My recommendation to use the temporarily very weak prices in Cummins for continued and new buys has already paid off: The share price grew from around 200 to over 255 USD. And it will continue to, even though Cummins is increasingly focusing on new markets like hydrogen (engines, electrolysis, stacks for commercial vehicles, etc. – we reported).
Cummins can finance its own growth well from its own means through corporate earnings. On average, 34 percent of corporate profits are distributed to shareholders as dividends – in 2022, it was 6.28 USD per share. This was topped up by seven percent on July 11 to 1.68 USD per share for the quarter. The company’s growth rate of 26 percent per year on average over the past five years is solid. Cummins now sees turnover in the current fiscal year at 33 billion USD and expects an earnings per share of 19.80 USD, which corresponds to a growth of 31 percent. A good justification for further rising prices.
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Share price decline despite good figures
Cummins reports for the second quarter a turnover of 8.6 billion USD (plus of 31 percent) and profit of 720 million USD, which came out lower than expected, however, and allowed the share price to sink from over 255 USD to 230 USD – thus already back to buy level, as the guidelines are unchanged.
Together with Air Liquide, Cummins Engine acquired Canadian company Hydrogenics in 2019 for 290 million USD. In the transaction, Air Liquide retained at that time a 19 percent share in the company. This share Air Liquide has now sold to Cummins for the equivalent of about 156.5 million USD, making the value of Hydrogenics as per today the equivalent of over 823.7 million USD. Cummins plans with subsidiary Accelera, in which Hydrogenics is consolidated, to build an annual electrolysis capacity of 3.5 GW in the next years. A diversity of large orders – 500 MW in China, 500 MW in the USA, 500 MW in Spain and 1 GW in Belgium – are already in the books of Cummins or Accelera.
Considering that Plug Power intends to build 5 GW of electrolysis capacity within a few years and is currently valued on the stock exchange with a good 6 billion USD, Cummins should consider placing its subsidiary on the stock exchange, possibly while also retaining a majority shareholding, like Thyssenkrupp did with Nucera. The consequence in this purely theoretical consideration: Capital inflow of over 2 billion USD, with which, on the one hand, the price for buying Hydrogenics is covered (flows back in); in addition, an extraordinary profit beckons; and thirdly, Accelera via the stock exchange would receive new growth capital (for acquisitions?) – just as a thought experiment.
Hydrogen-powered engines
The automotive expert journal WardsAuto reports on how advanced Cummins is in its work to bring engines to market that run on hydrogen. There is to be a new version of the successful B6.7 diesel engine that with its powertrain burns hydrogen and can be used in heavy trucks. After all, there are already restrictions in place in California that prohibit already starting 2024 the operation of diesel trucks on, among other places, port grounds. Vehicles produced before 2010 will soon no longer be allowed on the roads of this state. A winning pass to all manufacturers of alternative drives – so employment of the fuel cell or direct injection of hydrogen as well as battery-electric systems.
With this, the new B6.7H 6.7-liter hydrogen engine (range of 483 km, or 300 mi) can quickly become a slam dunk if hydrogen and the corresponding infrastructure are available. So it is very suitable that the US government via the Inflation Reduction Act has provided 8 billion USD for the construction of six to ten H2 terminals distributed across the US – in addition to the many individual programs offered by states such as California.
Summary: Cummins Engine is working on a variety of platforms for the use of hydrogen in many applications such as heavy transport and rail but also for electrolysis, whether PEM or alkaline. The stock market will increasingly let this show in the company valuations. A real H2/FC blue chip is what Cummins has developed into.
Disclaimer
Each investor must always be aware of their own risk when investing in shares and should consider a sensible risk diversification. The FC companies and shares mentioned here are small and mid cap, i.e. they are not standard stocks and their volatility is also much higher. This report is not meant to be viewed as purchase recommendations, and the author holds no liability for your actions. All information is based on publicly available sources and, as far as assessment is concerned, represents exclusively the personal opinion of the author, who focuses on medium- and long-term valuation and not on short-term profit. The author may be in possession of the shares presented here.
