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Crisis and Opportunity’s “Breakthrough technology turns air, sunlight, coal, even water into precious gas”

Deciphering DeHaemer's "How to Make 10 Times Your Money on the Energy Mega-Shift"

[ed note: We got a lot of questions about this pitch after we solved a different DeHaemer teaser yesterday, so we’ve brought it up for all to see again. The stock spiked up in the Spring, a few months after this article first ran back in January, but has come back down to a bit below the price it was when DeHaemer was first teasing the stock. We have not looked at the stock since or researched what caused the move up and back down, but the ad does not seem to have changed at all. What follows has not been edited or updated since it first appeared on January 28.]

—from 1/28/14—

It sounds, of course, very exciting — the spiel is an ad for DeHaemer’s Crisis and Opportunity newsletter, which is a fairly pricy $500 number that tends to focus on smaller companies and on stocks in war-torn or otherwise scary parts of the world. This one, however, is quite a bit more mundane — it’s a technology company that he says can turn sunlight and water and air into natural gas, solving the world’s energy storage problems.

Who wouldn’t want that?

Or, as he puts it:

“A technology that can convert air, sunlight, coal and even water into gas is the equivalent of a cure for cancer!

“What’s that worth?

“A lot. Maybe the biggest windfall ever.

“…. the company was able to convert air into gas.

“That’s right… the same air you and I breathe.

“This company was able to turn it into gas and transport it through a natural gas pipeline.

“This gas can be used to turn on your lights and heat your home, among countless other things.”

That’s hyperbole, of course, but there’s a bit of truth in there … and plenty of cash out there for the companies who can solve energy problems. What’s the problem DeHaemer is talking about?

Well, I won’t make you sit through the whole presentation, but the basic idea is that this company can solve the problem of energy storage for renewable energy.

Renewable energy is sometimes cost-effective these days, depending on where and how it’s produced, and it’s obviously important to lots of people and is in high demand. Many consumers will pay more for energy they feel better about, and technology improvements should continue to make solar, wind and other renewable energies more efficient in the decades to come.

But storage is an unsolved problem — the wind doesn’t blow all the time, the sun doesn’t shine at night, batteries are expensive and short-lived and many other storage solutions, like pumped hydro (you pump water up hill, then run it back downhill through a turbine when you need to generate electricity), are inefficient and take up a lot of space or just haven’t been economically feasible (like Beacon Power’s flywheels, which are in use in two plants to help regulate the electric grid but weren’t profitable enough to keep Beacon out of bankruptcy — Dehaemer actually teased those folks too, though that was back in 2007 when they were riding a bit higher, and when he was penning a different letter for a different publisher).

So really, what this company is doing is converting wind (“air”) or sunlight into electricity, which happens all the time, but then instead of that electricity just feeding into the electric grid this company uses their technology and that electricity to split water molecules into hydrogen and oxygen (the process is called electrolysis). That hydrogen is used either as a fuel itself, as in fuel cells, or can be pumped into the natural gas network (and/or turned into synthetic natural gas through methanation).

Here’s a bit more of the hype, in case that basic stuff got a little too boring:

“You see, this company has been working on this breakthrough for many years.

“It has patented (145 patents and patent applications in all) and perfected the technology.

“And when all is said and done, it can supply all of the energy America could possibly want for just $0.02 a kilowatt hour. That’s the equivalent of filling up your car for just $0.57 a gallon.

“It works by converting air, sunlight, coal, and even water into gas.

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“It’s clean, cheap, and abundant.

“You can even transport this gas right through existing natural gas pipelines โ€” so there’s no extra infrastructure costs to move it, because the pipelines already exist.

“And get this: Since air, sunlight, coal, and water are essentially limitless in supply, this energy will never run out… ever.”

Then, thankfully, we get a few clues about the actual company that DeHaemer is teasing — I’ll extract a few of those clues for the Thinkolator here:

“Their annual revenue has jumped to $40 million from $19 million in 2009.

“And they have a backlog (sales for this company’s technology that’s already been booked) of over $53 million.

“The most recent customer to adopt their technology was the nation of Germany. Germany is the sixth largest energy consumer in the world. They licensed this company’s technology to build a two-megawatt power plant facility in Falkenhagen. Two megawatts can power more than 2,000 homes.

“The power plant went live this past August. For Germany, this is just the beginning of a major rollout of this company’s power generation technology….

“Enbridge โ€” a $33 billion company that owns and operates the longest oil and gas pipeline systems in the world โ€” invested millions into this company last year. In return for millions invested, they now own 13% of what I think is about to become an energy giant….

“Another ‘big name’ investor in this company is General Motors (GM).

