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The Other Hydrogen Fuel – Top 5 Green Ammonia Stocks

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The Quest To Replace Liquid Fuels

As renewable energies progress, some limitations are becoming clearer. The intermittency of renewables requires the presence of energy storage. This could be in the form of batteries, as we explored in our article “The Future Of Energy Storage – Utility-Scale Batteries Tech”.

However, some forms of energy consumption are very resistant to electrification. For example, long-distance naval shipping, or air freight.

Even trucking has so far failed to be converted to EVs, due to the weight of batteries required; as well as limitations in the battery production capacity, which has delayed for many years the Tesla Semi.

Largely, these limitations stem from the fact that gasoline/diesel/kerosene are extremely energy-dense, much more than the best batteries.

So the idea of a liquid fuel that would be an alternative to petroleum products is highly attractive. One idea is biofuels, which essentially produce the same product as fossil fuel, but from renewable sources. It is another idea we explored in our article “Algal Biofuel: The Next Energy Revolution?”.

Another idea is to use the most abundant atom in the universe, hydrogen, to store energy. However gaseous hydrogen has some limitations, from the difficulties of producing it economically, to the energy costs of liquefying, transporting, and storing it.

Hydrogen atoms do not need to be in the form of H2 gas to be storing energy. Another extremely abundant element, nitrogen, forming 4/5th of our atmosphere, can help.

Ammonia As An Energy Carrier

Simple Chemistry

Ammonia, or NH3, is a fertilizer and can be burned or oxidized to produce nitrogen and water.

NH3 +O2 → N2 + H2O

So it is somewhat similar to hydrogen combustion, in that it only produces harmless byproducts, at least in ideal conditions (more on that later).

The difference with hydrogen is that ammonia is a lot larger molecule than H2, and a lot more stable as well. This makes its transportation and storage a lot easier. Ammonia is also almost 50% more energy-dense than liquid hydrogen.

Hydrogen liquefaction wastes 44.7% of the energy it contains, as it requires cooling at -253°C (-423°F). Keeping it liquid leads to more losses, increasing with the duration of storage, potentially up to 79% losses for seasonal storage.

“Ammonia, on the other hand, can be liquefied by either cooling it below -33°C (at atmospheric pressure) or pressurizing it above 7.5 bar (at 20°C)—significantly more achievable conditions than those required for hydrogen. This process can be close to 99% efficient”.

Existing Infrastructure

Ammonia is not a rarely produced chemical, with it being a key component in the production of fertilizer, but also plastics and explosives. This means there is already an existing industry and supply chain for the mass production of ammonia, although somewhat dependent on fossil fuels for now. It also makes it a well-understood and efficient process. Overall, ammonia is the second most highly produced chemical in the world.

Ideally, an ammonia economy would rely on so-called green ammonia, generated from renewable energy. This distinguished it from other types of ammonia:

  • Grey/brown ammonia: produced from fossil fuels.
  • Blue ammonia: produced from fossil fuels, but with carbon capture.
  • Pink ammonia (sometimes also called yellow ammonia): produced from nuclear energy.
  • Turquoise ammonia: produced from the pyrolysis of methane. This breaks down methane into hydrogen and solid carbon, with the hydrogen later converted to ammonia. The solid carbon can be stored or used for applications like carbon fibers.

And while a lot less extensive than the fossil fuels network, there is no less than 5,000 km (3,100 miles) of ammonia pipeline in the US (and 490,000 km of high-pressure natural gas pipelines). With ammonia being non-corrosive and not damaging steel pipes like hydrogen (“embrittlement ”), new pipelines could be relatively inexpensive.

This would nevertheless require massive investment in both production capacity and pipelines. To replace just half of the global natural gas consumption would require multiplying by 20 the global ammonia production.

Depending on the exact solution adopted, ammonia could work as an energy storage and transfer system with an efficiency (returned energy) ranging from 84%-38%.

The Limitations of Ammonia

The problem with using ammonia directly for energy is that combustion is seldom a perfectly efficient process. When ammonia is impartially burned, it produces NOx gases, which are toxic, as well as greenhouse gases (300x more potent than CO2).

Several solutions have been proposed, including:

  • Burning green ammonia in a fuel blend, in combination with fossil fuel.
  • Burning green ammonia in a fuel blend, in combination with hydrogen.
  • Converting liquid ammonia to compressed hydrogen directly on the storage site, and on-demand, like at a fuel station. A process named “cracking”.
  • Using dedicated fuel cells, like for hydrogen, to directly generate electricity and power an electric motor.
  • Using catalyst to destroy NOx before they are released. This could cause some problems as these catalysts often are extremely expensive metals like Palladium, Platinum, and Rhodium, which are already used to reduce NOx emissions in fossil-fuel-powered vehicles. A purely ammonia-based combustion would require a lot more of it.

