Defiance ETFs: Ballard Leaps Forward In 2021

[This ETF Industry Perspective is sponsored by Defiance ETFs.]

Ballard Power Systems, the fuel cell solutions provider, has announced a number of significant agreements and orders relating to zero-emission fuel cell electric vehicles (FCEV) since the beginning of 2021.

In January, the company confirmed a purchase order from UK-based Arcola Energy for fuel cell modules for Scotland's first fuel-cell powered train.¹ This was quickly followed by follow-on orders for more fuel cell modules for fuel cell electric buses (FCEBs) in the Netherlands;² a memorandum of understanding (MOU) with Global Energy Ventures to develop a fuel-cell-powered transport ship;³ and a nonbinding MOU with Chart Industries, Inc. for the joint development of a fuel cell engine using onboard liquid hydrogen (LH2) for heavy-duty transportation applications such as trucks, rail and marine vessels.⁴

Taken together, these announcements reflect the demand for clean automotive and transportation solutions, despite the drop in travel and COVID-19-induced uncertainty. Transportation is a major cause of carbon emissions, and a prime target for decarbonization by governments who need to meet zero carbon targets within the next few decades.

Around the world, public opinion is increasingly concerned by the impact of climate change and the effects of air pollution on public health, leading to rising pressure for clean alternatives to fossil fuels.

Hydrogen's Potential

Currently, alternative power sources like biomass, solar, wind-based energy and electrification aren't sufficient to meet world demand, and the energy they generate is neither consistent nor price-effective enough for mass application. But hydrogen fuel cells can provide a solution. Hydrogen exists in abundance across the planet, and it's energy-dense, giving it long-duration discharge cycles that enable it to meet peak demand by storing excess energy and distributing it when and wherever it is required.

Hydrogen usually appears as a compound with other elements, requiring electrolysis to separate the hydrogen molecules and harvest them for fuel use. The molecules are stored and transported in pressurized containers, until they are transferred into fuel cells such as proton-exchange membrane (PEM) fuel cells produced by Ballard, and their energy can be released as fuel. When electrolysis is powered by energy from renewable sources, the resultant fuel is termed "green hydrogen" and considered by analysts to emit close to zero emissions.

Taken together, the recent orders and agreements announced by Ballard represent considerable ongoing investment in the adoption of fuel-cell solutions for heavy-duty passenger transportation and marine solutions. Municipalities, governments and enterprises continue to be heavily concerned about the need to reduce emissions, hit targets and clean up their carbon footprint, which in turn testifies to the ongoing and potential strength of the green fuel market. Investment in clean energy stocks and a hydrogen ETF remains appealing to investors who wish to increase their holdings in environmentally friendly companies and ethical trade.

Ballard Power Systems was established in 1979 in Canada to research more efficient fuel alternatives, and the company began working on the development of PEM fuel cells in 1983. It quickly became one of the leading purveyors of fuel cell and clean energy solutions and PEM fuel cells. Since the launch of its first fuel-cell-powered bus in 1993, the company has developed, supplied and maintained motive modules installed in thousands of zero-emission vehicles around the world, including the world's first hydrail train in China.

A Strong Business Model

The company has a particular focus on heavy-motive vehicles such as buses, trains, heavy trucks and marine transportation, which are seen as far more challenging to power with hydrogen fuel. Over 2,000 zero-emission trucks powered by Ballard fuel cells are operating worldwide, including delivery trucks in China, drayage trucks in ports in California and heavy-duty mining trucks in South Africa. There are also over 1,000 Ballard FCEBs in China, Australia, Canada and Europe, which have collectively traveled over 70 million miles. Ballard's fuel cell engines have a lifetime of over 30,000 hours, can travel up to 300 miles between refueling stops and refuel in just 10 minutes.

Ballard has a number of strategic partnerships aimed at developing and innovating more efficient and environmentally friendly transportation solutions. As well as its recent MOUs with Chart and Arcola Energy, the company works together with Volkswagen AG, Siemens, Audi, Ford, Honda and Daimler AG to advance fuel-cell passenger vehicles. The company also collaborates with Plug Power to produce thousands of hydrogen fuel-cell-powered forklifts used by large retailers such as Home Depot, Whole Foods, Amazon and BMW in their warehouses. Ballard provides the fuel cell stack used in the forklift engines.

Alongside its research and development of fuel cell land vehicles, Ballard is also innovating fuel cell transportation solutions for marine applications. Ballard's center in Denmark is involved in numerous marine projects, including the development of fuel-cell-powered barges, ferries and cruise ships. Additionally, the company produces megawatt-scale stationary PEM fuel cell systems in power stations for backup use by industrial plants, enterprises and utilities.

Investors who are interested in supporting and accompanying companies like Ballard in the nascent fuel cell sector can diversify their investment and mitigate risk by using a fuel cell ETF such as HDRO from Defiance. HDRO is the first U.S.-listed hydrogen ETF, recently issued by Defiance to track the rules-based BlueStar Global Hydrogen & Next Gen Fuel Cell Index. HDRO enables investors to avoid overexposure to any single stock while preserving the opportunity to benefit from the potential of this disruptive and innovative new technology.

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