The analysts believe a hydrogen revolution is gathering momentum to drive energy transition across several ‘hard-to-abate’ sectors
The investment banking giant has carried out its own proprietary policy and economic analysis into the hydrogen economy, which found that green hydrogen – that which is created by through electrolysis using renewable energy sources – could be cost competitive across most regions by 2030.
What is known as blue hydrogen – where hydrogen is created using fossil fuels but the carbon dioxide emitted during the process is sequestered via carbon capture and storage – could be lower cost in North America.
“We believe a hydrogen revolution is quickly gathering momentum to drive energy transition across several ‘hard-to-abate’ sectors,” the JP Morgan analysts said.
“However, investors should also be wary of over-optimism given H2 adoption for some end-uses appears more challenging and less economic versus other low-CO2 alternatives.”
The analysts said they believe investing in hydrogen is “likely to remain challenging”, both with major corporates and smaller hydrogen-focused companies.
“After the dramatic performance of H2-focused stocks over 2020, we believe investors ought to take a more relative approach to the nascent H2 subsector,” they added.
In Europe, JP Morgan kicked off coverage of Norway’s Nel ASA with a ‘neutral’ rating and ITM Power () at ‘overweight’, adding to an ‘overweight’ rating on Nikola Corporation (NASDAQ:NKLA), ‘neutral’ on Bloom Energy Corp () and Inc (), and ‘under weight’ on Inc ().
Read More: JP Morgan warns hydrogen investors to be wary of over-optimism