Boris is (long) out: however, hydrogen and nuclear stay in
3rd November 2022 |
Boris Johnson may be a long way from No. 10 Downing Street. However, the green industrial revolution that he advocated continues.
The hydrogen explosion…
On 3 October 2022, UK energy infrastructure company Carlton Power secured planning permission to build the UK’s largest green hydrogen hub.
Green hydrogen is hydrogen produced using renewable energy sources, such as wind and solar, rather than non-renewable sources, such as coal.
Hydrogen is an incredibly versatile and powerful energy resource. It can act as a storer of energy and can be transported as liquid or gas. It is produced in a number of ways, one being an environmentally friendly process known as electrolysis. The longer aim is hydrogen will be a reliable, green, energy source used to help to power homes, machinery and transport.
The Carlton Power hub, known as the Trafford Green Hydrogen scheme, worth £300 million, is expected to have an ultimate capacity of 200MW with an initial Phase One capacity of 15-20MW.
The hub will produce 100% green hydrogen for industry and transport operators in the Greater Manchester area.
Carlton Power also has plans to develop two other hydrogen hubs in Devon and Cumbria.
It is another example of companies pushing innovation in line with the UK government’s hydrogen strategy, which is seeking to achieve 10GW of green hydrogen energy production capacity by 2030.
The “strategy” explains that, “Government investment in hydrogen to de-risk early projects could unlock over £4 billion of private sector co-investment up to 2030,” with up to 35% of the UK’s energy consumption coming from hydrogen.
Another key development in the UK hydrogen energy industry will see hydrogen injected into a gas-fired power station for the first time.
On 23 October 2022, energy provider Centrica announced that it will trial using hydrogen at its Brigg power station in Lincolnshire, as it seeks to reduce “carbon intensity” at its site.
The project, launching in the second half of 2023, will receive £8 million in government funding.
The government likes hydrogen. Big business likes hydrogen. Here at Frontier Tech Investor, we like hydrogen. Our Buy List includes Clean Power Hydrogen (LSE: CPH2) and HydrogenOne Capital Growth (LSE: HGEN).
Clean Power Hydrogen is a manufacturer of hydrogen electrolysers. The company has a key competitive advantage in the electrolysis process, as it uses low-concentration alkaline electrolyte, rather than expensive earth metals, to separate hydrogen and oxygen atoms.
HydrogenOne is an investment fund which invests in a mixture of private and publicly-listed hydrogen companies. It provides exposure to hydrogen companies that would otherwise be out of reach to the ordinary investor, and reaches all parts of the burgeoning hydrogen energy trend.
You can find the original recommendation for each here.
… as the UK goes (even more) nuclear
Nuclear energy is also burgeoning in the UK.
A month ago, the government chose the site for the UK’s first prototype nuclear fusion reactor. After shortlisting five sites, it opted for the West Burton A plant in Nottinghamshire.
The plant is set to be built by 2040, and will be allocated government funding worth £220 million for the first phase.
The deal is significant, because it points to the commercial viability of nuclear fusion, which has so far been restricted to experimental phases.
The reaction process, energy density and environmental impact is what differs nuclear fusion from nuclear fission, which is the process of traditional nuclear energy.
In nuclear fusion, atoms are smashed together (fusion), rather than being split (fission).
Nuclear fusion releases around four times more energy than nuclear fission, and comes with far less risk. Fission can produce radioactive waste, which can remain active for millions of years. Fusion is potentially the most environmentally friendly energy source ever.
However, fusion still remains unachievable on a commercial scale. But with multiple companies and governments around the world pressing hard for commercial fusion energy, and advancements making great leaps forward, it appears that it’s simply a matter of time until commercially viable fusion energy is achieved.
The West Burton A site also suggests that we really are moving closer to adoption of nuclear fusion energy.
It’s huge step forward for the UK’s energy goals, and could potentially help achieve the government’s target of sourcing 25% of its electricity supply from nuclear power by 2050. The UK currently gets around 16% of its electricity supply from nuclear power.
Until then, nuclear fission is still one of the most environmentally friendly and energy rich options globally. And, in our view, it’s a necessity for energy security for countries around the world.
There are four such names in the Buy List of Frontier Tech Investor that play on this nuclear energy investment idea.
These are:
- Aura Energy (LSE: AURA). The company is an early-stage miner of uranium. Its Tiris project is shaping up to deliver 800,000 lbs of uranium oxide when it moves to commercial production in 2024.
