Ballard Power Systems Inc. (NASDAQ:BLDP) Q2 2020 Earnings Conference Call - Final Transcript

Aug 06, 2020 • 11:00 am ET

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Ballard Power Systems Inc. (NASDAQ:BLDP) Q2 2020 Earnings Conference Call - Final Transcript

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Executive
Randall MacEwen

field service support to customers in China, Europe and North America. On the supply chain side, we experienced some modest impacts in Q2, but have worked to mitigate overall 2020 risk including by increasing our inventory positions in key materials.

Although the situation remains fluid, we're not expecting any major supply chain disruptions for the remainder of 2020. On the demand side, while we continue to experience some modest delays in customer projects, programs and order intake, we believe the overall COVID-19 context will represent long-term demand acceleration, as I described in the recent blog posted on our website. There've been several important policy and commercial developments in our target geographic markets since our last earnings call. I want to review these for you.

Let me first start with Europe, where momentum continues to build. On May 27, the European Commission proposed its EUR750 billion economic recovery plan with the green deal at its core. The plan puts a focus on kick-starting a clean hydrogen economy with renewable hydrogen, cleaner transport and logistics as key elements. On July 8, the European Commission released a plan entitled a hydrogen strategy for climate-neutral Europe which cemented hydrogen as a key priority to achieve the European green deal and a clean energy transition.

The plan sets out a phased approach to develop renewable hydrogen. In the first phase from 2020 up to 2024, the strategic objective is to install at least 6 gigawatts of renewable hydrogen electrolyzers in the EU and the production of up to 1 million tons of renewable hydrogen to decarbonize existing hydrogen production and facilitate the uptake of hydrogen fuel cell buses and heavy trucks.

In the second phase, from 2025 to 2030, the strategy is for hydrogen to become an intrinsic part of an integrated energy system with strategic objective to install at least 40 gigawatts of renewable hydrogen electrolyzers and the production up to 10 million tons of renewable hydrogen. In this phase, renewable hydrogen is expected to gradually become cost competitive with other forms of hydrogen production, and the plan calls for parallel demand side policies to support scaling of trucks, rail and maritime transport applications, along with the build-out of the network of hydrogen refueling stations.

In the third phase, from 2030 onwards and towards 2050, renewable hydrogen technology should reach maturity and be deployed at large-scale to reach all hard-to-decarbonize sectors. The European Commission expects investments over the next decade to 2030 could range between EUR24 billion and EUR42 billion for electrolyzers, EUR220 billion to EUR340 billion for scaling up solar and wind energy production capacity and EUR65 billion for hydrogen transport, distribution storage and hydrogen refueling stations.

And we can now add Germany, Norway and Spain to the growing list of countries that have announced hydrogen strategy to road maps with each of these countries recently unveiling their respective national hydrogen strategies. Germany announced its national hydrogen strategy with 38 measures across the hydrogen value chain including fuel cell vehicles. Germany also announced