The press conference for the second quarter delivered a number of results that allow a very optimistic outlook for the future of the company. Ballard is positioning itself perfectly in its most important markets: buses and trucks, rail vehicles, maritime transport and stationary energy. This involves optimizing the production processes of all important components, cost reductions (scaling), local-for-local strategies (supply chains in the specific countries where Ballard maintains production) and ramp-up in the various regions of the world in which the company operates. A few examples:
In buses, the Canadian company is ahead of the pack in the fuel cell segment with a formidable market share of still over 70 percent. Recently, the largest single global order came in from customer Solaris for 96 FC buses (52 of them for public transport company Rebus in Güstrow near Rostock). In the next two years, it’ll be an astounding 10,000 FC buses (Europe and USA), a large share of which is sure to be Ballard. The USA is just beginning to pick up speed in this regard, and Ballard sees itself well placed to accept larger orders from, among other, New Flyer (have market share of about 66 percent in transit buses). Individual orders from municipalities have now grown from units of 1, 2, 5 to 100 FC buses.
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The China card
In China, a lot is finally happening at the government level regarding hydrogen (see above). The chance of a comprehensive funding program starting in 2024/25 is increasing. Will China do it in dribs and drabs or, similar to the US government with the Inflation Reduction Act, launch a mammoth hydrogen program (investment incentives, subsidies for H2 production)? China could use hydrogen as a climate-friendly economic stimulus package for itself, given the current problems in the construction sector and with the infrastructure programs. In addition, new markets within electric transport can be established that could supplement or alternatively replace battery-electric ones, which would deliver a turbo boost to the world market for fuel cells.
For Ballard and its joint venture with Weichai (49:51), this allows a lot of possibility. CEO Randy MacEwen said: “We are believers in the long-term market opportunity for China. It is the largest market for production and use of hydrogen today and based on my recent visits there, I expect that to continue through 2030 – 2050. There is an enormous level of activity.”
Wisdom Motor sends 147 FC trucks to Australia
With Wisdom Motor – headquarters in province Fujian in China –Ballard has already started a strategic partnership in May 2022, which also includes the companies Templewater Group and Bravo Transportation (trucks and buses). Wisdom Motor in turn signed a cooperation agreement (MoU) with the Australian companies Pure Hydrogen and HDrive in November 2022, where Wisdom would supply over a five-year period 12,000 heavy-duty hydrogen-powered trucks (among them rubbish trucks).
Now, the first order has been completed, which entailed the delivery of 147 hydrogen-powered trash collection vehicles. Order value: 63 million USD. Supplier of the modules/stacks: The joint venture of Ballard and Weichai in China – exclusive even. Could this already mean that Ballard via the China JV is now supplying 2,400 FC modules per year here from this deal alone? The FC capacities of the JV currently correspond to 20,000 units per year, so this order is a very good start looking at the future.
Investments in China will be adjusted
Originally, Ballard wanted to establish its own MEA production with an investment volume of 130 million USD in China, among other things to counter import tariffs. This investment will be postponed for now, until there is clarity on the subsidy program. They are sticking to the plans, but don’t want to invest in land and all that until the FC market gets going there. However, they have concerning the supply chain all of the important connections already and can quickly act at the opportune time. To put it another way, this allows the interpretation that Ballard is first investing more in markets (USA, Europe) where the company expects to have better chances of winning orders in the near future. All this can also quickly be modified, however, if China accelerates its hydrogen strategy through subsidies and incentives.
Platform partnerships as a turbo
Ballard has been working for a long time on building so-called platform partnerships. This refers to customers who know how to use the fuel cell know-how (stacks & modules) for their own benefit and integrate this into their own hydrogen strategy, and acquire the FC modules exclusively from Ballard. They fully rely on Ballard in this regard and the company’s experience as well as the quality of its FC products. For Ballard, this means being able to deliver large quantities of modules/stacks to these partners in the future. In the bus sector, these are companies like Van Hool or Solaris, and with rail vehicles, Siemens Mobility and Stadler, to name a few examples. There could probably become 30 or more such partnerships, which means enormous and, above all, secure sales potential in the medium to long term.
