Over the past few years, fossil fuels have seen a decline in popularity as renewable energy sources like wind and solar power have proved to be far better alternatives, not just in terms of sustainability, but also cost. However, clean storage is a challenge that still needs to be dealt with. Amongst the many energy-storage mediums being considered, hydrogen is anticipated to solve the problem for the renewable energy industry. With a probable solution to this major obstacle, many wonder if an advanced investment in renewable energy stocks would be a good idea.
One of the best options to consider in this regard would be hydrogen stocks.
The value of hydrogen stocks has been continuously fluctuating over the last few years. Bloom Energy’s stock is no different. It increased by 201% during the last year, but then suddenly dropped by 44.2%. However, the opportunity presented by the hydrogen energy storage process is worth trillions of dollars.
Benefits of hydrogen energy storage
What is most lucrative about this innovative technology is its low cost. The fact that Bloom Energy’s fuel-cell cost per kilowatt has decreased by 59% since 2015 (dropping to $2,420 from $5,886) reflects that a further cost reduction is expected which would eventually allow companies to capture a greater market. This means a simultaneous increase in the sale of fuel-cell kilowatts, thus leading to greater revenue and profit margins. Although the company is currently making a loss, if this trend continues, it will be making huge profits in upcoming years.
Bloom Energy’s expected revenue for this year is $950 million- $1 billion which would possibly result in a gross margin of 25%. This indicates that because of the improving financial performance of the company, Bloom Energy’s might be one of the best renewable energy stocks to purchase.
Bloom Energy’s future course of action
Although Bloom Energy is not specifically a hydrogen company, the management is planning a transition. The idea is to ultimately focus entirely on hydrogen fuel cells, along with initiating electrolysis; a process that uses water and electric power to create hydrogen.
The best part about Bloom Energy’s fuel cells is that not only can they create hydrogen, but also convert hydrogen into electricity. Therefore, if available at an economical price, it will be a perfect solution for storing energy.
Is Bloom Energy the best renewable energy stock to buy?
Given that renewable energy costs are continuously decreasing and there is a demand for energy storage solutions, Bloom Energy has a huge market potential especially with the anticipated reduction in fuel cell costs.
Although Bloom Energy poses an opportunity that might be worth $4.2 billion, an investment in this renewable energy stock is not risk-free, but then no investment is- and given the trend and available data, it does seem to be one of the best renewable energy stocks if one is considering an investment in this industry.