Wednesday, 09 September 2020
Hans Gunnar Nåvik is a researcher at Arctic Securities and he has currently investigated potentials of Hydrogen as an alternative energy carrier for commercial purposes. He has valuable experience in early-stage investments in renewable energy.
As a high potential energy source, the development of Hydrogen has become an issue in focus among policymakers, investors and business developers. Arctic Securities has also seen Hydrogen as a prospective energy carrier and been at the forefront to observe the market adoption of Hydrogen.
1. What are the main drivers for Arctic Securities interest in Hydrogen?
Hydrogen is an emerging market on the back of the ongoing global energy transition following the 2015 Paris Agreement, public concerns and equity market awareness. Hydrogen is perceived as a key technology and energy carrier in the transition, and the hydrogen market is expected to grow strongly in the coming decades, demanding a high level of investments.
2. Who do you believe would be important consumers for Hydrogen? (which industries or sectors?)
We see hydrogen adopted in industry as a feedstock and in high-temperature heat applications as fuel in long-range commercial and heavy-duty land transport, both road and rail, navigation and aviation. Hydrogen can also be used as an energy source in commercial and residential heating. Furthermore, hydrogen could be deployed in power for grid balancing and as long-term energy storage.
3. How do you see the price development of Hydrogen? What would be factors that bring down Hydrogen's price?
We see that cost of production, transmission and distribution of hydrogen will decline going forward. Key to declining cost is the scale in the entire hydrogen value chain, alongside cost decline in renewable energy and carbon capture and storage (CCS)
4. Which direction do you see investment in Hydrogen production heading? (Particularly with regards to technology and regions?)
Investments seem to be heading in the green hydrogen direction in the short term. However, we see our position in blue hydrogen as well, expecting investments to follow once certain political issues are solved. For the medium term, we see investments heading in both directions (green and blue hydrogen) side by side.
5. In your opinion, what are the biggest challenges in investing in the Hydrogen industry?
Very early-stage markets are what characterizes the hydrogen space from an investment point of view. Thus, obvious risks exist from rapid shifts in market development, investment focuses and trends as well as derailing potentials.
6. To what extent would Arctic Securities like to get involved in the Hydrogen industry?
Arctic has broad experience in financing start-up and established companies. As such, Arctic will, amongst others, be instrumental in pushing technology forward by raising capital for these companies. Low carbon hydrogen is an early-stage emerging market, and Arctic has an ambition of thoroughly understanding hydrogen to best serve businesses, markets and our customers.