Selection procedure of Ford speaks for Ballard
Ford Truck has decided, after comprehensive market analysis, to employ Ballard FC modules for its trucks of the F-MAX series. Two 120-kW FCmove XD modules be employed per truck. First, a letter of intent (LoI) was signed and the delivery of some modules for test purposes agreed on. From this will then come a large series. You can compare this with Bosch and Nikola, where Bosch supplies the FC modules.
This is an accolade for Ballard that underlines its expertise. Ford Truck builds, in addition to heavy trucks, many other vehicles such as construction vehicles and tractors that could in the future have Ballard inside. The truck production in Turkey is to be the first Ford site for this. Over 10,000 vehicles roll off the assembly line here every year.
Ford can itself install the Ballard modules perfectly on its own truck chassis, is the plan. It will surely take another year or two until, after test runs, the first large orders are given over to Ballard. The foundation, however, has now been laid. What would happen if Ballard were to supply 1,000, 5,000, 10,000 or more FC modules in a year – alone for this one platform partnership? According to Ballard: “As Ford’s fuel cell F-MAX truck platform matures, we anticipate this partnership to evolve into a long-term scaled-deployment-level module orders and supply arrangement.”
Canadian Pacific (CPKC) too has ordered for its production facility in Kansas City 20 FC modules for use in various locomotive types in order to gain experience from the test operation. They are also working together with railroad company CSX to make locomotives H2-ready or break away from diesel operation. A very large order can come out of this. Further orders are expected further in the course of 2023.
Figures
The reported loss for Ballard lay, as expected, at minus 0.10 USD per share for the quarter. The order volume rose strongly in terms of value to 147.5 million USD and will continue to do so. In the bank still lies a good 815 million USD in liquid assets. The ratio of sales development between the first and second half of the year is described as 30:70 percent, so the current second half of the year promises positive surprises regarding this. Really exciting will then be 2024/25.
Summary: The calm in the share price development of Ballard should end in 2024 at the latest and lead to a gradual rise in the share price that finds its foundations in the rising number of orders for the FC products in all the various platform partnerships, markets and regions. A turbo could be China, when clarity on subsidization is created. Therefore: Buy and leave alone. No hasty reactions. Think about Facebook, Amazon and Google in the first years: There were only “logical” huge losses – until the business models started to soar – the shares as well.
Disclaimer
Each investor must always be aware of their own risk when investing in shares and should consider a sensible risk diversification. The FC companies and shares mentioned here are small and mid cap, i.e. they are not standard stocks and their volatility is also much higher. This report is not meant to be viewed as purchase recommendations, and the author holds no liability for your actions. All information is based on publicly available sources and, as far as assessment is concerned, represents exclusively the personal opinion of the author, who focuses on medium- and long-term valuation and not on short-term profit. The author may be in possession of the shares presented here.
Bloom Energy was able to increase its turnover by 24 percent in the second quarter to over 301 million USD. The right growth, meanwhile, is to take place – as in every year contingent on project completions – again in the second half of the year – principally in the fourth quarter. The ratio is assumed to be 30:70, so 70 percent of sales – with increasing trend – will wind up in the second semester.
The expectation of delivering in the fiscal year a total turnover of 1.4 to 1.5 billion USD has been validated. The non-GAAP profit margin is to come out to 25 percent for the whole year. The cash on hand was able to be raised as per June 30, 2023 to an astounding 923 million USD. This includes net proceeds from a convertible bond in the amount of 560 million USD.
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New business model: Series 10
For industrial customers requiring at least 10 MW of energy output, Bloom offers to make this scalable to purchase via electricity and heat supply contracts – term of at least five years –– without having to themselves invest in technology/hardware. The customer receives energy at a fixed calculable price and that reliably 24/7. For this, Bloom can continue to employ natural gas but also biogas and hydrogen, depending on availability. In addition, Bloom is determined to use waste heat – for example at data centers – wisely. Consider that data centers in particular require a lot of energy for cooling the servers, but at the same time the resulting waste heat (process heat) is also useful. Specifically:
The customer receives a secure supply of energy at a fixed price over an extended period of time. Up to 0.099 per kWh at the lower end.
If there is a need for more energy, the system can be expanded to the requested amount through further delivery of additional Energy Servers within 50 days after the signing of the contract.
No upfront investment required. Bloom provides the Energy Servers and infrastructure for the customer at no additional cost.
