3 Hydrogen Stocks With Strong Government Support
With the world pushing for more sustainability, hydrogen has become an increasingly attractive alternative. A solid 7.1% compounding annual growth rate is predicted for the hydrogen industry by 2040, with the potential for faster growth in the following years. Harnessing the power of hydrogen more efficiently and sustainably could be extremely beneficial, as hydrogen has the highest energy per mass of any fuel. As of now, most of its uses are only industrial, though there is potential for change. According to McKinsey, total hydrogen demand could reach 660 million tons by 2050, easing more than 20% of emissions worldwide. Here are some of the best companies in this lucrative industry.
Plug Power (PLUG)
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Plug Power (NASDAQ:PLUG), headquartered in Latham, New York, has been a prominent player in the hydrogen industry since its establishment in 1997. Despite facing challenges, including legal issues following its IPO, the company has made significant strides in developing hydrogen fuel cell systems, especially for material handling equipment and electric vehicles. Plug Power’s GenDrive system, developed in collaboration with Ballard Power Systems (NASDAQ:BLDP), addresses the drawbacks of conventional batteries by offering rapid recharge times and consistent power output.
Plug Power also appears to be a promising investment due to its alignment with the U.S. government’s ambitious National Clean Hydrogen Strategy and Roadmap. This strategic alignment provides Plug Power with a favorable operating environment, as the government is actively supporting the growth and development of the hydrogen industry, in which Plug Power is a key player.
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The government’s commitment to scaling up the hydrogen sector, as outlined in the Roadmap, includes specific production targets and significant financial incentives. The Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA) could provide Plug Power with essential funding, including federal support for creating regional hydrogen hubs and sector investments. The IIJA, in particular, allocates funds for the hydrogen electrolysis process employed in Plug Power’s fuel cells.
These legislative measures offer Plug Power a competitive edge by providing financial support and creating a conducive regulatory environment. As the U.S. government strives to achieve net-zero emissions and promote clean energy solutions, Plug Power stands to benefit from its integral role in the hydrogen value chain, making it an attractive investment option for those seeking exposure to the growing clean energy section with substantial government support.
Air Products and Chemicals (APD)
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Air Products and Chemicals (NYSE:APD) is an American company leading in industrial gases. It has some of the most advanced Liquefied Natural Gas processes and is a leader in hydrogen fuel infrastructure. The company owns and operates over 100 hydrogen plants, producing over three billion standard cubic feet of hydrogen per day. Through its products, APD aims to help the world overcome its struggle in the pursuit of an energy source that is both sustainable and efficient. To achieve this mission, it has been receiving massive government support and is making large domestic and international investments. For example, to build its CAD 1.6 billion net zero hydrogen energy facility, APD is receiving CAD 475 million from the Canadian government. One of its biggest projects underway is taking place in Saudi Arabia and is the world’s biggest hydrogen energy project. By 2026, the company expects to create 600 tonnes of carbon-free hydrogen each day.
In addition to its sheer size and domination of the hydrogen industry, the company also has strong financials. It boasts an impressive net profit margin, hovering around the 20% mark for the past year. The company keeps adding to its cash balance, quickly reinvesting it into bigger projects and further establishing itself as an industry leader. With this approach, they can be at the forefront of a potent industry.
Nel ASA (NLLSF)
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Nel ASA (OTCMKTS:NLLSF) is a Norwegian company specializing in hydrogen solutions. Headquartered in Oslo, Norway, Nel is a global leader in producing, distributing and integrating hydrogen-based technologies. The company is renowned for its expertise in proton exchange membrane (PEM) electrolysis, a key technology for producing green hydrogen from renewable energy sources. With a commitment to sustainable practices, NEL is at the forefront of efforts to drive the transition to a cleaner and more environmentally friendly energy landscape, making it a notable player in the global hydrogen market.
Nel ASA presents a compelling investment opportunity, notably due to its strategic partnership and government support for its latest gigafactory in Plymouth Charter Township, Michigan. Selected as one of the world’s largest electrode manufacturing facilities, the structure is set to be a key player in the burgeoning hydrogen industry. The region’s highly educated workforce, proximity to research institutions and collaboration with General Motors (NYSE:GM) made Michigan a clear choice.
Moreover, the significant financial support from the Michigan Strategic Fund, including a $10 million grant and 15-year, 100% State Essential Services Assessment (SESA) Exemption Request valued at up to $6.25 million, underscores the government’s commitment to Nel’s success. With total support for the Michigan site at $50 million so far, the company’s expansion aligns with the state’s vision for clean energy development, creating a promising outlook for investors seeking opportunities in the growing hydrogen sector.
On the date of publication, Tomas Levani did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tomas is a self-taught investor with a passion for ESG investing. He has managed the portfolio of a small investment fund, interned at a Fortune 500 investment company, and started his own research firm. Through his freelance writing, he now aims to find favorable investments in companies with a mission of bettering the world.
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