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Highlights
- The UK government released its low carbon hydrogen economy plan, proposing a twin track strategy of using both green and blue hydrogen for building the nascent sector.
- Hydrogen energy is expected to account for 20 to 35 per cent of UK’s energy consumption by 2050
- Roughly 3 million households in the UK are expected to switch to hydrogen from fossil fuels by 2030.
The UK government published a report on its low carbon hydrogen economy plan, highlighting a twin track strategy to boost the hydrogen economy and to attract up to £4 billion in investment by 2030 in the sector.
The report estimates hydrogen to account for 20 per cent to 35 per cent of the UK’s energy consumption mix by 2050. Moreover, an estimated 3 million homes in the UK is expected to start using hydrogen instead of fossil fuels for heating purposes.
The twin track strategy will use both green hydrogen and blue hydrogen technology. Green hydrogen is an entirely renewable energy source and emits zero carbon; it is still in the nascent stage and more expensive technology. At the same time blue hydrogen uses carbon capture storage and natural gas and emits some degree of carbon and is relatively cheaper compared to green hydrogen.
The government aims to use the contracts for difference (CfDs) mechanism in order to help the nascent hydrogen economy grow, which was used previously to boost the offshore wind energy sector, and also identify hydrogen standards by collaborating with the industry, business models and other initiatives.
The government plans to launch a hydrogen sector focused action plan in 2022. The report comes ahead of the COP26 climate talks set to be hosted by the UK three months later in Glasgow.
Related Video: How soon will hydrogen enter the domestic sphere for the UK?
Let us take a closer look at these 3 FTSE-listed stocks operating in the hydrogen sector and how they reacted to the development:
- ITM Power PLC (LON: ITM)
FTSE AIM UK 50 index listed firm ITM Power is hydrogen focused renewable energy company. It recently announced its first deployment of a 2 MW electrolyser sale to Japanese general trading company Sumitomo Corp and utility company Tokyo Gas.
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ITM’s shares closed at GBX 393.00 on 17 August. The company’s market cap stands at £2,168.49 million, and its one-year return is at 46.47 per cent as of 17 August.
Related Article: Electrolyser manufacturer ITM Power reported an encouraging order backlog of £154.0 million
- AFC Energy PLC (LON:AFC)
Another FTSE AIM UK 50 index listed firm AFC Energy, is an alkaline fuel cell developer used in hydrogen powered electricity generation.
It announced on Monday the delivery of its first fuel cell system with leading automation company ABB Ltd. In December 2020, the two companies had entered into a strategic partnership to develop and distribute an electric vehicle charging system via ABB's market channels located worldwide.
(Image Source: EODHD/Others)
AFC’s shares closed at GBX 58.70 on 17 August. The company’s market cap stands at £431.10 million, and its one-year return is at 179.52 per cent as of 17 August.
- Hydrogenone Capital Growth Plc (LON:HGEN)
Recently main market listed firm Hydrogenone Capital Growth is an investment firm focused on hydrogen energy companies. The company announced its net asset value (NAV) per share at end of 13 August at 97.94 pence per share, slightly below its NAV per share of 98.00 at the close of 30 July.
The stock was listed on the AIM exchange on 30 July and received the LSE’s sustainability label, the Green Economy Mark, upon listing.
(Image Source: EODHD/Others)
Hydrogenone’s shares closed at GBX 100.50 on 17 August. The company’s market cap stands at £107.94 million.
Bottom Line
The next ten years have been called the hydrogen decade as more policies come into place to help transition the world towards a low carbon economy. In addition to the proposed measures, government should also co-ordinate with the industry to further identify specific pain points that can be addressed to further aid in building the sector.