“GM โ€” the second largest automobile manufacturer in the world with annual sales of $152 billion โ€” owns a 5% stake. Like Enbridge, GM knows that the millions of dollars it has invested in this company could return hundreds of millions, if not billions, of dollars in the years to come….

“That’s why the company’s stock is up about 100% in a year.

“However, it still trades for less than $19 a share… and has a total market valuation of less than $250 million!”

So what’s our secret stock? As you can imagine, with that nice pile of steaming clues it didn’t take the Thinkolator long to identify our target — this is Hydrogenics Corp. (HYGS).

Hydrogenics has long been a hydrogen company with a good story, creating hydrogen systems and pushing for fuel cell adoption, but their story turned sour a few years back (coincidentally, that’s about when the last promise of hydrogen fuel cell cars fell out of favor with the first reliable hybrid and electric cars), but they have indeed had a bit of a recovery lately on the strength of both renewed interest in hydrogen fuel cells for transportation and telecommunications, and, more recently, on the pilot projects of their “power to gas” systems like the operational project in Germany that DeHaemer is teasing today.

The stock is slightly above $19 now, right around $21, but the market cap is under $200 million still and they have enough cash to keep going for a while. They are not profitable, but they do envision themselves becoming profitable fairly soon — they don’t think they need a capital infusion ore increase in production capacity to reach profitability. And they have some strong partners in E.on in Germany and Enbridge in North America (and Hyundai and GM).

The “power to gas” division is not their biggest one, but it’s a very appealing story (which is no doubt why DeHaemer’s publisher is using it, probably successfully, to catch the attention of new customers). The company describes the advantages of their system pretty nicely here:

“One of the unique characteristics of the Power-to-Gas solution is that it leverages the inherent advantages of the natural gas system. It provides the means to both store and transport energy. By storing hydrogen or substitute natural gas in the existing natural gas pipeline network and its associated underground storage facilities, the stored energy is not restricted to the site of generation. In effect the natural gas system serves as a โ€˜Power by Pipesโ€™ alternative to the transmission grid to alleviate network congestion and transport energy. Separating the storage and discharge of energy results in a higher overall integrated energy system efficiency”

I haven’t seen any information about the efficiency of the system — about how this “gas storage” system for electricity compares to grid storage or batteries or simply to the current system — but it does seem like it could make for a nice and tidy way to turn solar power or wind power into baseload “always on” power if that electricity is turned into natural gas that can be stockpiled and burned in a nat gas turbine. How much it costs versus actually producing the natural gas and burning it, I don’t know. They do have the large project in Germany, which is for 2MW but is apparently scalable and started operations over the Summer, and a second plant in Hamburg is apparently underway … and they also are selling self-contained systems to essentially provide local baseload power from renewable energy in the form of “micro-grid storage,” as with this order they announced just recently.

This is one of those companies where the one-year chart looks like an awesome breakout company, the five-year chart shows us a recovery from a several-year lull, and the ten-year chart shows a completely collapse of a market darling. Consolidation-adjusted, the stock was around $200 not much more than a decade ago, three or four bucks in 2010-2011, and is now back above $20 (there was a 25:1 share consolidation or “reverse split” back in 2010 so they could stay on the Nasdaq — the stock was down in penny range for a while before that). The same is true for most of the hydrogen fuel cell companies that have survived, stocks like Ballard Power (BLDP), FuelCell (FCEL) and Plug Power (PLUG) — I can’t say that I remember a specific catalyst to all of those companies collapsing in the early-to-mid 2000s, but they were all darlings for at least a little while at the same time that the internet bubble was preparing to burst … and they’re all down 80, 90 or whatever percent from their long-ago highs.

But Hydrogen is certainly capturing our fancy again — hydrogen cars are being pushed again by a couple carmakers, with baby steps taken on building up hydrogen fueling stations again, and that has helped the fuel cell companies this year (there’s a good Washington Post piece on hydrogen fuel cars at the DC auto show here), and Hydrogenics has shown some life in building up their backlog of orders a little bit … heck, there’s even one analyst who thinks they’ll be profitable next year (perhaps he’s dating the CEO’s daughter or is just more optimistic than others, I don’t know).