Installation, service (maintenance) and management of the Servers is carried out by Bloom Energy.
The systems are designed so that they can run on natural gas, biogas and hydrogen – according to customer requirement and availability. Also the switch from one energy source to another is no problem.
The energy can be requested directly by the customer, but also alternatively through a provider that supplies the customer with energy according to need. Bloom cooperates with energy suppliers of all kinds for this.
Heating
More than 50 percent of the energy used in the business realm is process heat. This area is one of the most important in terms of decarbonization. Rising energy prices are an additional challenge. On the other hand, the increasing digitalization is leading to higher power requirements for data centers and associated networks. Up to 40 percent of the energy required there is used to cool the systems. That energy is primarily electricity. This is also the case with air conditioning and appliances for cooling or freezing. Hydrofluorocarbons (HFCs) are employed in these, which are very destructive to the climate – 100 times more damaging than CO2.
Here, Bloom can make a start by employing CHP (combined heat-and-power), as the Energy Servers give off a large amount of heat. From this point of view, the heat is a perfect usable waste product, which can be used by the industrial customer for its process heat. The waste heat can equally be used in return for air conditioning and chilling/freezing. At the end of the day, all this is achieved without the use of HFCs.
All this saves money and reduces CO2 emissions as well as energy requirements. This is already being utilized in Europe, but now with the Inflation Reduction Act, the USA is on track to use this potential for itself. Bloom is in talks with many potential industrial customers on the subject.
Summary: You can bet on the fourth quarter of this year already today. It must be, based on the forecasts, overall very positive in terms of a) the profit margin and b) expected turnover: 400 to 500 million USD. The third quarter is expected to remain at the level of the second quarter and so not offer any surprises. Further speculation should focus on the introduction of high-temperature electrolyzers in 2024, as a further boost to sales and order volume could derive from this.
Bloom is still experiencing losses but will enter the profit zone in 2024/25 – and with high sustainable growth, is my expectation. Furthermore, the topic of hydrogen (production, application, tax incentives via Inflation Reduction Act) will have increasing importance for Bloom. The stock market will have no choice but to show the long-term prospects in its valuation. Bloom seems to me to be very well positioned in the field of energy and hydrogen. Target: More than 50 USD in two years. Collect and leave alone. The stock market anticipates all this.
Disclaimer
Each investor must always be aware of their own risk when investing in shares and should consider a sensible risk diversification. The FC companies and shares mentioned here are small and mid cap, i.e. they are not standard stocks and their volatility is also much higher. This report is not meant to be viewed as purchase recommendations, and the author holds no liability for your actions. All information is based on publicly available sources and, as far as assessment is concerned, represents exclusively the personal opinion of the author, who focuses on medium- and long-term valuation and not on short-term profit. The author may be in possession of the shares presented here.
Plug Power reports on a variety of projects related to hydrogen, its production, use and future markets in which it is active and feels it is a frontrunner. Company representatives talk about an H2 production facility in Georgia that is the largest of its kind in the USA. They’re active everywhere – in stacks, cryotechnologies (liquefaction), electrolyzers and hydrogen-powered vehicles.
The figures, though, speak a completely different language: Turnover indeed grew by a remarkable 70 percent to over 260 million USD in the second quarter. But the quarterly loss likewise increased 58 percent to minus 236.4 million USD, or 0.40 USD per share (minus 0.26 USD per share was the expectation for the Q2). Liquidity decreased noticeably to only about 1 billion USD, so the CFO expects that Plug needs in the next 12 to 18 months between 1 and 1.5 billion USD in new liquid capital.
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Is an offering (share placement) coming soon or will a credit of over 1 billion USD be given by the DOE (Department of Energy) via the Inflation Reduction Act? Best could be a convertible bond at the value of 1 to 2 billion USD, as large funds are focusing especially on green bonds that fit with the sustainability theme and the company has sufficient capital. The stock market, meanwhile, appears skeptical and has let the share price plummet.
“By the end of 2023 we aim to generate 1.4 billion dollars (USD) in revenue, commission more than 200 tonnes of liquid green hydrogen plants and become the largest global player, exceed 400 million dollars in electrolyzer sales, deploy 30 megawatts of stationary power products, which will serve as a substantial source of recurring revenue for Plug and finally clearly demonstrate the path of profitability for all our investors.”
