Between environmental concerns and the rise in fossil fuel prices partially caused by the Russia-Ukraine conflict, the global attention to renewable energy sources is growing. Now, hydrogen stocks could face potentially lucrative opportunities for growth.

The Norwegian hydrogen company Nel ASA is one of the frontrunners in the race to hydrogen power adoption. Let’s take a look at how Nel ASA is capitalizing on the demand for clean energy and what this means for the industry as a whole.

An opportunity arises

With rising fuel prices, carbon emissions and other environmental issues taking centre stage, the United States, Europe, and multiple nations across the globe are encouraging the transition from fossil fuels to renewable energy sources.

While the United States is focused on cutting its carbon emissions by 50-52% by 2030 compared to its 2005 levels, Norway, Brazil, and New Zealand have already made renewable energy sources their main sources of electricity, with green energy comprising 98.4%, 84.1%, and 80% of their total energy production respectively.

Apart from the traditional superpowers, an array of developing nations have also moved to the forefront of clean energy adoption. Guyana is moving towards its target for 90% of its energy to come from renewable energy sources by 2050, while Barbados is aiming to reach both carbon neutrality and 100% clean energy use by 2030.

Russia’s invasion of Ukraine has further accelerated Europe’s push toward green energy adoption. With the continent relying heavily on Russia for natural gas and oil imports, Europe’s energy supply has been compromised due to the economic sanctions that have been placed on Russia. As a result, Europe has had to shift its approach to energy production.

To reduce Europe’s reliance on Russia for its energy supply, the International Energy Agency (IEA) drafted a 10-step plan focused on adopting renewable energy sources.

Even without the IEA’s plan, nations such as Germany have taken their energy production futures into their own hands. Germany has brought forward its Renewable Energy Sources Act, now looking to eliminate fossil fuel usage by 2035 completely and thereby end its energy dependence on Russia.

As the demand for renewable energy accelerates, hydrogen stocks such as Nel ASA may be uniquely positioned to capitalize on this opportunity.

Record Financial Results

2021 proved to be a financially prosperous year for Nel ASA, with the company recording its highest-ever quarterly revenue of NOK 248.1 million in the final quarter. What’s more, the company racked up USD 12 billion in potential orders, yet another record high.[1]

The Norwegian company started 2021 by landing a EUR 13.5 million contract to supply Iberdrola, one of the world’s largest electricity utilities, with its 20 MW PEM solution. This will assist Iberdrola in its green fertilizer production as it looks to make its green hydrogen plant in Spain the largest in Europe.

Moving on to the second quarter, Nel ASA entered the automotive space, closing a deal to supply Canada’s Hydrogen Technology & Energy Corporation with a new hydrogen fueling station. This fueling station would be used to service HTEC’s light-duty fuel cell electric vehicles across Canada.

The hydrogen company then took a plunge into the home heating market, supplying an alkaline water electrolyzer to British gas distribution company SGN. This electrolyzer will be used to power the world’s first hydrogen-to-homes heating network, which will provide heat to homes on Scotland’s east coast.

Going into 2022,  the company received an order for its alkaline electrolyzer system from food tech startup Solar Foods. The company is expected to use Nel ASA’s electrolyzer to create green hydrogen, which will then be used in the food production process.

Teaming up

In addition to driving sales through product innovation, Nel ASA has also pursued an array of strategic partnerships as an avenue for growth.

The company entered into a memorandum of understanding (MOU) with carbon reduction technology company Haldor Topsoe. Together, the companies agreed to develop renewable electricity for ammonia and methanol solutions with the goal of becoming global leaders in carbon emission reduction technologies by 2024.

By partnering with First Solar, Inc., Nel ASA has entered into the solar power market. Together, the companies will combine their capabilities to develop integrated Photovoltaic (PV) Hydrogen power plants, whereby solar power and hydrogen will be combined in the energy production process.

In addition to partnerships with individual firms, Nel ASA has also joined the PosHYdon project consortium. This network aims to integrate hydrogen, natural gas, and wind power generation off the coast of the Netherlands and has planned the installation of a hydrogen production plant.