And HYGS is making some progress, it appears — they think that they can keep gross margins stable and become profitable once annual revenue hits $50 million, which might not be more than a year or two away if all goes well, and they have enough cash to at least get through another year like last one without having to sell shares. That’s on the strength of backlog for telecom backup power systems from their partner Commscope, as well as a big order still working its way through for propulsion power cells (for a secret customer) and some hydrogen generation orders (for systems that use electrolysis to produce hydrogen where it’s needed — like in industry, or at hydrogen fueling stations). Here’s how the CEO put it on their last quarterly call:

“… let me just reiterate that Hydrogenics remains on track to attain the goals led out since 2012, the company is now at inflection point with our energy storage and power systems operations coming to represent a much larger share of Hydrogenics’ overall business, we remain on track to become profitable at the 50 million revenue run rate, and at a 30% gross margin and weโ€™re well on way this milestone achievement. We have what it takes to support rapid growth, scale up our operations and diversify our business space but we still anticipate full year revenue to be up over 30% this year versus 2012.”

And … that’s about all I can tell you about HYGS from my few minutes scanning their information. They’re still small, the story is really cool, particularly the energy storage capabilities, and they still think they’ll reach profitability fairly soon … if the hydrogen “story” really takes off again they could certainly be a beneficiary, as they have been with their parade of positive news over the last six months, but keep half an eye on those 2004-2006 charts for the hydrogen companies before you fall too much in love with stories like these, until some kind of sustainable profitability is reached they’re very much at the whims of shifting tides of sentiment.

What do you think? Ready for the next wave of hydrogen companies? Think HYGS is good fuel for your portfolio? Let us know with a comment below.

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arch1
March 8, 2014 1:09 pm

fp; Speed of burn increase is caused by lower octane. Are you sure effect you notice is not from water vapour injection which slows rate of burn. Have you ever noticed how engine runs better on a foggy day. Modern computer regulated autos have ignition point constantly being re-adjusted so not much effect from that anymore. On the other hand a small quantity of propane injected does slow burn rate & thus raise effective octane rate of mix. Hydrogen is quite explosive, beware of escaped gas when experimenting with it.

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susan
susan
April 30, 2014 8:16 am
Reply to  arch1

Thank you for your response. It seems that with the change in laws that gives corporations the right to donate to political campaigns as much as they choose, the agribusiness will not be altered to do what needs to be done. Go towards sustainable farming practices. We cannot yet accurately measure the damage being done to the soils and below because of the mass use of chemicals in farming from cattle raising to soybeans. If there was an investment idea to invest in that would help us move in that direction and Travis would find it, I would be in, even if the return was years away….

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ted
Member
ted
July 16, 2014 2:02 am
Reply to  susan

How about all the mid-west grain that is being sold to the Chinese to raise pigs?
Doesn’t that contribute to the ruin of the Gulf of Mexico and pollution of the environment by 1.6 billion pigs?

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Alan Harris
Guest
Alan Harris
July 10, 2014 12:29 pm

Id like to thank you all for adequately demonstrating easily we can turn gas into a lot of ‘hot air’. ๐Ÿ™‚

Seriously, in 1960, my science teacher demonstrated splitting water into Hydrogen and oxygen. It gnawed at me for a long time till I realised that the problem wasnt converting water to hydrogen or burning it to generate electricity…..as Frank (and others) have said, the problem is storing it. Anyone got an investment candidate for overcoming that problem? Still, I think someones got the wrong end of the stick re the cost of conversion by comparison to nuclear, nat gas, coal, oil etc …..how much would a new world cost? Frank may be right about fossil fuels not causing global warming (not even a tiny bit?) …..but what if he’s wrong. Do we just say Opps!

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steve
Guest
steve
July 10, 2014 12:35 pm

Run fuel cell cars with a reformer that will convert natural gas to hydrogen. This has been done on prototype cars for years. So you store natural gas rather than gasoline in your fuel tank. I don’t know the economics but I believe it can be competitive with
gasoline and hybrid cars. Methanol fuel cells may be a future fuel cell alternative.
I don’t believe you can get an all electric battery powered car that will give you 300 miles between charges and enable you to charge the batteries within 5 minutes which would be something similar to refueling an IC engine.

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meassassin
July 10, 2014 11:39 pm
Reply to  steve

I thought Musk answered this in the “Fast or Free”, your choice video.

https://www.youtube.com/watch?v=6_XEv2f_Uhw

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arch1
July 10, 2014 2:05 pm

Alan; Once again you are correct, burning any fuel contributes to global warming. So does transmitting electricity,the power lost over distance is in the form of heat, just as running any electric appliance, notice how motors get warm? Fermentation of yeast,and sewage,also generate heat. Rain falling from the sky returns all the heat used to generate water vapour forming clouds. Most of the heat that allows life to exist on this planet comes from solar radiation, fossil fuel can be viewed as sunlight stored long ago that is now released. Without the greenhouse effect of atmospheric gases & the huge
( perhaps 98% ) effect of water vapour the earth Including the oceans would soon be too cold to allow survival of any living organism through the radiation of heat into the extreme cold of space. By the way has anyone yet determined what the optimum temperature of earth should be ??? And from whose viewpoint?? Carbon dioxide is a fairly constant ratio of four hundred parts per million. To visualise that think of four seats in a ten thousand seat stadium,,,,large effect if you add another seat? Think about it and who stands to gain by a global carbon tax. fa

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archivesDave
archivesDave
July 10, 2014 6:56 pm
Reply to  arch1

Al “Horsepucky-Stick” Gore comes to mind!