Plugquarterly report
That’s a lot of nice talk – but realistic? The forecasts are maintained: 1.2 to 1.4 billion USD turnover is taken as the target for the entire year 2023. The plans are huge. Alone in the business area of electrolysis, a capacity of 7.5 GW will be expected. The current figures (order book with about 224 million USD for electrolysis) speak a different language. The target level corresponds to a sales potential of up to 5 billion USD. Realistic? When?
There are many new sites in the world where hydrogen could be used in forklifts – the basis of their business with customers like Amazon and Walmart. But Plug needs to produce the liquefied hydrogen itself and earn money from it instead of buying it, even at a loss, from third parties, is my assessment. Otherwise, each new customer brings a loss with it, is my subjective view.
Plug calculates the price for hydrogen based on 0.03 USD per kWh in the USA as 2.75 USD per kg. In Europe, because of the imposed conditions and the price of electricity, around 0.75 USD per kg higher. If costs such as liquefaction and transportation are included, however, then 4.50 to 5 USD per kg is a realistic basis. Here, the subsidy via the US Inflation Reduction Act of 3 USD per kg will have a positive impact (profit margin).
Summary: Plug Power will require still longer before the share can be recommended as a buy. After placement of a convertible bond (my expectation/prediction). And then sufficient liquidity for all the ambitious plans must be reassessed. The company has very good potential to become a top player in the hydrogen sector. One should still be critical, however, since Plug is working on a large number of projects (building up capacity) in parallel, possibly positioning itself too broadly, and this at many different construction sites at the same time, and then also internationally active. Less is more, I would say. The company is for me – after studying the 10-Q (quarterly report) – too little transparent. Starting 7 USD, I’d consider the share.
Disclaimer
Each investor must always be aware of their own risk when investing in shares and should consider a sensible risk diversification. The FC companies and shares mentioned here are small and mid cap, i.e. they are not standard stocks and their volatility is also much higher. This report is not meant to be viewed as purchase recommendations, and the author holds no liability for your actions. All information is based on publicly available sources and, as far as assessment is concerned, represents exclusively the personal opinion of the author, who focuses on medium- and long-term valuation and not on short-term profit. The author may be in possession of the shares presented here.
The past few months have been extreme for Hyzon Motors, but all figures for the past two years since the IPO had to be reprocessed because of the accounting debacle, in order to comply with accounting guidelines and the conditions for listing on the stock exchange (quoted share price needed to be above 1 USD again, all quarterly reports available, deadlines met). All this has now been accomplished and there is clarity. In addition, the board of directors was newly formed and expanded to include experienced professionals.
The stock market has translated this – as I predicted – in the form of rising share prices, which involved a rapid increase from about 0.50 USD to just over 2 USD (company value rose from 150 to over 400 million USD). Recently, a marked decline in the price occurred again, which however in view of the company prospects should be transitory in nature.
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To the figures: At the end of the second quarter, cash and cash equivalents still amounted to 172.4 million USD. The loss for the quarter in the amount of 60.2 million USD contains the high legal costs in connection with the SEC investigations and the necessary legal measures, for which 32 million USD was recorded and 28.5 million USD of that can be regarded as non-recurring.
The capital requirement per month is estimated at 9 to 12 million USD, with between 73 and 81 million USD of capital expected to be put to use in the second half of the year, and then in total 110 to 120 million USD in 2024. So the company is still well financed, but will surely have to raise capital in the course of 2024 (issuance of shares, loans, subsidies under the Inflation Act, etc.) or seek other forms of financing (convertible bond, participation by a strategic partner). Still unclear, however, is what the costs for the final report from the Securities and Exchange Commission for Hyzon will come to in year 2024.
Matthew Foulston new board member
Matthew Foulston has over thirty years of experience mainly in the automotive industry and there especially in the heavy haul industry. Among other things, he was CFO at Navistar Truck and CFO of Mazda North America as well as in top positions at Ford Motor. Hyzon will certainly have made a good choice in this regard that serves the company’s goals.
