Is 2023 the year of hydrogen? Is 2023 the year of hydrogen? Is 2023 the year of hydrogen?

Is 2023 the year of hydrogen?

PG
Peter Garnry

Head of Equity Strategy

Summary:  Hydrogen is seen by many as the solution to decarbonize the economy over the coming decade and hydrogen related stocks are off to a strong start to the year driven by several big orders in the industry. This suggests that this year could maybe be the big breakthrough for hydrogen. While renewable energy sources can be built out faster than nuclear power and is greener than burning natural gas it is not a stable energy source but with clean hydrogen it can lead to baseload electricity and stabilise prices, but the technology is still expensive.


Hydrogen is the quickest way to create baseload electricity while growing renewables

Our best performing theme basket this week has been our energy storage basket gaining 10.2% catapulting the basket to the second-best performing basket this year. The big gainers have predominantly been the fuel cells & hydrogen companies such as Plug Power, Bloom Energy, Ballard Power Systems, Nel, and FuelCell Energy. This industry has seen quite some big orders in the beginning of the year suggesting that 2023 could be the big breakthrough year for the industry.

We have written extensively about the energy crisis last year and specifically about power prices and Europe’s baseload problem. Renewable energy is an intermittent energy source and such as the share of renewable energy increases the volatility of electricity prices increases unless you baseload to stabilise the grid and prices. That has previously been nuclear power in France and cheap gas from Russia. With corrosion problem in French nuclear power plants and rapidly rising gas prices due to Russia’s lower supply Europe’s baseload problems have intensified. With electric vehicles and air-to-water heat pumps demand growing rapidly the demand for electricity will also grow rapidly. This will put more pressure on Europe’s grid in the years to come. Clean hydrogen produced from excess renewable energy seems like a good short-term solution but it also comes with higher costs.

Nuclear power takes too long to build out and fusion energy technology is far from ready for commercialisation. Natural gas has become more expensive and with Russia out of the equation using natural gas power plants for baseload has less appeal these days. Renewable energy capacity can be build out faster but it does not solve the baseload issue. But with electrolyzers excess energy from renewable energy sources can be used to split hydrogen from water. This clean hydrogen can then be stored and later burned in power plants for baseload electricity. This technology will be more expensive than burning gas if Russian gas was part of the equation but it might be the only solution short-term to decarbonise the power production in Europe.

Energy storage will increasingly become a key technology for our transition to a greener society but also absolutely necessary as more parts of the economy is electrified. Battery manufacturers are already seeing massive adoption due to electric vehicles and we remain very positive on those companies and lithium miners. But this year could be the year when hydrogen related stocks get their big breakthrough.

Disclaimer

Saxo Capital Markets (Australia) Limited prepares and distributes information/research produced within the Saxo Bank Group for informational purposes only. In addition to the disclaimer below, if any general advice is provided, such advice does not take into account your individual objectives, financial situation or needs. You should consider the appropriateness of trading any financial instrument as trading can result in losses that exceed your initial investment. Please refer to our Analysis Disclaimer, and our Financial Services Guide and Product Disclosure Statement. All legal documentation and disclaimers can be found at https://www.home.saxo/en-au/legal/.

The Saxo Bank Group entities each provide execution-only service. Access and use of Saxo News & Research and any Saxo Bank Group website are subject to (i) the Terms of Use; (ii) the full Disclaimer; and (iii) the Risk Warning in addition (where relevant) to the terms governing the use of the website of a member of the Saxo Bank Group.

Saxo News & Research is provided for informational purposes, does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. No Saxo Bank Group entity shall be liable for any losses that you may sustain as a result of any investment decision made in reliance on information on Saxo News & Research.

To the extent that any content is construed as investment research, such content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication.

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments.Saxo Capital Markets does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo Capital Markets or its affiliates.

Please read our disclaimers:
- Full Disclaimer (https://www.home.saxo/en-au/legal/disclaimer/saxo-disclaimer)
- Analysis Disclaimer (https://www.home.saxo/en-au/legal/analysis-disclaimer/saxo-analysis-disclaimer)
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)

Saxo Capital Markets (Australia) Limited
Suite 1, Level 14, 9 Castlereagh St
Sydney NSW 2000
Australia

Contact Saxo

Select region

Australia
Australia

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-au/about-us/awards

Saxo Capital Markets (Australia) Limited ABN 32 110 128 286 AFSL 280372 (‘Saxo’ or ‘Saxo Capital Markets’) is a wholly owned subsidiary of Saxo Bank A/S, headquartered in Denmark. Please refer to our General Business Terms, Financial Services Guide, Product Disclosure Statement and Target Market Determination to consider whether acquiring or continuing to hold financial products is suitable for you, prior to opening an account and investing in a financial product.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Saxo Capital Markets does not provide ‘personal’ financial product advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo Capital Markets does not take into account an individual’s needs, objectives or financial situation. The Target Market Determination should assist you in determining whether any of the products or services we offer are likely to be consistent with your objectives, financial situation and needs.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc.

The information or the products and services referred to on this website may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and Services offered on this website is not intended for residents of the United States and Japan.

Please click here to view our full disclaimer.