Hydrogen is used in fuel and energy-based commercial applications.
Hydrogen investments present unique challenges and opportunities. Consider whether markets behave irrationally or efficiently. Hydrogen supply affects likely investment returns. Other energy sources compete with hydrogen. Government support (or lack of) is important. The most unlikely use of hydrogen is in controlled-fusion power plants.
Irrational vs. Efficient Markets
Efficient Market Theory (EMT) states that a security's price quickly converges to what it is really worth. There is debate over whether this is true on average---with substantial exceptions---or is an absolute. If EMT is true as an absolute, there is, ideally, no undervalued or overvalued pricing. Many claim that EMT is wrong. The extent to which hydrogen-based securities behave "rationally" and "efficiently" is crucial to forecasting investment prospects.
Hydrogen Supply
New hydrogen sources are a research focus. For example, ScienceDaily reports that modified algae release hydrogen gas. In the short term, this new development would decrease hydrogen price (greater supply, equal demand). Then again, that same cheaper hydrogen may facilitate new technologies. High material costs can limit commercial development. Finding profitable investments is a complicated supply/demand calculation.
Competing Energy Sources
Hydrogen energy must compete against giant fossil fuel sources. If fossil fuel prices spike for an extended time, at first glance, it would seem that the hydrogen economy would prosper. Competing alternate energy candidates--solar, geothermal and wind--would also see a niche. Hydrogen has an advantage to some extent. It is not as dependent on weather conditions--pertaining to solar and wind power. Hydroelectric (water) and geothermal energy rely on geology and climate.
Government Support
State funding can influence hydrogen-based investments. Subsidies or tax breaks can offset other high costs. Government assistance is not limited to strict finance. Environmental concerns, energy independence and national pride in "progress" can rally public support. A reason for governments rallying support of hydrogen investments is that the public may resent what may seem as privileged treatment of a specific industry. Knowing and anticipating popular support (or resistance) to hydrogen energy can help in making wise investment choices.
Long Shot: Fusion
The most unlikely investments pay off the most handsomely---high risk equals high reward. Controlled fusion is as unlikely as it gets with modern or foreseeable technology. Fusion occurs in conditions similar to those at the center of the Sun. When working with fusion power, profitability is a prime concern. It is not an easy feat. Initiating fusion requires massive energy input. Two design themes may promise controlled fusion. One has multiple lasers firing on a hydrogen pellet, generating temperatures and pressures necessary for fusion. The other design is a magnetic torus. The magnets manipulate hot hydrogen plasma in order to generate fusion conditions. Both designs are complex, costly and unlikely to pay off. But then, that is precisely what appeals to speculators.
Tags: fossil fuel, most unlikely
