The Future of Hydrogen is Still Uncertain
The hydrogen fuel cell industry continued to grow in 2017.
But the future of hydrogen as fuel is still uncertain.
London-based sustainable energy consultant E4tech estimates the global fuel cell industry increased megawatts shipped by 30% to 670 MW last year compared to 2016. And considering even bigger increases in previous years, E4tech says industry volumes have more than tripled in the past three years.
This year, E4tech expects the global fuel cell industry to reach nearly 1,000 MW in energy shipments.
But while growth is impressive in percentage terms, we're really not talking about a whole lot of energy in the big picture.
A typical American household uses about 10,000 KWh annually.
So 1,000 MW could run only about 100 U.S. homes for a year.
The global fuel cell industry is quickly growing. Since 2011, the industry has increased energy shipments by over 600%. But fuel cells are not really contributing to our energy needs yet.
In fact, as it stands today, there are four individual solar farms that produce more energy annually than the entire global fuel cell industry combined:
Tengger Desert Solar Park (China) - 1,500 MWDatong Solar Power Top Runner Base (China) - 1,000 MWKurnool Ultra Mega Solar Park (India) - 900 MWLongyangxia Dam Solar Park (China) - 850 MWAnd there's a fifth in India, the Kamuthi Solar Power Project, which produces nearly as much as the global fuel cell industry does annually at 648 MW.
Some will argue that the hydrogen fuel cell market is just beginning to bud, particularly in the automotive markets. But there's one major issue that's still holding the entire industry back: costs
Producing energy from fuel cells is expensive. A few years ago, it cost over $1,000 to produce a single kilowatt of power from hydrogen fuel cells.
Last year, the U.S. Department of Energy reported costs had drastically gone down to $53 per kilowatt. But this is still very expensive relative to other energy sources.
Just consider how much you pay for energy now...
The average price consumers pay for electricity in the U.S. is about $0.12 per kilowatt-hour. Operating gasoline-powered vehicles is even cheaper. At $2.67 per gallon of gasoline, one kilowatt-hour costs $0.08.
If the cost of gasoline were $53 per kilowatt, the price at the pump would be $1,768 per gallon!
There's little doubt that hydrogen fuel cell costs will continue to come down in the future. But until then, the hydrogen fuel cell market will remain a background player. The new energy leader is still lithium, particularly in the automotive market. And investors agree.
The Global X Lithium ETF (NYSE: LIT) saw a 60% increase in price last year, with average daily volume increasing to about 665,000 shares, up from about 46,000 at the beginning of 2017. LIT's assets are now approaching $1.2 billion.
Some major lithium producers, like Sociedad Quimica y Minera de Chile (NYSE: SQM), have seen gains of nearly 100%.
Meanwhile, smaller lithium exploration and development companies have raked in major gains. One small lithium developer in my Secret Stock Files portfolio has seen gains of over 250% since September.
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Keith Kohl, our resident small-cap lithium expert, tells me, "2018 is the year for small-cap lithium exploration plays. Ten years ago, the lithium market was all promises. Today it's all profits." I think he's spot on.
Hydrogen fuel cells may be a part of our future. But lithium is a part of our present. And there are still ground-floor investment opportunities to be made.
That's why guys like Keith are loading up their portfolios with small-cap lithium plays instead of very actively investing in hydrogen. In his most recent research report, Keith will explain his argument in detail. He's putting the final touches on that as I write.
Personally, I'm investing in small-cap lithium, too (and it's already starting pay off incredibly). In another 10 years, when the costs of hydrogen fuel cells drops, I'll invest. But for now the market winds are blowing in lithium's direction.
As Keith mentioned, 10 years ago was the time to imagine the future for the lithium market. Today is the time to act and profit from it.
Keep an eye on your inbox for Keith's research, where he will cherry-pick the absolute best small-cap lithium stocks for you. All you have to do is invest in the stocks and watch the profits roll in. I urge you not to miss out on this opportunity.
Good investing,
Until next time,
Luke Burgess
@Lukemburgess on TwitterAs an editor at Energy and Capital, Luke's analysis and market research reaches hundreds of thousands of investors every day. Luke is also the investment director of Angel Publishing's new Secret Stock Files newsletter, which helps investors leverage the future supply/demand imbalance that he believes could be key to a cyclical upswing in the hard asset markets. For more on Luke, go to his editor's page.