Telegraph Article - part117 Jun 2021 14:44
Diary of a fund manager: I'm siding with DIY investors on Britain's hottest hydrogen stock
ITM Power's share price is struggling but there are many reasons why I, and Britain's keenest savers, will persevere
If the UK is to reach its aim to become carbon neutral by 2050 and to cut emissions by 78pc by 2035, then we must take drastic action now. Despite many of us gradually switching to electric vehicles, installing solar panels and recycling, it is simply not enough.
We need to decarbonise our heating and our key industrial zones too. Thankfully, we have a technological lead in an area that could provide at least one of the solutions, hydrogen. As someone who has spent years focusing on trying to find new and interesting investment ideas, I am delighted to find those with their roots in good ol’ blighty.
Let’s begin with some of the key drawbacks with renewable energy. While in the UK we have longer hours of daylight in the summer months and windy shores from which we can draw energy, it is in the winter that we seek greater amounts of power. And we have no guarantee that the wind will blow at the right time, so we need some way to store this energy.
Batteries offer a shorter-term solution but they struggle for anything more than a few hours. The answer may be in transforming this renewable energy into hydrogen via a clever piece of kit called an Electrolyser. Once in the form of hydrogen it can be stored for as long as we want, used again as power via a fuel cell or even used in our heating system as gas.
We increasingly hear of the ills of our gas boilers at home and the reason being that heating gas contains carbon, or CH4 to give its technical name. The huge advantage of hydrogen is there is no carbon, the symbol is H – note, no C.
It appears that our system, and others in Europe, are capable of taking up to 20pc hydrogen without any modification to piping, boilers or cookers. This alone would see a huge drop in harmful emissions. If we hear that a chunk of Keele university or East Leeds has disappeared then we’ll know the current trials have gone wrong, however.
Whether fortunate or unfortunate, the UK has four key “emission hubs” – the Government imaginatively called them “superplaces” which are gathered largely around power nodes, the Humber, North East, South Wales and Scotland. Electrolysers are able to use the chemicals from such hubs to divide the atoms, giving hydrogen for power and carbon, to be captured.
This is all very exciting but rest assured, I am not changing my stripes. As well as leading in this technology, Britain has investable companies that are at the forefront. Sheffield-based ITM Power, has a lead in Electrolysers. Ceres Power, a complementary fuel cell technology and engineering company, is also worth a look.
However, both these stocks have a problem and generally markets have punished them for this. After ITM’s share price rose nearly 3,000pc in two years, it’s down this year by more than 30pc. ......
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