Countries Committing to Hydrogen Technology Accelerates, Investment Opportunities Abound

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Wednesday, October 2, 2019

Hydrogen technology is back in the news for its usefulness in reducing pollutants in a diverse group of power applications. Amongst other things, hydrogen can be used in transportation, portable electronic devices and electric power systems.

Last week, at a meeting of energy ministers and delegates in Tokyo, representatives from 30 countries pledged their support to develop hydrogen energy for transportation. Because the only byproducts of producing hydrogen are water and heat, hydrogen has long been trumpeted as a solution to carbon emissions. Still, mainstream uptake has been slow. A concerted effort by countries worldwide, though, could change things dramatically.

From a broader perspective, utilities have hopped on board with renewable energy and commitments to reduce their carbon footprint. Last year, Xcel Energy (NASDAQ:XEL) was the first utility to set a goal to be carbon-free by 2050. NextEra Energy (NYSE:NEE), the owner of Florida Power & Light, has a stated target of installing 30 million solar panels in the state by 2030 as a means to slash emissions. In north-central Washington, the Douglas County Public Utility District is aiming to become the first power company in the Pacific Northwest to use their dams to create renewable hydrogen.

“Hydrogen is the most abundant element on the planet, and it can be produced from sources ranging from fossil fuels to waste products. It just makes sense that we start tapping into this clean energy at greater scale,” commented Andrew Hidalgo, CEO of H/Cell Energy Corporation (OTCQB:HCCC), in a phone call with AllPennyStocks.com.

The amount of emissions and efficiency vary greatly depending upon how hydrogen is produced, so it is not perfect for every application, explained Hidalgo. “However, when combined with solar technology, there is essentially zero carbon emissions, making hydrogen a perfect solution for reliable energy independent of any utility grid.”

H/Cell already had its hands in the clean energy space through its subsidiaries, general contractor The Pride Group Pty in Australia, which focuses on security and environmental systems, and U.S.-based PVBJ Inc., a provider of environmental systems solutions. With both of these companies operationally profitable, the parent company has recently begun pushing an initiative to market and sell its hydrogen-and-solar energy system, coined HC-1, for residential and commercial properties.

The system operates by utilizing solar modules to produce electricity that charges a bank of batteries. Once those batteries are charged, the excess electricity powers a hydrogen generator that electrolyzes water, extracting the hydrogen in a gasified state, which is stored in a tank.

When the batteries are charged and the storage tank is full, all excess electricity can be sent to the utility grid, earning the system owner energy credits. The utility then has clean energy to sell to other customers.

The owner uses electricity held in the charged batteries. If there isn’t ample solar power to charge the batteries, the system processes the stored hydrogen through a fuel cell to charge the batteries to meet the electricity demand and replenishes the complete system when the sun comes back out.

“We’re leveraging our existing customer bases in Australia and the Mid-Atlantic region of the U.S. to introduce HC-1 to our environmentally-conscious clients. Concurrently, we’re looking to expand into markets where hydrogen and other clean energy solutions are being encouraged, including Asia,” said Hidalgo during the call.

Globally, 12 countries have recently established clean energy mandates led by China, Australia, India and the United Kingdom. In the U.S., the Department of Energy is offering grants to support innovative hydrogen and fuel cell technology, while states actively modify Renewable Portfolio Standards that dictate a specific percentage of electricity that utility companies sell come from renewable sources.

“We think that we’re timing the massive renewable energy market right by amplifying our sales efforts of HC-1 judging by incentives for renewable energy that gives customers a quick ROI and reduces strain on aging grids,” Hidalgo added. The HCCC CEO said its different units have more than $40 million in bids outstanding, of which about 10% is specific to its renewable energy push.

From an investment standpoint, the renewable energy segment has notoriously underperformed in the past. There were plenty of reasons, including high material costs keeping systems out of reach and some companies taking on too much debt on the promise that the markets were going to mature much more quickly than they did. H/Cell is emerging at the right time with wholesale expenses far lower than historically and a business model that affords the company both access to an engaged customer base and existing profitable operations to undergird thoughtful expansion into the hydrogen vertical.

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