- Rolls-Royce Holdings (LSE: RR) is a manufacturer of propulsion and clean energy systems. The company recently shortlisted another two sites for its £200 million small modular reactor (SMR) factory, due to come online in 2029. This takes its total shortlist to eight sites. SMRs are smaller and more mobile than traditional nuclear reactors. Rolls-Royce’s share price is up more than 20% since 12 October 2022.
- Sprott Global Uranium Miners UCITS ET (LSE: URNM). URNM is an exchange-traded fund that provides diversified exposure to the world’s leading nuclear energy companies. In particular, its holdings include nuclear energy giants Cameco and Kazatomprom.
- Yellow Cake (LSE: YCA) is a uranium holding company that gives direct exposure to the uranium spot price without processing or mining risk. Its uranium oxide holdings are worth almost $1 billion. Its share price is up 19% over the past year.
You can find the original recommendations under the “open date” icon in the Buy List on the Frontier Tech Investor website.
Buy List update
Argo Blockchain (LSE: ARB)
Argo is a cryptocurrency miner.
Against a backdrop of risk-off sentiment in the crypto markets, it would be an understatement to say that the company’s share price has struggled over the past year. It has fallen more than 90%.
It’s likely that more pain is on the way for Argo.
On 31 October 2022, the company announced that a £24 million fundraising from a strategic investor is “no longer likely to go ahead.”
This is set to leave Argo in a tight spot, as without the investment, the company will soon become cash flow negative and will likely have to curtail operations.
As a result, the company has sold 3,834 of its Bitmain S19J Pro machines for around £4.8 million.
The company is also exploring other financing opportunities to help provide sufficient working capital for the next 12 months.
We’d add that Argo is not the only bitcoin miner that is financially on shaky ground at the moment.
This is due to several reasons, including high energy prices and historically low hash prices (mining revenues).
It’s nothing we haven’t seen before, with crypto miners facing equally treacherous conditions in 2019, and some making it out the other side. Riot Blockchain (NASDAQ: RIOT) found itself 96% down from all-time highs that year, but would go on to achieve a more than 10-fold increase in its price the following year.
We’re not saying that Argo will also make a phoenix-like ascent from the ashes. Given current conditions, survival is its main objective for now.
As a result, we are moving Argo to a HOLD. You can find the original recommendation here.
The Frontier Tech Investor “Top Three”
Sometimes it’s hard to decide on which stocks to invest in from our buy list.
Below is our Frontier Tech Investor “Top Three” section showing three stocks in open BUY positions. If you’re trying to figure out what to invest in next, these are three that we think are a great place to start.
This doesn’t mean our other stocks are no good: this is just a tool to help you spot the next Frontier Tech Investor stock that could be worthy of your consideration.
Volex (LSE: VLX) – Volex is a global manufacturer of power and connectivity products. These include power cables, fibre optics and charging plugs. It might sound a little basic, but these are critical mechanisms that are powering some of the key technologies of the modern day. These technologies comprise electric vehicles (EVs), artificial intelligence (AI) and big data networks. Volex has huge credibility behind it, particularly as it does business with some of most widely recognised companies in the world, including Tesla. You can find the original recommendation here.
Team17 (LSE: TM17) – Team17 is a video game publisher. It has a large collection of games containing some of the most popular of the gaming world. One of these is Worms, the enthralling last-man-standing survival game born out of the nineties gaming boom. Team17 is keeping up with the times and offers its games across a number of contemporary technology platforms. It has even flirted with the idea of non-fungible tokens (NFTs), a megatrend which could revolutionise the gaming industry. At a time where sceptics think online gaming will come off the boil following the ease of lockdown restrictions, Team17 keeps gamers coming back for more. You can find the original recommendation here.
Pod Point Group (LSE: PODP) – The UK’s inadequate (for now) electric vehicle (EV) charging network is threatening to bring the EV transition to a halt. By 2032, the shortfall of EV charge points in the UK is estimated to reach 250,000. However, Pod Point’s innovative range of EV charging solutions could go a long way in ensuring this deficit is reduced. The company’s charging technology is fit for homes, public charging bays, lamp posts and commercial buildings, and can ensure that the EV transition reaches all areas of the UK. In our view, Pod Point can unlock the potential of the UK’s EV charging network. You can find the original recommendation here.
Sam Volkering
Editor, Frontier Tech Investor
Elliott Playle
Analyst, Frontier Tech Investor
