Is Hydrogen Energy Worth Investing In?

It can often feel like solar and wind are the only players in the renewable energy game. In fact, they’re not. Hydrogen has a stake, too. Maybe you’ve heard of hydrogen fuel cell electric cars. The hydrogen-powered transportation sector is growing as we speak, and you know what growth means for capital. So should you invest in hydrogen stocks, and see what comes for clean, renewable hydrogen energy?

A quality ETF is a good sign

Look into hydrogen energy in the market and you’ll find these stocks have found their place. I’m talking about the Invesco WilderHill Clean Energy ETF, of which hydrogen energy claims a chunk of.

This ETF goes by the ticker symbol “PBW” on the NYSE Arca (a stock + option provider). Fifteen years after its inception, PBW is in what looks to be a short-term bear run, having dipped nearly 10 percent in the last two weeks of October. But it’s long-term growth is noteworthy. It has grown 82.87% year-to-date, with a 178.66% boost since the global market crash at the start of the COVID-19 pandemic. In all, PBW has proven that the stock market is not the economy.

Of course, there’s also individual stocks like Plug Power, Ballard Power Systems, FuelCell Energy and Bloom Energy. Basically, you have choices.

Hydrogen fuel cell cars are multiplying—which is good for the market

Hydrogen energy is anything but a one-trick pony, but hydrogen fuel cell cars in particular are growing in popularity. For 2020, we’ve got the Toyota Marai, Hyundai NEXO, and Honda Clarity. While most of these have only made their way to the California and Hawai’i landscapes of the U.S. market, charging landscapes are currently in construction elsewhere.

Allied Market Research expects the hydrogen fuel cell industry to have a compound annual growth rate (CAGR) of 66.9%, ultimately reaching an industry valuation of $42.04 billion by 2026. The Latin American region would likely see even more growth. As California strives toward sweeping clean energy, the state—as well as others—is seeing an increase in governmental initiatives to help build a more reliable system of hydrogen energy stations.  

Hydrogen stocks have had a good year, all things considered

The hydrogen energy sector took a noteworthy dip in September. At the time, a trio of major companies—Plug Power, FuelCell Energy and Bloom Energy—fell upwards of 10 percent. But the stocks have since recovered, and more so.

Given the volatile nature of 2020 in many ways, it’s no surprise to see some robust fluctuations. As an investor, I see long-term potential in hydrogen energy, as well as its sister renewables. After all, the need for large-scale clean energy is only getting more urgent, and investing can help us get our share of hydrogen stocks’ growth. Whatever you do, just be sure to diversify your portfolio to represent growing capital and impactful investment alike.