In addition, on August 24, 2023, current board member Erik Anderson was elected Chairman of the Board of Directors. Anderson succeeds George Gu, who stepped down from his position.
200‑kW fuel cell has reached milestone
The site in Rochester, New York will be closed down or sold to reduce costs. The 200‑kW stack that was developed in the production facilities and the corporate-owned research center in Bolingbrook, Illinois, on the other hand, is in test series and on the road. The start of production there and commercialization can therefore begin in 2024. In parallel, the fully automated production of the MEA (membrane electrode assembly) was set up. Now it’s on to the product design and acceptability. Another 16 prototypes are still to go through testing.
The 200‑kW stack (single stack) has many advantages compared to the competition, according to the press release on it, regarding the size, weight, range (more km per kg hydrogen), but also the price (25 percent lower). In addition, the service requirement is lower. Ten trucks have already been equipped for test runs with these 200‑kW stacks, three of them in Europe and seven in Australia. All very good news.
A global market of 68 million diesel-powered trucks can be retrofitted with such and thus contribute to decarbonization. The Inflation Reduction Act would come into play here to, as 60 million USD have been made available for processes for the reduction of diesel emissions, another 2 billion USD for related production facilities on US soil, another 3 billion USD for technologies that help technologically improve motor vehicle production, etc. Hyzon will surely be named some figures, as they expect subsidies out of these for themselves, since they’ve classified themselves as a “technology innovator.”
A good sign: The short sellers are stocking up. Over 20 million shares were still sold short a few months ago, so this number has fallen to under 13 million. After prices around 2 USD, it went back down, to 1.20 USD, although this could be seen as a reaction to the rise from 0.50 USD to 2 USD (profit taking, technical reaction). The current prices around 1.20 USD invite considerations again of buying.
Hyzon, likewise to Nikola and Ballard, is engaged in exactly the right market – the fuel cell in the commercial vehicle segment. Some orders in 2024 will drive the share price of Hyzon in the positive direction. Also the participation of a strategic investor is conceivable at any time. Hyzon is thinking about pursuing partnerships like that with Fontaine Modification (system integrator in USA) in others regions as well, like with partners present in Europe.
Tests with 110‑ and 120‑kW modules
Hyzon Motors also is transitionally positioning itself with its 110‑kW and 120‑kW modules. Already 15 test trials of FC trucks with customers (Performance Food, Airgas, Bison Transport, Talke, Total Transportation Services, MPREIS, Hylane and lastly Seaboard Transport) were able to be successfully completed. They were tested under extreme weather conditions and in all conceivable daily operations. Over 2,900 hours of continuous use of the FC systems and over 68,000 miles (110,000 km)in distance were clocked in the process. This test program is underway in Europe and the USA and is to be extended to Australia – with customer Remondis. The number of employees is to remain at around 380.
Partnership with Fontaine Modification
Hyzon builds, in contrast to Nikola Motors, no truck chassis of its own, but supplies the complete fuel cell module. The installation is carried out by companies such as Fontaine Modification from the USA as a system integrator for Hyzon. After all, Fontaine alone converts over 44,000 trucks for customers every year. With it, Hyzon has the perfect partner.
Fontaine Modification belongs to the holding company Marmon Holdings, which has a stake in over 100 companies from, among others, shipping and logistics, machine building and medical technology, with an annual turnover of 10 billion USD. Marmon Holdings in turn belongs to the investment portfolio of billionaire Warren Buffett, Berkshire Hathaway. For me, this can be used to justify the speculation that Marmon could make a stake in Hyzon in order to use the FC knowhow (patents, products) in-house for subsidiaries like Fontaine.
So you can well imagine that Hyzon is going with FC modules a way similar to Ballard Power with Ford Trucks or Nikola with Bosch, but could also become part of a larger strategic whole. Fontaine/Marmon could be this, but also companies like Cummins or automotive suppliers such as Dana or Magna could be considered. Or truck producers who themselves would like to have the FC powertrain in house, but have “slept through” the development. So Hyzon is becoming highly interesting, in addition to the growth prospects around the FC stacks, as an acquisition speculation.
