteps. Nikola is considered to be Tesla’s competitor in electric vehicle manufacturing with a competitive edge on high stock valuation. Nikola’s plan to use hydrogen fuel cells to operate vehicles with General Motors has also gained a lot of traction. Looking at established automobile companies such as General Motors taking a chance in creating some of these fuel cells goes to show how this hydrogen fuel cell “craze” is already spreading.
Fuel cells have been making an impact with Shell Oil Company as well. The company has recently been researching the impact of fuel cell technology and learning how the technology can be applicable to them. Currently, they have focused efforts in using this energy in transportation on ships. They plan to operate a trial period for 12 months in order to determine its efficiency. Oil companies are starting to recognize the negative impact this new source of energy can have on oil, and are trying to keep up with the change by incorporating fuel cell energy in their own operations. Even Saudi state oil producer Aramco publicly acknowledged the major impact of hydrogen powered energy and is now trying to source their own fuel cells to add to their energy portfolio (Murphy, 2021).
Plug Power’s stock, which was considered a penny stock just a couple of years ago, has significantly increased its share price, especially with the current state of key statistics. Plug Power has reported little earnings, yet an emerging trend can be seen with companies that have little to no earnings doing comparatively well and becoming “hot” stocks. On the other hand, it also questions the reliability of the market; with the network also short squeezed with GameStop and AMC, investors are wary of relying on the same valuation methods in order to skillfully determine profitable investments. It brings up the question of what investors are planning to use to gain insight into future investments. This new global trend of moving towards more energy-efficient resources starts with huge brand-name companies such as Amazon and Walmart. The way hydrogen fuel cells are being introduced to the market, first being used for forklifts and now cars, can revolutionize the way we start making consumer goods. Since this new direction of sustainability is becoming profitable for companies, it is likely that other corporations will opt for using this energy as well.
Works Cited
“5 Fast Facts about Hydrogen and Fuel Cells.” Energy.gov, www.energy.gov/eere/articles/5-fast-facts-about-hydrogen-and-fuel-cells.
Murphy, Dan & Turak, Natasha. “Aramco Sees Major Hydrogen Market Forming amid Historic Pressure Test for Big Oil.” CNBC, CNBC, 28 June 2021, www.cnbc.com/2021/06/28/aramco-sees-major-hydrogen-market-forming-amid-pressure-for-big-oil.html.
“How Do Hydrogen Fuel Cell Vehicles Work?” Union of Concerned Scientists, www.ucsusa.org/resources/how-do-hydrogen-fuel-cell-vehicles-work.
Jaganathan, Jessica. “Shell to Trial Use of Hydrogen Fuel Cells for Ships in Singapore.” Reuters, Thomson Reuters, 21 Apr. 2021, www.reuters.com/business/sustainable-business/shell-trial-use-hydrogen-fuel-cells-ships-singapore-2021-04-21/.
Mackintosh, James. “The Story of Amazon's Fuel-Cell Supplier Explains This Crazy Market.” The Wall Street Journal, Dow Jones & Company, 28 Mar. 2021, www.wsj.com/articles/the-story-of-amazons-fuel-cell-supplier-explains-this-crazy-market-11616936401.
Smith, Howard. “Why Nikola, Plug Power, and Bloom Energy Stocks Jumped Today.” The Motley Fool, The Motley Fool, 21 Apr. 2021, www.fool.com/investing/2021/04/21/why-nikola-plug-power-and-bloom-energy-stocks-jump/.
