Ceres Power Holdings PLC (AIM:CWR, OTC:CPWHF) and its peers could be key beneficiaries of France and Japan’s plans to expand their nuclear capacity in the quest for clean energy alternatives to fossil fuels.
That at least is the opinion of American investment bank Citi, which noted that hydrogen and nuclear-related stocks had been lifted by separate announcements by the two countries.
President Macron has unveiled a EUR30bn industrial investment plan that includes a nuclear modular reactor plus two mega-factories for the production of green hydrogen.
And in a significant policy shift, Prime Minister Fumio Kishida told parliament that nuclear was vital for Japan’s energy security and also emphasised the importance of green hydrogen.
“As a carbon-free power source, increasing nuclear power generation widens the power options needed to produce green hydrogen,” Citi said.
“Further, the high-temperature steam emitted by nuclear can, in turn, be used in solid oxide electrolysis, a technology that works especially well in high-temperature environments to produce green hydrogen at better efficiencies and economics versus rival PEM [polymer electrolyte membrane] and alkaline technologies.
“We highlight solid oxide technology provider Ceres Power, as well as peer green hydrogen OEMs [manufacturers] ITM Power and Nel, as potential beneficiaries from this theme.”
Citi rates Ceres shares ‘buy’. In early afternoon trade, the stock was up 6% at 1,102p, valuing the business at GBP2.1bn.
All of the seven banks or brokers listed by Sharepad as covering Ceres had ‘buy’ recommendations.
The consensus share price target is 1,706p, which is a 64% premium to the current valuation.