Disclaimer
Each investor must always be aware of their own risk when investing in shares and should consider a sensible risk diversification. The FC companies and shares mentioned here are small and mid cap, i.e. they are not standard stocks and their volatility is also much higher. This report is not meant to be viewed as purchase recommendations, and the author holds no liability for your actions. All information is based on publicly available sources and, as far as assessment is concerned, represents exclusively the personal opinion of the author, who focuses on medium- and long-term valuation and not on short-term profit. The author may be in possession of the shares presented here.
The Green Hydrogen in India congress took place in New Delhi on April 18 and 19, 2023. The occasion prompted an invitation for me to travel from Mumbai via Surat to New Delhi and then through Ahmedabad back to Mumbai. Scheduled along the way was a host of individual meetings with key representatives from major Indian corporations, often at their headquarters. These companies have all identified hydrogen as a new field of high growth and already have large amounts of renewable energy available – primarily solar energy – for hydrogen production. Their aim is to export hydrogen by ship in the form of green ammonia.
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A number of large Indian corporations have not only already installed up to 5 gigawatts of solar generation but are each increasing their photovoltaic capacity by 1 gigawatt every year. This could result in green ammonia production of around 1 million metric tons annually – colossal amounts and highly ambitious plans. Although India is currently an importer of ammonia as fertilizer, it wants to turn this situation around within a few years. And its goal is not just to become self-sufficient but also to tap into a huge export market for green ammonia and green methanol. The plan is to take a 70:30 approach, i.e., 70 percent of the volume produced for in-country use and 30 percent for export.
President Modi takes on hydrogen
On the eve of the hydrogen congress, President Narendra Modi gave a speech about climate change on the India News television channel. He set out how India intends to tackle the climate crisis through numerous programs and measures. Every individual in India was reportedly called upon to manage the environment and resources wisely.
In January of this year India set in motion a comprehensive hydrogen program. The initiative gives particular weight to solar energy and wind power as the basis for the production of hydrogen. Green ammonia, along with green methanol, is clearly seen as the way to make hydrogen internationally transportable over the long term, an option which will allow India to develop it as an export commodity. However, since India itself has a large appetite for sustainably produced energy with the aim of reducing, and if possible supplanting, the importation of fossil fuels, the percentage of hydrogen exported will be smaller than the amount remaining in the country.
Of course, alongside climate change, there is also the issue of energy security and how technology may potentially be used to tackle these problems. The focus of the congress in New Delhi was purely on hydrogen.
National Green Hydrogen Mission
Launched only in January, India’s hydrogen program – the National Green Hydrogen Mission – is all-encompassing. Every aspect, from production to the many deployment opportunities, is addressed. Additionally, there will be numerous subsidy schemes. Here’s one example: The blending of hydrogen in gas grids is subsidized by the state, in other words the state assumes the transport costs in the pipelines. As the gas grid is currently not used to capacity, this is the perfect opportunity for hydrogen. To date, the proportion of hydrogen that can be injected is up to 18 percent.
Green Hydrogen in India
India has fully recognized the potential of green hydrogen. The country is working on highly ambitious plans in which companies are expected to be the primary drivers of implementation. The world’s largest energy conglomerate, India’s state-run NTPC, also plays a significant role in this decarbonization process which is being hastened thanks to a large number of individual projects being carried out across the nation.
India wants and needs to move away from oil and gas imports and also to find alternatives for coal so as to ensure energy security as well as tackle the issue of decarbonization. As it stands, the country spends over USD 90 billion buying in fossil-based energy carriers such as oil and gas. In all, 40 percent of its primary energy is imported. On the other hand, India boasts virtually endless potential to produce renewable energy very cheaply, mostly via solar power and increasingly via wind power – and predominantly offshore in the future. India sees itself as a hydrogen front-runner as renewable energy via solar power can be produced locally at highly affordable prices when compared globally.
There is a real eagerness to lay the foundations for large-scale hydrogen production. Rapid approvals procedures will be put in place for projects relating to renewables generation. People are talking about weeks or a few months rather than years like in Germany. Many areas are ideally suited since they are categorized as “wasteland,” meaning land which is not fit, for instance, for growing food or raising cattle.
