Shares of FuelCell Energy (FCEL -5.28%) surged this morning and were trading 12.6% higher as of 12:25 p.m. ET Tuesday after the hydrogen fuel cell maker announced a collaboration for a large power plant in Nigeria.
FuelCell Energy collaborates on a large green hydrogen plant in Nigeria
FuelCell Energy has signed a Memorandum of Understanding (MoU) with Oando Clean Energy Limited, a renewable energy subsidiary of one of Africa's largest energy companies, to build a hydrogen power plant with a capacity of 5 megawatts (MW) to 15 MW in Nigeria.
The African country relies heavily on fossil fuels to generate power and has a significantly low electrification rate. Nearly 43% of the country's population has no access to electricity.
The Nigerian government has drawn up plans to increase the share of renewables in power generation to 30% by 2030. Oando Clean Energy believes a partnership with FuelCell Energy will help them boost Nigeria's access to power and industrialization, given the latter's "flexible, cost-effective, and state-of-the-art scalable technology."
Aside from its fuel cell and electrolyzer technology, FuelCell Energy's agreement with Oando also seeks to explore the use of its carbon capture and sequestration technologies.
A turnaround or a dead cat bounce?
FuelCell Energy stock has fallen rapidly so far this year as the company has struggled to grow revenue. For example, FuelCell Energy's revenue dropped 41% year over year to $25.5 million in the third quarter, and its gross loss nearly doubled to $8.2 million. The company is also consistently issuing fresh stock to raise funds to run its operations, thereby diluting the wealth of existing shareholders.
Its MoU with Onado, therefore, may have given investors in FuelCell Energy a "rare" reason to celebrate. However, this could eventually turn out to be nothing but a dead cat bounce for the hydrogen stock.