As NOx are powerful greenhouse gases, making sure we don’t see them replacing CO2 is a must to justify transitioning to an ammonia economy.

Ammonia As An Hydrogen Carrier

As mentioned above, ammonia (NH3) can be “cracked” back into nitrogen (N2) and hydrogen (H2). This means that even if the issue of NOx emission proves unsolvable, there is still potential for an ammonia economy.

In this context, ammonia is used directly for storage, transportation, as well some niche applications. And get turned into hydrogen in a gaseous form (even if compressed) to power vehicles through direct combustion or fuel cells.

This allows the decarbonized economy to enjoy a few key benefits of ammonia's physical and chemical characteristics:

  • Lower energy losses during the production of the liquid fuel, while still using green energy to do so.
  • Low-cost renewable energy during periods of overproduction (strong sun & wind) can be used to reduce the overall fuel production costs.
  • The possibility of multi-month storage, allowing for resiliency in the energy system, is somewhat of a must for mobility. For example, a hurricane knocking off the power grid would not stop the supply chain, ambulances, and cars from running, as it might for a fully EV-centric system.
    • The multi-month storage also allows for excess production in sunny or windy months to be turned into fuel supply for months with lower renewable energy production.

So it is possible that talking of an ammonia economy or a hydrogen economy might be a little misleading.

A more likely scenario is a mixed ammonia-hydrogen economy, with each technology leveraged to perform best on its strong points:

  • Ammonia for transportation, long-term storage, and “soaking up” the surplus energy of sunny or windy days.
  • Hydrogen for direct consumption, short-term storage, and applications requiring quick & high energy output, like steel production or jet engines.

This is a scenario where nuclear power plants could also play a role in decarbonization, even without mass adoption of EVs, thanks to “pink ammonia” providing a low-carbon source of liquid fuel.

The Path To An Ammonia Economy

The road map for ammonia adoption is a little harder to determine. Some research estimates that an ammonia-driven economy, using mass production of green ammonia (2nd generation), is unlikely before 2030.

In this scenario, more efficient ammonia production relying on direct electroreduction (3rd generation) would take over only at the end of the 2030s, due to the technology being today in its early stages, especially efficient electrocatalysts.

Overall, there are massive hopes for green ammonia growth, with some estimates considering the current $300M market could turn into a giant $17.9B market, or an astonishing 72.9% CAGR by 2030.

Top 5 Green Ammonia Stocks

This list looks to focus on green ammonia or green hydrogen companies. But current leaders in ammonia generation, like for example CF Industries Holdings, Inc. (CF) or Yara International ASA (YAR.OL) are likely to turn to green ammonia in due time and might be an option as well.

1. Aker Horizons ASA (AKH.OL)

Aker Horizon is the subsidiary of the Aker group centered around green energy. The group is an important Norwegian conglomerate, with a focus on renewables and marine/offshore businesses.

Source: Aker

Aker Horizon is the holding company for several subsidiaries including carbon capture, green hydrogen, and renewable energies.

Source: Aker

The company is notably very active in hydrogen and green ammonia generation, with a goal to decarbonize Arctic shipping.

Source: Aker

So Aker is not a purely green ammonia company but can handle the entire vertical integration of green ammonia, from offshore windmills to hydrogen generation to green ammonia production. It is also working on projects like waste-to-energy in France, a biomass plant in Germany, and carbon capture in the Middle East (Saudi Arabia and UAE).

This makes it a good stock for investors looking for exposure to the green energy sector at large, with a strong positioning on green ammonia, but also other green energies, and some geographical diversification.

2. Plug Power Inc. (PLUG)

Plug Power is a leader in green hydrogen, with a focus on fuel cells. Notably, its fuel cells power over 40,000 forklifts, with revenues up x8 since 2013. It is also active in building hydrogen infrastructure like hydrogen production, logistics, utility-scale power generation, and deliveries.

Source: Plug Power

The company is aiming for scale to reduce production costs from $10/kg to $4/kg, while multiplying production by 14x in 2027.

Source: Plug Power

Due to massive investments to increase production capacity 19x since 2020, the company is not profitable yet. This led to almost doubling revenue from the beginning to the end of 2023. Most of the current and projected business is expected to come from North America.

