Over the last decade, the desire for electric vehicles has grown, so much so that rather than being a novelty they are now becoming mainstream. Consequently, Australia’s rare earth miners have benefited with lithium being the big winner.
This decade, rather than focusing on battery technology, there has been a big push toward renewable energy sources and hydrogen is shaping up to be the next big thing that investors should be looking at.
The Australian Renewable Energy Agency (ARENA) reported that both the government and industry have undertaken a substantial amount of work in this area to quantify the opportunities in renewable hydrogen in Australia.
As a result, they have set a goal for producers of hydrogen to be able to do so for under $2 a kilogram. Two weeks ago, Australian company Hysata announced that its new technology developed by scientists at the University of Wollongong could meet the government’s target and that they can reach gigawatt-scale hydrogen production capacity by 2025.
According to ARENA, demand for hydrogen exports from Australia could be in excess of 3 million tonnes each year by 2040, which could be worth up to $10 billion. We have already seen Fortescue Metals Group (ASX:FMG) partner with the Queensland Government to build the world's largest green hydrogen manufacturing facility.
But they are not alone, as Wesfarmers wholly-owned subsidiary Coregas is involved in a large project in the La Trobe valley that would see them export liquified hydrogen.
AGL Energy (ASX:AGK) has also entered this space and Origin Energy is looking to enter.
Right now, I suspect we are just seeing the tip of the iceberg and that there will be more large companies coming to play. With many smaller players also entering the hydrogen space in Australia, I suspect we may also see mergers or acquisitions of these smaller companies over the coming years.
We have already seen one merger between Real Energy and Strata X Energy to create the Pure Hydrogen Corporation with the stock rising more than 20% in the last month.
Investors would be wise to study up on green hydrogen and be on the lookout for investment opportunities that will definitely become available in this space.
Dale Gillham is chief analyst at Wealth Within and international bestselling author of How to Beat the Managed Funds by 20%. He is also author of the award-winning book Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in all good bookstores and online at www.wealthwithin.com.au