2 hydrogen stocks worth to buy after JCB’s hydrogen deal with Fortescue
Highlights
- Equipment maker JCB entered into a one-of-a-kind green hydrogen supply agreement with Australian firm Fortescue, just as the COP26 commenced over the weekend.
- The multibillion-pound deal makes Fortescue the largest supplier of green hydrogen to the UK.
- JCB and clean energy focused firm Ryze Hydrogen will distribute the fuel in the UK
UK based construction equipment manufacturing company JC Bamford Excavators Ltd (JCB) struck a multi-billion deal with Australia based Fortescue Future Industries (FFI) to import and distribute green hydrogen in the UK.
Fortescue called the deal, which was signed just as the COP26 summit’s commenced on Sunday, a ‘first of its kind’ agreement as it has now become the largest supplier of green hydrogen in the UK.
JCB will buy 10 per cent of Fortescue’s green hydrogen supply, according to the deal.
The agreement will also see two major billionaires in the industrial sector, JCB’s founder Lord Anthony Bamford and Fortescue Metals Group’s founder Andrew Forrest, join forces.
JCB and Ryze hydrogen, a low carbon hydrogen company, founded by Anthony Bamford’s son Jo Bamford, plan to distribute it in the UK. Production is expected to begin in early 2022.
Green hydrogen is a fully renewable source of energy, unlike blue, brown or grey hydrogen. However, it is relatively more expensive than other methods of hydrogen production at present.
Lord Bamford said the deal would make green hydrogen a more viable option.
The move comes after the UK’s business secretary, Kwasi Kwarteng, recently said that hydrogen would play a key role in the UK’s transition towards net-zero emissions.
In view of this, let us take a deep dive into 2 FTSE AIM UK 50 index listed hydrogen stocks and their performance:
- ITM Power PLC (LON: ITM)
ITM Power is a UK based hydrogen manufacturer and energy storage company.
The company recently raised £250 million from an oversubscribed share placement. The company issued 57.495 million, placing shares at a price of 400 pence per placing share.
The proceeds will be used to increase its electrolyser manufacturing capacity to 5 GW by 2024.
(Image source: Refinitiv)
ITM’s shares ended up by 1.79 per cent at GBX 489.00 on 29 October, while the FTSE AIM UK 50 index ended at 6,627.21, down by 0.17 per cent.
The company’s market cap was at £2,692.72 million, and its one-year return is at 111.69 per cent as of 29 October.
- Ceres Power Holdings PLC (Lon: Cwr)
Ceres Power Holdings is UK based leading fuel cell and electrochemical technology firm.
The company recently appointed former Smiths Group CFO Eric Lakin as its new CFO. He is expected to join the group in January next year. He will succeed current CFO, Richard Preston.
The company’s H1 2021 revenue and other income increased by 96 per cent to £17.4 million, from £8.9 million in H1 2020. The jump was due to Ceres’ strong progress in its commercial partnerships.
(Image source: Refinitiv)
Ceres’ shares ended up by 0.57 per cent at GBX 1,245.00 on 29 October, while the energy sectoral index ended at 5,988.97, down by 1.18 per cent.
The company’s market cap was at £ 2,372.57 million, and its one-year return is at 77.35 per cent as of 29 October.
Bottom Line
UK’s demand for hydrogen and other clean fuels is expected to increase significantly in the coming years.
According to the latest research from UK based energy market intelligence company Cornwall Insights, UK’s low carbon hydrogen demand may increase from approximately 10 TWh in 2030 to around 37 TWh by 2050.
Also, the estimated hydrogen focused infrastructure capex and investment is expected to touch around £23 billion.
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