The government and the responsible ministries are working on accelerating and supporting the ramp-up of the hydrogen economy by simplifying regulatory processes in addition to introducing assistance mechanisms. In this respect, President Modi is putting considerable pressure on local authorities to quickly make this a reality and to constructively support the hydrogen economy. Modi presumes, in a positive sense, that he is taking the right course of action as guided by his entrepreneurial mode of thinking. I’m told that this is something he is renowned for in his country.
Green ammonia: a foreign currency earner
Given that India still imports over 3 million metric tons of ammonia – derived from natural gas – for use as fertilizer, over the coming years it is possible that the many renewable energy resources coupled with future hydrogen production will make the country not just self-sufficient but also an exporter of ammonia. We are talking about 3 to 5 million metric tons of green ammonia per year as early as 2030 as a means of making green hydrogen transportable. A plethora of projects aiming to build ammonia plants are already at the planning and implementation stages. Many initiatives are located close to ports, rendering them ideal from a logistical perspective.
Pioneering conglomerates
The demand for green hydrogen is huge – above all in the chemicals industry, steelmaking and other industrial applications. A proportion of 10 percent is envisaged for the mobility sector, a figure which includes the use of hydrogen in commercial vehicles, on ships and on railroads. Yet the need for hydrogen is also foreseen for automobiles in the medium to long term according to the manager responsible for this area at the Reliance Group, whose major shareholder Ambani plans to invest more than USD 50 billion in hydrogen.
Ultimately, the issue of the day is still decarbonization. And India’s billionaires were well ahead when it came to hydrogen matters. That’s what leading executives at Reliance, Adani and other companies told H2-international when elaborating on their hydrogen plans. For example, Tata launched a hydrogen think tank together with Rand Corp. way back in 2004. Furthermore, the subsidiary Tata Motors set up a joint venture with Cummins Engine which has recently been extended to involve hydrogen technology.
India to keep electrolyzer production at home
However, there is a squeeze on the availability of electrolyzers needed to produce hydrogen. This situation is not just about the energy required by the electrolyzer but the availability of the necessary quantities of components and/or their capacities. Chinese manufacturers still dominate the scene when it comes to alkaline electrolyzers – the most widely adopted form of electrolysis. India’s intention is to set up its own industry, in other words attract foreign manufacturers and make use of their expertise through the construction of production facilities within the country, all of which will be subsidized by means of state-funded programs.
Market leaders in renewables such as Greenko have therefore established partnerships and joint ventures with companies like John Cockerill (electrolyzers) to ensure that they, too, can have sufficient electrolyzer capacity to meet ambitious corporate goals which include the use of hydrogen for ammonia production. Uniper already has an off-take agreement relating to future production quantities.
For companies in Europe, particularly in Germany, this development is creating extremely interesting opportunities not just to buy hydrogen but also to set up production (fuel cells, electrolysis, hydrogen tanks and component parts) through the transfer of technology by means of partnerships and joint ventures in India in a “local-for-local” approach.
On right path to the hydrogen era
India has fully comprehended the potential for producing its own hydrogen and is setting about making this a reality. Of course, this won’t happen overnight since it requires an enormous amount of capital investment and the projects need to meet the criteria for their financing. The high number of personal conversations with top-ranking officials from government and industry as well as delegates from key provinces leads me to the conclusion and the appreciation that India is perfectly positioned in this respect and will become a leading international player.
Increasing energy demand will continue to be met initially by fossil fuels but will be replaced by renewables and hydrogen little by little. India is on the right path to achieving that goal. Its aim is to be energy self-reliant by 2047 and reach net-zero carbon emissions by 2070. Several weeks ago, India became the most populous country on Earth with a total population of 1.4 billion – overtaking China. This means an intense and rapidly growing hunger for energy – but thankfully this energy will be renewably produced in the medium to long term.
I was able to attend this congress as a member of the delegation from the German advisory initiative Lili Navitas (which stands for “green energy”). The organization’s purpose is to connect up German and Indian companies focused on hydrogen and associated production technologies (e.g., electrolysis) and to facilitate connections in order to foster joint projects in both India and Germany. The initiator was Kiran Bhojani who previously worked in a high-level position at E.ON in Germany and has Indian heritage. He considers it his mission to guide India on its journey to becoming a hydrogen society and to support this by providing contacts and encouraging links between companies.
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