ETFs
Hydrogen ETFs Soared in May: Here’s Why – May 31, 2024
The green energy revolution is gaining momentum and investors are making the most of this emerging trend. With growing demand for cleaner fuel sources, hydrogen has become a key player. Hydrogen, when used as a fuel source, emits only water and heat, making it a clean energy alternative. When burned or used in fuel cells, it produces water as its only byproduct.
This is in stark contrast to fossil fuels, which emit harmful greenhouse gases. As the hydrogen sector continues to grow, investors are increasingly interested in hydrogen stocks and ETFs. The pack has seen some momentum over the past month.
Global X Hydrogen ETF (HYDR – Free report) , Direxion Hydrogen ETF (HJEN – Free report) And Defiance Next Generation H2 ETF (BRDH – Free report) added 27.4%, 18.3% and 22.9% last month (as of May 30, 2024). Let’s find out why these ETFs are rallying.
AI boom boosts hydrogen stocks?
The expansion of the AI industry has led to an increased need for clean and sustainable energy sources, including hydrogen as a potential fuel. IEA report says that by 2026, the AI industry is expected to consume at least 10 times the electricity demand it had in 2023as quoted on CNBC.
An IEA report, published in January, highlighted that on average, a typical Google search uses 0.3 watt hours of electricity compared to 2.9 watt hours for a ChatGPT query. This demand is reflected in the stock market, where companies involved in green hydrogen production are attracting increasing attention.
The hydrogen market is expected to see significant growth, with projections suggesting it could reach a valuation of $410.6 billion by 2030. marking a CAGR of 7.80%according to a market and market research report.
Cheaper than electric vehicles?
Hydrogen fuel cell vehicles are powered by converting hydrogen gas into electricity via a fuel cell. Hydrogen is supposed to be cheaper than electric vehicles. Its profitability lies in the production and distribution of hydrogen itself.
Although the initial cost of manufacturing hydrogen fuel cells is higher than that of batteries used in electric vehicles, the infrastructure required for hydrogen production and distribution may be less expensive and more scalable than the infrastructure necessary for widespread electric charging stations.
Other uses
Hydrogen has a high energy density by weight, making it effective for applications where weight is a crucial factor, such as in aerospace and some transportation sectors. Additionally, its ability to store and release energy also makes it a likely solution for grid storage, helping to balance the intermittent nature of renewable sources like wind and solar.
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