Wall Street Is Going Crazy For A Revolutionary Technology That Could Change The Energy Market As We Know It

Stocks of companies that develop and cell fuel cells are going crazy — their shares are about 50% in the past five days.

The gainers include:

  • Plug Power: 67%
  • Ballard: 48%
  • Fuel Cell: 49%

Among the catalysts for the surge was the announcement of a huge new Walmart order for Plug Power’s fuel cells — which use Ballard materials; as well as a strong revenue report from Fuel Cell.

The market caps of these companies are tiny, but still, the surge cannot be ignored. Are we really on the verge of fuel cells going mainstream?

Let’s back up for a moment.

What are fuel cells?

Basically, fuel cells take hydrogen and turn it into electricity. The most common way of doing this involves using a proton exchange membrane.

This is a membrane that separates out the positive and negative charges — the proton and electron — of a hydrogen atom. The membrane is treated in such a way that the electron cannot pass through it; instead, it only captures the proton. This allows the electron to go through an external circuit and get momentarily captured as electricity.

The exhaust product from the system is created by the proton and electron recombining with an oxygen molecule, which is flowing through the other side of the membrane. The only “waste” created from a fuel cell is water heat, meaning they are essentially carbon neutral.

Via Ballard, Here’s the visual demonstration. The flow field plate is charged to separate out the proton and electron.

Hydrogen and oxygen pass through along either side of the charged membrane.

The hydrogen atom gets split into its positive and negative charges — protons and electrons.

The proton passes through the membrane, where it will become part of an exhaust product…

While the electron gets temporarily captured as electricity.

The split proton and electron are reunited with an oxygen atom to produce water and heat — a nearly pure form of energy exhaust.

If you stack a bunch of these guys together, you get a fuel cell.

( You can watch the whole video here » )

More demand, and getting cheaper

The long-term shift in the marketplace is that hydrogen — namely in the form of natural gas, which is simply hydrogen and carbon — is getting cheaper and more abundant, according to Bloomberg’s Christopher Martin. On the higher end, solar-based fuel cells, which convert, converts solar and wind energy into hydrogen, have seen cost improvements as solar use has expanded. And fuel cells form part of the push toward cleaner energy, something Walmart has been pushing. And a recent note from Navigant notes more sectors are looking to fuel cells to provide grid-independent sources of power in case of natural disasters.

“With the growing need to enhance grid resiliency and the accelerating adoption of distributed generation technologies worldwide, the stationary fuel cell industry is well-positioned for growth over the next decade,” says Mackinnon Lawrence, research director with Navigant Research. “Expected to break through the $US2 billion mark in annual revenue in 2014, stationary fuel cells are seeing increased financing options for adoption, particularly in the healthy residential combined heat and power segment.”

Walmart also sees the cells as cost and labour-saving devices, since it takes less time to refuel a lift, and thus creates less downtime.

The hype cycle

But again, the market cap of these firms remains relatively minuscule. As far as their use in transport, fuel cell use is so far limited to light industrial machines like forklifts. Navigant says the stationary fuel cell market will reach $US9 billion in annual revenue by 2022.

More importantly, these stocks have come under huge waves of hype before when he market gets frothy. Plug Power went public during the dot-com bubble, and while it survived, its stock has gone nowhere for the past decade. Check out the insane heights it reached during the bubble.

Some analysts believe everything will ride on whether automakers ultimately start rolling out fuel cell vehicles en masse. But given the surge in demand for electric vehicles, there is a decent chance the bump doesn’t go much higher from here.

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