Driving the industry forward

Through its innovations and strategic partnerships, Nel ASA is identifying new growth opportunities for hydrogen stocks in markets such as heating, mobility, and food production.

By partnering with companies in different geographical regions and industries, Nel ASA is identifying previously untapped gaps in the market that may result in the expansion of hydrogen applications. Such discoveries may possibly enable other green hydrogen companies to pursue new avenues of growth and thus avoid saturating the existing market.

By venturing into uncharted waters, Nel ASA has formed new pathways to foster potential growth and the expansion of hydrogen fuel solutions.

Nel ASA is one of the stocks currently held in Defiance’s ETF, HDRO. It should be noted that the following companies mentioned in this article are not current holdings of HDRO:  Iberdola, Hydrogen Technology & Energy Corporation, SGN, SolarFoods, Haldor Topsoe, and FirstSolar, Inc.

For current performance and holdings, please visit defianceetfs.com/HDRO

Fund holdings and sector allocations are subject to change at any time and should not be considered recommendations to buy or sell any security.

Important Disclosures:

Fund holdings and sector allocations are subject to change at any time and should not be considered recommendations to buy or sell any security.

The Fund’s investment objectives, risks, charges, and expenses must be considered carefully before investing. The prospectus contains this and other important information about the investment company. Please read carefully before investing. A hard copy of the prospectuses can be requested by calling 833.333.9383.

Investing involves risk. Principal loss is possible. The Fund may trade at a premium or discount to NAV as an ETF. Shares of any ETF are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. The Fund is not actively managed and would not sell a security due to current or projected underperformance unless that security is removed from the Index or is required upon a reconstitution of the Index. A portfolio concentrated in a single industry or country may be subject to a higher degree of risk. Specifically, the Index (and as a result, the Fund) is expected to be concentrated in hydrogen and fuel cell companies. Such companies may depend largely on the availability of hydrogen gas, certain third-party key suppliers for components in their products, and a small number of customers for a significant portion of their business. The Fund is considered to be non-diversified, so it may invest more of its assets in the securities of a single issuer or a smaller number of issuers. Investments in foreign securities involve certain risks, including the risk of loss due to foreign currency fluctuations or political or economic instability. This risk is magnified in emerging markets. Small and mid-cap companies are subject to greater and more unpredictable price changes than securities of large-cap companies.

The BlueStar Global Hydrogen & Next Gen Fuel Cell Index is the exclusive property, and a trademark of BlueStar Global Investors LLC d/b/a BlueStar Indexes® and has been licensed for use for certain purposes by Defiance ETFs LLC. Products based on the Global Hydrogen & Next Gen Fuel Cell Index are not sponsored, endorsed, sold or promoted by BlueStar Global Investors, LLC or BlueStar Indexes®, and BlueStar Global Investors, LLC and BlueStar Indexes® make no representation regarding the advisability of trading in such product(s).

HDRO is new with a limited operating history.

Total return represents changes to the NAV and accounts for distributions from the Fund.

Median 30-Day Spread is a calculation of the Fund’s median bid-ask spread, expressed as a percentage rounded to the nearest hundredth, computed by: identifying the Fund’s national best bid and national best offer as of the end of each 10-second interval during each trading day of the last 30 calendar days; dividing the difference between each such bid and offer by the midpoint of the national best bid and the national best offer; and identifying the median of those values.

Commissions may be charged on trades.

Go to defianceetfs.com/hdro to read more about HDRO, including current performance and holdings information. Fund holdings are subject to change and should not be considered recommendations to buy or sell any securities.

HDRO is distributed by Foreside Fund Services, LLC

[1] “Nel ASA: Fourth quarter 2021 financial results”, 16 February 2022, https://mb.cision.com/Public/115/3507495/b6d34a7cc2dda393.pdf

 

The post Nel Asa’s success shows strength in the hydrogen market appeared first on InsightsSuccess.

Source link