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Fuel Cells

By,David Sell

Energy Sector

 

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Industry Definition –Fuel Cells

Hydrogenics Corporation(NASDAQ: HYGS)

Quantum Fuel Systems(NASDAQ: QTWW)

FuelCell Energy(NASDAQ: FCEL)

Ballard Power Systems(NASDAQ: BLDP)

Firms in this industry manufacture and develop solid oxide or molten carbonate fuel cells, which are used as commercial energy utility sources.

These goods are used as an alternative energy source. Often they are used by firms for distributed generation or backup power, helping diminish their reliance on a centralized facility or grid, causing lower environmental impact.

 

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Energy Fuel Cell Sector BreakdownIndustry Breakdown By Market Cap ($BLN)

Stationary Fuel Cells$356.61 M

(.027%)

Fuel Cells$510.43 M

(.038%)

Alternative Energy$2.01 Trillion

(14.9%)

Energy Sector $13.41 Trillion

(100%)

X $ 18.626 BWOR $ 2.443 B

FCEL $ 122.57 MBLDP $ 76.01 MHYGS $ 23.82 MQTW $ 20.27 M

51%

31%

10% 8%

2011 RevenueFCEL BLDP HYGS QTWW

 

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22%

78%

2011 Revenue Breakdown

94%

6%

80%

0%19%

100%

Fuel Cells

Contracts

Material Products

 

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Grid Parity Locations by 2015

Grid Parity

 

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Fuel Cell Revenue Generation

Design Manufacture Sell Install and Service

(20.1%) of Revenue (103.9%) of Revenue 93.9% of Revenue (13.3%) of Revenue

Customer uses Fuel Cell for Distributed Generation

or Backup Power

• Manufacturing

outsourcing

expected to

increase

• Design / R&D

continues to

decrease as Rev %

 

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Trends

Fuel Cell costs Lower

Grid Power costs Higher

Distributed Generation / Going Green

Transition to Commercial

Industry

 

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Fuel Cells affordable in more Areas• Low natural gas prices =

lower fuel cell price

• Grid parity in cities increases every year

• Electricity prices have decreased once in 11 years

• Fuel cell technology continues to lower costs

-0.00110438655897

24

2010 2011 2012 2013 2014 2015

-4.00

-2.00

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

Input prices inverse grid electricity

Grid ElectricityNatural Gas

ProjectionsElec CAGR = 3.62%Gas CAGR = 6.02%

 

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Distributed Generation Increasing Rapidly

• Japan, South Korea, and Germany main locations

• Fuel Cell growth could expand quicker w/ more manufacturers

• Most manufacturers are subsidies

• Green is a trend including minimizing grid power

2010 2011 2012 2013 2014 20150

50000

100000

150000

200000

250000

300000

350000

resCHP Systems

Fuel Cell

Non-Fuel Cell

Projections

FC CAGR = 78.9%NFC CAGR = 58.9%

 

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Corporation Buyouts Show Transition

• Sign of transition from R&D to Commercial Industry

• New Synergies emerging showing profitability

Membran

e

Catalys

t

MEA Su

ppliers

Gas Diffusio

n Laye

r

Bipolar Plat

es

Stack

Assembly

05

10152025

Integration Lacking in Industry

Manufacturing Step

# of

Com

oani

es• Companies buyout others for vertical integration• Others from strategic partnerships for future profits

Ex. BIC buyout of Angstrom Energy-Google and Ebay hold major equity positions in FC comps-All companies discussed have min 2 strategic partnerships

 

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Key Financials

SymbolMarket Cap (M)

% of 52 high

Closing Price P/E EPS

EV/EBITDA

Debt/Equity

Debt/EBITDA

R&D/EBITDA

FCEL 172.91 47.2 0.98 -4.08 -0.24 -25.34 3.22 -10.96 -1.33

BLDP 84.44 57.1 1 -2.86 -0.35 -6.15 0.79 -3.27 -1.14

HYGS 46.82 89.2 6.2 -4.56 -1.36 -6.46 1.88 -1.17 -0.32

QTWW 42.8 25.1 0.9 -0.57 -1.59 -2.75 2.04 -2.99 0.00

High 172.91 89.2 6.2 -0.57 -0.24 -2.75 3.22 -1.17 0.00Low 42.8 25.1 0.9 -4.56 -1.59 -25.34 0.79 -10.96 -1.33Mean 86.7425 54.65 2.27 -3.02 -0.89 -10.17 1.98 -4.60 -0.70Median 65.63 52.15 0.99 -3.47 -0.86 -6.30 1.96 -3.13 -0.73

 

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Stationary Fuel Cell ManufacturingRecommendation: Positive

• Operates with trends Signifying:1. Costs are decreasing and competition prices

increasing2. Long-time R&D industry transitioning to

commercial base

• Must Combat key risks of:1. Solar or Wind becoming more widely used2. Smart-grid may get cheaper eliminating grid-parity