Green Hydrogen Could Have Avoided Texas Power Crisis, Says Bloom Energy CEO

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

The recent power crisis in Texas has emphasized the importance of resilient and reliable energy provision. The sight of people burning cabinet doors to stay warm and huddling around standpipes for clean water, as hundreds of thousands suffered power shortages in freezing temperatures, has propelled questions around power provision into the headlines. With traditional fossil fuels failing to deliver consistent power, public interest is turning to hydrogen and fuel cell energy generators. 

The Texas power crisis was triggered when the grid was overwhelmed by demand for power during a fierce winter storm. Alternative energy sources that rely on solar and wind power failed, largely because it's not yet possible to use these systems to store excess energy and redistribute it successfully. It was seen as an enormous irony that the state with the biggest natural reserves of fossil fuels still failed to provide resilient power supply, but that irony underscores the importance of using advanced technology to store, redistribute, and deliver energy in the right places and at the right times. It is becoming increasingly clear that hydrogen can provide this service, rendering a hydrogen ETF an attractive investment possibility.

Today, we're paying the price for decades of neglect. Natural disasters have multiplied exponentially, rising from around 6 a year between 2002 and 2010 to 22 in 2020 alone, while electricity demand has skyrocketed. Access to reliable power is a necessity today, not a luxury, but in the words of KR Sridhar, CEO of Bloom Energy, what happened in Texas is not an abnormality, but the new reality. Until the long-term task of fixing the grid is completed, states, municipalities, and essential industries should turn to fuel cell technology to provide the energy resilience they are lacking. 

Bloom Energy Corp BE is one of the leading providers of distributed, on-site electric power solutions, using clean, renewable energy to deliver constant electric power. Speaking to Bloomberg TV, Sridhar pointed out that the US national grid is failing and in desperate need of an overhaul. Federal and state policies ignore resilience in the grid and there are no policies regarding it, while market forces don't reward it, so it's not surprising that utilities companies' have neglected energy resilience for so long.¹ 

Green hydrogen power is one of the leading alternatives to energy derived from fossil fuels and natural gas. Its energy-dense nature provides long-duration discharge cycles of more than 12 hours, and enables hydrogen fuel cells to collect excess energy created in certain locations or periods, store it, and redistribute it to other locations and at times when supply is lower. Wind, solar, and biomass energy solutions have yet to prove themselves as a viable replacement for fossil fuels, despite decades of real-world use, but hydrogen fuel shows far more promise.

Hydrogen is abundantly available across the planet, mostly as water in a compound with oxygen. Energy providers like Bloom Energy use electrolysis to harvest the hydrogen molecules, then transfer them into fuel cells so their energy can be released as fuel. Decades of investment in fuel cell research and development have brought technology to the point where it is cost-effective, reliable, and easy to roll out. Hydrogen fuel cells are already in use around the world in a number of situations, including fuel-cell elective cars, trucks, and buses; power for industrial applications which need molecule-based fuels; heating and residential uses; and in microgrids and backup power sources, which is Bloom Energy's primary focus. 

For companies like Bloom Energy, as well as investors in a clean energy ETF, the Texas power crisis confirmed their belief that fuel cell technology is crucial not only to reduce emissions, but also in order to meet the ever-increasing energy demands of an always-on world. Texas was not a one-off event; California's frequent power outages during wildfire season are viewed almost as a fact of life by now, but there's no reason why essential services should also have to lose power. Not only does the state refuse to incentivize customers to set up their own microgrid to provide power backup, anyone who does so is penalized with serious fines for leaving the grid. But essential services like water treatment plants, water pumping systems, and hospitals cannot afford to lose power for even a short amount of time. They need backup microgrids that can kick in immediately and run indefinitely. 

Bloom Energy began as a clean energy provider using natural gas and converting it to electricity through a combustion-free electrochemical process that reduces carbon emissions and cuts other types of air pollution to close to zero. In 2019, Bloom upgraded its Energy Server line of generators to run on hydrogen fuel, and in 2020 the company expanded into producing hydrogen electrolyzers too.² Bloom supplies microgrids and mission critical generators to customers who require reliable, constant power. 

With so much riding on a reliable energy supply, and the potential for green hydrogen to meet the demand, it's not surprising that the hydrogen fuel market is showing so much promise. Bloom Energy's share prices rose 350% over the past 12 months, since they moved into the hydrogen fuel space, further testifying to the financial benefits of increased investment in green hydrogen. 

For investors who are eager to benefit from the disruptive and innovative potential of green hydrogen stocks without overexposing themselves to the risk of backing a single company, a fuel cell ETF may be the ideal investment vehicle. Defiance ETF recently launched HDRO, the first US-issued hydrogen ETF. HDRO tracks the rules-based BlueStar Global Hydrogen & Next Gen Fuel Cell Index, and offers a diversified way to invest in the newest and most promising companies in the hydrogen fuel sector. 

The Funds’ investment objectives, risks, charges, and expenses must be considered carefully before investing. The prospectus contains this and other important information about the investment company which can be obtained by calling 833.333.9383. Please read it carefully before investing.

Distributed by Foreside Fund Services, LLC.

Investing involves risk. Principal loss is possible. As an ETF, the fund may trade at a premium or discount to NAV. Shares of any ETF are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. The Fund is not actively managed and would not sell a security due to current or projected under performance unless that security is removed from the Index or is required upon a reconstitution of the Index. A portfolio concentrated in a single industry or country, may be subject to a higher degree of risk. Specifically, the Index (and as a result, the Fund) is expected to be concentrated in hydrogen and fuel cell companies. Such companies may depend largely on the availability of hydrogen gas, certain third-party key suppliers for components in their products, and a small number of customers for a significant portion of their business. The Fund is considered to be non-diversified, so it may invest more of its assets in the securities of a single issuer or a smaller number of issuers. Investments in foreign securities involve certain risks including risk of loss due to foreign currency fluctuations or to political or economic instability. This risk is magnified in emerging markets. Small and mid-cap companies are subject to greater and more unpredictable price changes than securities of large-cap companies.

Performance, current holdings and other information can be found at defianceetfs.com/hdro/

Footnotes:

¹ "U.S. Hasn't Invested Enough in Energy Resiliency: Bloom Energy CEO" Bloomberg TV, February 24, 2021 https://www.bloomberg.com/news/videos/2021-02-23/u-s-hasn-t-invested-enough-in-energy-resiliency-bloom-energy-ceo-video

² "Bloom Energy Soars After Launch Into Green Hydrogen Market" GreenTech Media, July 15, 2020 https://www.greentechmedia.com/articles/read/bloom-energy-stock-price-soars-after-launch-into-green-hydrogen-market 

Photo by Lucie Hošová on Unsplash

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.