Far East Capital Newsletter
Hydrogen starting to show real promise
11 Jan 2021

In This Issue

Hydrogen starting to show real promise

We have had a strong rally in the first week of 2021. A number of downtrending (mostly gold) stocks have test ed those downtrends and have started to head higher, adopting what looks like shallower uptrends. However, the fall in the gold price on Friday night could test this thesis. While everything looked sweet on Friday afternoon, we could see that these secondary uptrends have a limited life if in fact we are in a bull trap i.e. where charts give a false signal.

The EV and alternative energy stocks surged to new highs last week, particularly the leading lithium stocks. Lithium has been on a bit of a roller coaster ride in recent years with a surging price having led to the development of a number of hard rock mines, only to be followed by oversupply and falling prices. Today, established producers will benefit from growing demand but if this leads to additional price jumps, new projects could put a lid on the price again.

UK Energy White Paper re Hydrogen
Just before Christmas, the UK Government released an updated White Paper concerning its strategy to become carbon neutral in energy generation. Amongst other objectives is the plan to generate 40GW of power from offshore wind farms by 2030, enough to power every home in the UK. It quotes a significant drop in the cost of wind power from £120/MWh to £40/MWh over the last five years.
There has been strong interest in hydrogen companies in the UK in recent months, so I was particularly interested in what the White Paper had to say on this front.

The UK Government is allocating £240m to advance hydrogen through the Net Zero Hydrogen Fund up to 2024/25, with an aim to have the UK producing 42 TWh of low carbon hydrogen by 2030. The emphasis is on clean green hydrogen as opposed to the 95% of current global production coming from fossil-fuel based methodology. A green hydrogen process captures carbon by-products at the point of manufacture.

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