The European Commission has introduced the “Green Deal”, a plan to make the EU carbon neutral by 2050 in which hydrogen plays a key role.
Hydrogen can be used to decarbonise industries and long-haul transport; storing energy in the long term, replacing natural gas for winter heating. Furthermore, excess of this chemical element can be used to create extremely cheap or even negatively priced renewable energy during times of low demand. Today, “green” * hydrogen produced from alternative sources is too expensive to play these roles, but that could change over the next decade as renewable energy costs continue to decline.
According to the Hydrogen Council, the international hydrogen market could be worth up to $ 2.5 trillion by 2050, meeting 18% of global energy demand, providing 30 million jobs worldwide and reducing carbon dioxide emissions of 6 gigaton a year. Companies benefiting from this growth opportunity range from nascent hydrogen companies to mature industrial gas producers and renewable energy groups, including the developing offshore wind value chain. For natural gas transmitters and distributors, hydrogen offers a way to reinvent themselves. The oil majors could also make the leap to become leaders in the renewable energy and hydrogen sector.(photo), senior investment analyst at NN IP: “To decarbonise the entire economy we need 1) decarbonise industry and long-distance transport, 2) store energy during times of the day when there is an excess generation, 3) use renewable energy for heating during the winter season. We believe that hydrogen can play a fundamental role in each of these areas. For this reason at NN IP we are looking for the winners of the energy transition, with the aim of generate strong returns while creating a more sustainable world. ”
While we believe the world is much closer to the definitive shift towards green hydrogen than it has ever been, picking the winners in this area today is a challenge. Several hydrogen companies have been listed on the stock exchange for many years, including both electrolyser manufacturers and fuel cell manufacturers. Names include Nel ASA, Hydrogenics, ITM Power (20% owned by Linde), Powercell Sweden, Plug Power and Ballard Power Systems. Last but not least, hydrogen vehicle manufacturer Nikola, which was listed on Nasdaq this year through a merger with an already publicly traded company. Each of the companies mentioned has negative earnings and cash flows, and will likely need additional funding to grow their businesses to become profitable.
Industrial gas producers Linde, Air Liquide and Air Products are now the main suppliers and distributors of hydrogen, mostly based on the methane steam reforming reaction. For these companies, the growing demand for hydrogen offers an opportunity, and given their strong distribution network and established customer relationships, their expertise in electrolysis and the company’s growing demand for decarbonisation, they are in a position to excellent for facilitating the transition to green hydrogen. Industrial gas producers achieve good returns on investment and are in line with our investment philosophy.
The value chain of solar and onshore wind will also benefit from hydrogen. Despite this, most of the solar value chain is very competitive, leaving little room for the creation of economic value. SolarEdge is an exception, as it has a proven basis as a market leader in residential and commercial inverters combined with power optimizers, and plans to enter the utility market later this year. In the onshore wind value chain, Vestas’ leading market share and strong execution resulted in relatively healthy margins. Other operators with significant market shares of onshore wind are Siemens Gamesa (turbines), TPI (blades) and GE (both).
Offshore wind is expected to experience strong growth over the next decade. This growth could be further increased as hydrogen takes off, as offshore wind seems very suitable for a combination with hydrogen reduction, given the relatively stable high load factors that result in widespread use of electrolysers. Beneficiaries include offshore wind developers and component suppliers. Leading developers include Orsted, RWE, Iberdrola and SSE, while component suppliers include turbine manufacturers Siemens Gamesa, Vestas and GE, monopile manufacturers SIF, offshore installers and cable companies such as Prysmian and Nexans.
Gas transportation and distribution companies can reinvent themselves as green gas and / or hydrogen companies, but they will not by definition be net beneficiaries of the switch from natural gas to renewable sources. Likewise, the oil majors making the switch to renewables and hydrogen leaders will continue to make do to compensate for lost fossil revenues. Equinor and Shell appear to be in the best position. Equinor focuses on the use of natural gas to produce hydrogen, in combination with CCS, is currently developing several offshore wind farms and is a pioneer of floating offshore wind. Shell is the leading energy supplier and trading company globally and can play a leading role in the development of the hydrogen economy.
Our sustainable and impactful equity team seeks out the winners of the energy transition, with the goal of generating strong returns while creating a more sustainable world. “We believe that companies focused on pure hydrogen are too early in their development to be included in our strategies. But the emerging hydrogen economy supports the strong prospects of some of our holdings,” concludes Tijs.

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