Alan Harris
Guest
Alan Harris
July 10, 2014 6:59 pm
Reply to  archivesDave
ted
Member
ted
July 16, 2014 2:12 am
Reply to  arch1

Ah, you forgot that ALL electricity is eventually turned into heat.
That is all of it , not part of it. (better than 99 percent).
The record shows that the percent of all greenhouse gases is going up.
We are in an interglacial period some 85 thousand years, why do you think we are not a frozen ice ball like we would be if not for all that cozy global warming?

Hugh Roberts
Member
Hugh Roberts
July 10, 2014 3:55 pm

Excellent points, Frank. Global warmists refuse to recognize the fact that increases in CO2 always FOLLOW warming; a CO2 increase cannot cause it. Mt. Erebus, the largest active volcano in the Antarctic on the Ross Ice Shelf, spews out tons of CO2 daily, but has not warmed the area at all. In fact, temperatures have been drooping, and ice has been growing massively on the shelf.

sooku
Member
July 10, 2014 5:57 pm

Are we to assume that hydrogen can be safely stored and transported using natural gas infrastructure? Doesn’t hydrogen like to go boom when you least expect it? Last time I checked (Zeppelin?), gaseous hydrogen is no fun to carry around.

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Alan Harris
Guest
Alan Harris
July 10, 2014 6:00 pm
Reply to  sooku

I think youll find hydrogen only likes to go boom when mixed with the oxygen that the pipe wall keeps out.

sooku
Member
July 10, 2014 6:24 pm
Reply to  Alan Harris

I was kidding. as someone else pointed out, Challenger “went boom”
even though it was an operational system made by the nation’s smartest
people. If H2 succeeds at all I suspect it will be generated at point of use or
methanized via waste CO2 that now causes global warming.

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Alan Harris
Guest
Alan Harris
July 10, 2014 6:26 pm
Reply to  sooku

Now that I agree with.

jimarb
jimarb
July 10, 2014 9:43 pm

WELL I’VE READ MOST ALL OF IT – CONCLUSION – EVERYTHING HAS ITS TIME – IT “WILL” HAPPEN – THOSE WHO WATCH AND WAIT WILL WIN – IF YOU HAVE A FRIEND WHO IS A MYSTIC HE MIGHT BE ABLE TO TELL YOU
JIM

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stsparky
Member
stsparky
July 10, 2014 10:59 pm

Some ideas presented here worth discussing?

http://youtu.be/LQVkcx58gCs

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M.G.C
Guest
M.G.C
July 11, 2014 8:16 pm

Save your money, the real deal is coming, Obama and the DOE hate it because it will kill all his crying liberal green energy over night that does not work anyway, im talking wind solar and stupid bio-fuel that’s another reason why it will be a winner, Electro Mag generator, nothing like you have seen, very simple
Scalable, put one in the spare wheel well, will never need a a plug in or lithium battery to sizes that will outrun a nuke plant. Thats all I can say for now so don’t ask, Top Secret, remember loose lips sink ships.

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Alan Harris
Guest
Alan Harris
July 12, 2014 6:32 am
Reply to  M.G.C

And your source/link?

arch1
July 12, 2014 12:28 pm

Need I remind that every time one form of energy is converted to another there is a measurable loss? Why would you want to ,,say,, burn coal to generate electricity to split water into hydrogen & oxygen & in turn combine Hydrogen with CO2 to form methane,,,which is natural gas. We have developed ways to recover NG in great quantities so why not just burn it? In liquified form you can store a much greater quantity of energy in a given tank size than hydrogen with less leak hazard. Existing engines can be easily modified to use it & in some projects people can take city gas from the mains & home,, liquify it at night during low electric use time for their next days driving. In time refueling stations are likely to be built if a demand is there.
Earlier someone mentioned Hindenburg fire was likely caused by static electricity
from frame to aluminized coating of hull. Very possible, but however it happened once the gas bags were breached a huge quantity of hydrogen was released. Our atmosphere is roughly four fifths nitrogen & one fifth oxygen ( with several other minor gases) so ignition immediately took place. The combining of hydrogen & oxygen results in superheated water vapor which you may know as steam. Steam has one of the greatest expansionary properties known & resulted in explosion & fire ball observed. Any time
you release a large quantity of hydrogen into the open air you are likely to get an explosion as the hydrogen rushing from confinement will generate the static spark to ignite itself. Nuff said? Questions class?

