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Why Powerhouse Energy (PHE) Shares Fell On New JV With HUI

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Updated 23 Aug 2022

Key points:

  • The PHE share price fell 4.17% after announcing a new JV with HUI.
  • This is the third JV announced by Hydrogen Utopia and Powerhouse.
  • Investors are wondering how their JVs will work out over time.

The Powerhouse Energy Group PLC (LON: PHE) share price fell 4.17% after the sustainable energy company announced that it had signed a Heads of Terms (HoT) agreement with Hydrogen Utopia Limited to enter into a 50:50 joint venture project in Poland.

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The two companies will jointly develop the project located in Konin, Poland. The deal will see Pworhouse Energy provide its proprietary technology that generates hydrogen power from non-recyclable waste plastics.

Also read: Five Best Green Energy Stocks In 2022.

Investors’ adverse reaction to the news indicates that they do not see how the agreement will benefit Pwoerhous Energy over the short term, and they are right. Building a waste-to-hydrogen power plant takes time, and a lot could happen before such a plant is operational.

A positive aspect of the deal is that Powerhouse Energy will not make any upfront payments to Hydrogen Utopia. Still, HUI can recover its fixed project costs of €250,000 with a €250,000 premium once the project’s funding terms have been agreed upon.

This is the third joint venture agreement announced by the two companies, with the first regarding a similar project at Lanespark, Co Tipperary, Ireland, unveiled on 13 July 2022. The second project was unveiled on 15 August 2022, when Powerhouse took a 50% stake in Protos Plastics to Hydrogen No 1.

The question lingering in most investors’ minds is, how will the two companies pull off their JVs? Can they work together effectively, or will the JVs fall apart in the future? Furthermore, how will each company benefit financially from the partnerships?

Until it is clear how the JVs will work out, PHE shares will likely keep falling, as shown in the daily price chart below. However, I expect PHE shares to bounce off the support at 1.55p to 1.67p highlighted on the chart.

*This is not investment advice. Always do your due diligence before making investment decisions.

Powerhouse Energy share price.

Powerhouse Energy share price 23-08-2022
Source: IG

The Powerhouse Energy share price plunged 4.17% to trade at 1.72p, falling from Monday’s closing price of 1.80p.