The fuel cell stock rally may have been initiated by U.S.-based Plug Power, but the movement has a decidedly Canadian bent.
Shares of Plug Power have charged from a 2013 closing price of (U.S.) $1.55 to today’s intraday highs of more than $10.00. A rash of recent orders was crowned with an order from Walmart that Cowen & Co analyst Robert Stone estimated might be valued at more than $50 million. Plug will supply fuel cells to power forklifts in Wal-Mart’s warehouses.
Not to be outdone, shares of Vancouver-based Ballard Power (TSX:BLD) are actually besting Plug Power today, adding 29% to $7.56, at press time. And Mississauga-based fuel cell maker Hydrogenics is up nearly 20%.
So why the interest in fuel cells, which were tossed out as as seemingly uneconomical more than a decade ago?
Byron Capital analyst Dev Bhangui 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. For uses such as backup power, hydrogen 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.
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Bhangui is bullish on Hydrogenics, which he feels is positioned extremely well as a hydrogen energy pure play.
Ballard Power, meanwhile, recently reported fourth quarter results revealed that the company was EBITDA positive for the first time in its long history.
While casual observers still associate Ballard with the automobile market, its Q4 numbers showed than more than a third of its fourth quarter revenue ($5.9-million) came from telecom backup power. The company’s fuel cell systems have performed especially well in places like Indonesia and in the Bahamas, where they helped maintain consistent power during when Hurricane Sandy hit the area in October of 2012.
To the surprise of some, Ballard wasn’t out of the car business altogether, it was simply constrained by a five-year non-compete agreement. With that roadblock out of the way, the company recently announced a four year deal with Volkswagen to to develop fuel cells in demonstration vehicles.
And recently, Ford, Renault-Nissan and Daimler, with the help of Ballard, announced they had agreed to jointly develop a fuel cell system to try to and advance the availability of zero-emission vehicles. According to group vice president of global product development at Ford, Raj Nair, the company is pursuing the initiative because the cost of fuel cell production has come down. The group expects to launch “the world’s first affordable, mass-market fuel cell car” by 2017.