Hydrogen Trains Keep Chugging Along
While we all remain focused on the pandemic, protests, and indices near all-time highs in spite of the new recession, it is easy to let some of the most promising market news fall to the wayside.
Few are looking as a major trend in potential zero-emission technologies continues to gain traction. Yet the news keeps coming.
While the U.S.A. has remained especially inward-looking, as is so often common during an election year, across the Atlantic hydrogen fuel cells are rapidly gaining attention and approval.
A slew of new announcements shows the trend that has already handsomely rewarded investors is ramping up.
First up, we're seeing a major vote of confidence in hydrogen fuel cells in Europe.
France-based Alstom, a major transportation manufacturer, and Snam, an Italy-based energy infrastructure firm, have announced a five-year deal that will have Alstom making and maintaining newly built or converted hydrogen trains while Snam will focus on the development of infrastructure related to refueling, fuel transport, and fuel production.
Germany has been running a train line with Alstom-made engines for nearly two years and the interest in Italy shows that the real-world trial is getting a strong vote of confidence from both the private and public sectors.
The main factor holding back the German trains is a lack of fuel infrastructure. There is only one station where the train can refuel for now. That will be addressed as up to 14 more refueling stations are installed in 2021, allowing a massive expansion of the hydrogen-powered routes in the near future.
The Netherlands is jumping in on the game with its first hydrogen-powered train line in the works.
In the U.K. the HydroFLEX train is being tested and there is already a lot of interest in getting fuel cell engines on the rails. About 29% of all trains depend on diesel and 58% of passenger rails are not electrified. These are easy targets for replacement with hydrogen power, especially as the country pursues aggressive pollution curbs and a complete phase-out of diesel trains by 2040.
Electrified lines that pull power from the national grid have been considered in the U.K. and across the continent but the cost is wildly prohibitive. Electrifying a single kilometer of track in Europe can cost $965,000 to $1.3 million according to the Railway Industry Association.
The potential to completely rework the roughly 218,000 km of rail lines in the EU works heavily in hydrogen fuel cells' favor as a power source. Napkin math puts full electrification of rail lines at $200 billion before considering the maintenance bill for a high-powered electrical system spanning such a distance. Its a ripe target for both savings, efficiency, and performance.
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Of course, this runs into the same issue that the German line has. It needs fuel infrastructure and the cost of hydrogen production to come down. Plus most hydrogen is produced with natural gas which, while far better than oil-based fuels, falls short of long-term decarbonization goals.
That brings us to our next wave of announcements.
Countries are piling into hydrogen programs to rapidly expand zero-carbon hydrogen produced by electrolysis from water, with the process powered by renewable energy sources. This also solves some of the intractable problems of using renewable energy sources. It allows easy energy transportation without costly and heavy grid connections, capacitors, or batteries.
Australia, Germany, Britain, Portugal, the Netherlands, and Japan are all starting serious work on hydrogen production strategies. Portugal plans to build a new solar-powered hydrogen plant which will produce hydrogen by electrolysis by 2023. The Netherlands unveiled a hydrogen strategy in late March, outlining plans for 500 megawatts of green electrolyser capacity by 2025.
It isn't just governments either. Royal Dutch Shell and Dutch gas firm Gasunie unveiled plans in February to build a massive wind-powered hydrogen plant in the Netherlands, capable of producing 800,000 tonnes of hydrogen by 2040, along with a host of smaller companies working on smaller pilot production plants.
None of this truly addresses the cost factor, but that issue is rapidly progressing as well.
In a big announcement on the domestic front, the California Energy Commission issued a report showing that fuel price parity with gasoline-based cars could be reached as early as 2025.
And if cars — which are the hardest vehicles to reach fuel parity with due to size and engine scaling — could hit parity in under five years, that just goes to show what is rapidly approaching. An inflection point that takes hydrogen fuel costs below oil- and battery-based power costs any way you care to measure it is coming fast.
It may already be here for the ideal vehicles for hydrogen fuel cells — heavy ones like trains, buses, freight trucks, and ships.
Hydrogen fuel cells' time is coming and the time to invest is already here. Jimmy Mengel can point you to which companies look the best.
Adam's editorial talents and analysis drew the attention of senior editors at Outsider Club, which he joined in mid-2012. While he has acquired years of hands-on experience in the editorial room by working side by side with ex-brokers, options floor traders, and financial advisors, he is acutely aware of the challenges faced by retail investors after starting at the ground floor in the financial publishing field. For more on Adam, check out his editor's page.
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