Ten or so years ago, I visited the Ballard Power (NASDAQ: BLDP) factory up in Canada where they made hydrogen fuel cells.
They had a hydrogen-powered bus there and made a big to-do about offering me a glass of water that had dribbled out of the tailpipe. It tasted like water.
Hydrogen-powered fuel cells have been around a long time and have lost much of their gee-whiz factor. In fact, over the past few years, they have become the redheaded stepchildren of the alternative energy field — mostly because it costs more in terms of BTUs to produce hydrogen than you get from burning it.
But there are some real benefits to hydrogen fuel cells, and the costs have dropped dramatically in the past decade.
I’ll tell you more about that today.
Fuel Cell
As you know, a fuel cell is simply a device that converts fuel such as hydrogen into electricity.
The most widely used type is the proton exchange membrane (PEM) cell. PEM fuel cells have a high power density and weigh a lot less than a traditional battery or an internal combustion engine, which makes them promising for vehicles.
In a PEM cell, hydrogen and oxygen gas are fed to catalytic electrodes at opposite sides of a membrane. This membrane is porous to protons but not to electrons.
The protons and electrons are separated by the action of a platinum catalyst in the electrodes. The protons can diffuse directly through the membrane, but the electrons have to make their way through an external circuit to reach the other side, and this movement provides the power for an electric motor.
One nice benefit is that there are zero damaging emissions in this process — just pure water.
Game On, Man
Hydrogen fuel cells have been used in cars, buses, and other transport vehicles. Most interesting, however, is that they are starting to become cost effective.
One company I told you about back in May of 2013 was Plug Power (NASDAQ: PLUG). At the time, it was trading at just $0.33 a share.
A year after my recommendation, it hit a high of $11.72. You could have seen a 10-month gain of 3,451%.
Plug Power makes hydrogen-powered forklifts and other yellow gear. The benefit is that they don’t stink up factories like diesel forklifts, and they don’t have to be recharged every shift like battery-powered forklifts.
Plug supplies a number of companies including Wal-Mart (NYSE: WMT), CVS Health (NYSE: CVS), and BMW (DE: BMW). It most recently got an order from Golden State Foods.
The company saw its orders triple in 2014 to $150 million. It will announce third quarter earnings on November 12.
Big in Japan
In other hydrogen news, Japan’s latest Basic Energy Plan suggests hydrogen will be a key energy carrier for that country in the future. All the big automakers are working on hydrogen-powered cars.
Hyundai has a fuel cell-powered SUV called the ix35. A test drive review from October 9, 2014 called it exceedingly normal with the exception of a silent engine.
Toyota (NYSE: TM) claims it has cut the cost of building fuel cell vehicles by 90% and could sell its first hydrogen vehicle for $50,000 in 2015.
The company thinks it can further reduce the cost of a fuel cell by 50% in the next few years. Most of the savings come from reducing the amount of platinum, which is used as a catalyst. Toyota’s goal is to sell the cars at cost.
Of course, this means there will have to be places to fill up your car. And they are coming…
Hawaii just announced it will build a hydrogen fill-up station, as did a group from Sainsbury, UK. California will have 54 hydrogen filling stations opened to the public in 2015.
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Beaten, Battered, and Left for Dead
After the big run-up in hydrogen stocks such as Plug Power, we’ve seen them come back to earth.
Plug is now trading at just over $4. In my investment trading service Crisis and Opportunity, I’ve taken profits a number of times, and we are back in it now. We are looking to double our money yet again.
Though Plug Power will continue to grow and investors will make money along the way, that is not where the big blockbuster opportunity lies.
You see, the market is looking at hydrogen power in the wrong way. The world thinks it is a solution for cars, trucks, and buses — and maybe it is. But where hydrogen really shines is in solving one of the world’s greatest problems: storing energy.
Windy
There has been tremendous growth in the use of wind and solar power in the past few years. Wind power now produces about 2.5% of all electricity and has been growing at 25% per annum. Solar has been growing at 30% per annum.
The problem with wind power is that it is intermittent. The wind doesn’t blow when it is most needed, and it blows a lot when it isn’t needed at all. You have the same problem with solar.
The holy grail of the utility industry has been a way to store electricity for use at a later time. There have been lots of failed or partial solutions, such as using batteries, pumping water uphill, or using flywheels.
None of these has been a game-changer due to problems such as cost and scalability.
Fuel Cells Are the Answer
But there is one company with a tiny market value of just $169 million that is on the cusp of changing the world.
It is building huge, 100MW fuel cell storage towers. The idea is to use the off-hours electricity from solar and wind turbines that is normally wasted, zap some water, separate the hydrogen, and store it in fuel cells indefinitely. This hydrogen can be used on site or transported in existing natural gas pipelines.
And the stock is set to launch.
The company reports earnings on November 10, and you want to be fully invested before it reports its first ever profits.
For your profits,
Christian DeHaemer
Check us out on YouTube!Christian is the founder of Bull and Bust Report and an editor at Energy and Capital. For more on Christian, see his editor’s page.
