Renewable energy is beginning to fill the gap created by mothballing of nuclear power and phasing out of coal-fired plants, and Hydrogenics (TSX:HYG) is poised to reap the benefits, says Byron Capital analyst Dev Bhangui.
Bhangui says after posting losses for many years, Hydrogenics is positioned extremely well as a hydrogen energy pure play. He says that while numerous technologies have been fighting for space in the renewable energy storage market, hydrogen-based solutions have a clear edge because they are simple, high capacity, flexible and economical.
Hydrogen, notes the Byron Capital analyst is the renewable energy source closest to being utility grade, solving a problem for utilities who have been forced to curb their use of the sources due to the instability of their supply and lack of storage buffers in traditional grid designs
Hydrogenics, says Bhangui, is now staring down multiple near-term opportunities he believes will happen concurrently. He says growth in the hydrogen market is coming from auto OEMs, who are driving the buildout of hydrogen refueling stations. Another market that is developing rapidly is in P2G, or Power to Gas energy storage. He notes that many of these projects worldwide were accelerated after the Fukushima disaster in Japan.
In a research report to clients yesterday, Bhangui initiated coverage of Hydrogenics with a BUY rating and $15.50 one-year target, implying a 28% return.
At press time, shares of Hydrogenics on the TSX were down 5.1% to $12.