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ted
Member
ted
July 16, 2014 2:16 am
Reply to  arch1

Terrorists set a bomb on it according to the secret government report. (no joke, that really happened) .

fedwatcher
Member
fedwatcher
July 16, 2014 2:40 am

The experts in this technology are Sasol and Fluor. Fluor built Sasol II and Sasol II was built because South Africa had coal and was under an embargo.

Hydrogen would require a huge infrastucture buildout, however Bloom Energy has installed many electric generators that work like fuel cells but use natural gas.

Methanization has a place as the natural gas distribution system exists.

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arch1
July 16, 2014 6:06 am
Reply to  fedwatcher

I really cannot see that methanization is economically feasible unless you have huge quantities of surplus electric power. Even then the only really practical way is using coal
as your carbon source , to combine with hydrogen since methane is HCO not HCO2.

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Clancy
Guest
August 19, 2015 4:01 pm
Reply to  arch1

Back to school, methane is CH4 not CHO !

Dave Hamer
Dave Hamer
July 16, 2014 6:32 pm

Has anyone figured out who Dan Ferris, purveyor of Extreme Value, is touting as “the best resource opportunity of my career” regarding the “next great royalty company”? Please advise…. Thanks, Dave605

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Robert Newsom
October 2, 2014 1:38 pm

Send me Everything = What compny is this and does Travis like it ?

Alan Harris
Guest
Alan Harris
October 2, 2014 1:41 pm
Reply to  Robert Newsom

Id guess youre gonna have to bust a whole $49 bucks (still makes me tee hee) to find out.

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Nick
Guest
Nick
October 16, 2014 7:02 pm

So… not to sound like an idiot, but I don’t have the time to read this entire article :-/
Could someone please tell me if this is real (or relatable to an average persons life), and how do we “”make money”” on this (yeah, quote unquote).

arch1
October 16, 2014 7:11 pm

yes it is not IMHO 0000000

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pete
Guest
pete
October 17, 2014 8:54 pm

Years ago I had the idea to look for new efficient way’s to split water into hydrogen and oxygen. I still think it could be done with the help of high frequency resonating the water
molecule. But I dumped the idea after I realized that there really is no cheap source of pure, unpolluted water. So how could hydrogen be ever produced from “water”
without a costly waste problem?

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joeyk
Guest
joeyk
November 2, 2014 4:08 pm

I can speak from experiance; Three of us started a company that used nquart fruit jars with ordinary tap water with an and a rubber hose with a chemical which received electric from the vehicle battery an electric probe into the water along with a chemicle that together produced hydrogen bubbles which thru these rubber hoses sucked into the intake manifold. These mixed with the gas providing an increase in mileage on a Ford f150 of about 5+ more miles /gal . The problem we run into is we couldn’t solve the problem of the water freezing in the winter or overheating in the summer. Sadly we run out of capital If anyone is reading this I can tell you for sure IT WORKS! GOOD LUCK

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gard
Guest
November 3, 2014 9:13 am

Diss it all you want from old information. Producing hydrogen from water is inefficient but when the sunlight needed to produce the electricity is used in solar cells and wind energy is used then the cost from raw material is free. Germany has already built one, and owners of solar farms and wind farms are beginning to use this technology. They hydrogen gas can be stored in the NG pipelines, i.e. sold as natural gas blend. Because it was free, it can compete with nat. gas prices. And it can be converted to methane and stored. As for storing it for use in a car, Germany has developed an absorbent to store the hydrogen at low pressures in automobiles. As for HYGS they have developed a membrane that makes the electrolysis more efficient. Looking at the fundamentals, they are about to break even in the earnings catagory, have plenty of cash, and have been producing and selling hydrogen generators for a while now. Guidance is positive and it certainly seems that Hydrogen is back in the news. Technicals are very much positive now and I will make a buy today as soon as the market opens. IMHO very low risk and high probability of significant gain. Use your own dd and give it a look.
What say you Travis? Wishing all gumshoers well and God bless this site and Travis

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gard
Guest
November 3, 2014 9:28 am

And by the way you cannot use pure water in electrolysis. It’s resistance is too high, effectively an insulator. The ions in the water act as electron carriers. And there is plenty of water with low enough impurities that would work very well in electrolysis.

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