The company sees its solution as either a direct mobility fuel, or a complement to EVs, as hydrogen allows to reduce the pressure on the grid of EVs peak charging not matching the times of production of renewables in the day.

Source: Plug Power

As a major fuel cell producer, Plug Power would benefit strongly from a turn toward a hydrogen/ammonia-based economy. While not directly active in ammonia production, the company is mostly focused on green hydrogen production (required for green ammonia production) and fuel cells, both components that would be still in high demand in case hydrogen alone is not working out.

So this makes Plug Power a good stock to bet on a turn toward hydrogen in general, with or without ammonia. If the limitation of hydrogen regarding logistics and storage turns out to be un-surmountable, it would still profit from a hydrogen+ammonia economy.

3. Ballard Power Systems Inc. (BLDP)

Ballard is another fuel cell manufacturer, and a pioneer of the technology with its first fuel cell bus in 1993.

The company is focused on heavy-duty markets: buses, trucks, trains/trams, ships, mining/construction, and power. While buses have been the core of the business, the company expects that by 2025 trucks will be a major business segment. It also expects Europe to stay its main market (50-60%), followed by North America (25%).

Trucking fuel cells are expected to keep growing and represent a $7.5B market in 2030 (from a $195B TAM), almost as large as all the other hydrogen/fuel cell applications combined.

Source: Ballard

Because of the higher power required, and the need for quick charging, heavy-duty vehicles have been a good pick for hydrogen and fuel cells over lighter vehicles like cars. It also reduces the need for catenary wire for rail, and fast recharging for long-distance hauling.

Source: Ballard

The company is not a stranger to ammonia either, with for example a recent contract with Amogy to provide it with fuel cells for its “ammonia-to-power platform which relies on unique ammonia cracking technology”.

While EVs have a reasonable chance to quickly take over the car markets, heavier vehicles are harder to decarbonize. With its established leadership in the sector, Ballard would be a prime beneficiary of a policy push toward a hydrogen economy.

4. FuelPositive Corporation (NHHHF)

FuelPositive has created a modular/containerized green ammonia generation system. Its first target is the agricultural sector, allowing for on-site ammonia production with locally produced energy. The system can generate up to 300kg/day, 100 tons per year of ammonia for CA$950,000.

This makes it a system fits for farms up to 1,800 acres. With just 1.5 acre of land covered with solar panels enough to power the ammonia generation.

FuelPositive claim its system can produce ammonia for CA$560/ton, which is in line with historical price, and more importantly, would shield farmers from the extreme price volatility they experienced in the last few years, with ammonia shooting up to $1350/ton at one point.

The start-up is at an early stage, with full-scale production scheduled for 2025, and 30 orders confirmed so far, with the first delivery scheduled for March 2024.

The main strength of FuelPositive is the modularity of its technology, allowing for a more distributed approach and standardized mass production of its ammonia generation module.

The company is building a partnership with Cipher Neutron, which can produce hydrogen without any metal of the platinum group.

While the primary focus is fertilizer production, the ammonia could be used to power farming engines with energy produced on-site, depending on the speed of adoption of ammonia/hydrogen-powered farming tools.

The decentralized and modular nature of FuelPositive systems could also make them a key element of a future ammonia economy. The fertilizer market can provide the gap for the company to grow until the use of hydrogen and ammonia is more widespread.

5. AmmPower Corp. (AMMPF)

AmmPower is similar to FuelPositive in that it provides modular ammonia generation systems, but at a larger scale, with its base module able to produce 4 tons/day. This put the company more into the field of very large farms (10,000+ acres) or industrial operations like textiles, refrigeration, mining, pharmaceuticals, or semiconductors.

Source: AmmPower

The company is in the process of building its order book, with the near-term booking potential estimated at $30M, and sale prospects for 690 units from 52 countries.

The company estimates the electricity cost to be around $360/ton of ammonia.

The modularity of the system allows for a quick turnaround and deliveries, with less than a year compared to the 3-4 years of similar projects without the modular approach.

It is also working on technology to transform waste into ammonia, in a joint venture with CTEC Energy Sales USA.

To further the progress of ammonia into a hydrogen-ammonia economy, it is creating a dedicated subsidiary dedicated to cracking ammonia into hydrogen, which will look for additional funding separately.

By striking the scale that might fit most industrial usage, as well as very large farms, AmmPower is aiming for clients and companies with deeper access to capital than most. Combined with ammonia cracking technology, this could allow it to scale up quickly following policies to push for the development of hydrogen as an energy carrier.