Ballard Power Systems Inc.BLDP struck another deal in China for delivering next-generation fuel cell modules for 300 buses in two cities. Guangdong Synergy Hydrogen Power Technology Co., Ltd., the contracting party, plans to deploy fuel cell technology in these buses in Foshan and Yunfu.
Valued at $17 million, the deal will also bring in potential recurring royalties starting from 2017. Per the contact, Ballard Power is obliged to supply fully-assembled fuel cell power modules as well as ready-to-assemble module kits. The company is also liable to provide a technology license for localization of assembly and supply of proprietary fuel cell stacks. In return, Ballard Power is expected to receive long-term recurring royalties leveraged to unit volumes of locally assembled modules.
This deal is in addition to a definitive license and supply agreement signed with Zehe New Energy Technology Co., Ltd. and Guangdong Synergy Hydrogen Power Technology Co., Ltd. in Jun 2015. Per the $10 million transaction, Ballad Power will provide fuel cell power products and technology solutions for 33 initial fuel cell-powered buses in Yunfu and Rugao, China.
Other Chinese Deals
In Jun 2015, Ballard Power signed a framework agreement with Tangshan Railway Vehicle Company, Limited for designing and developing a new fuel cell module to be used in tram or Ground Transport Vehicle applications. The framework agreement calls for the application of next-generation Ballard fuel cell power modules in vehicles, designed specifically for this purpose.
In Apr 2015, Ballard Power received an order from a Chinese customer for supplying its next-generation FCvelocityTM-HD7 power modules for eight buses to be deployed in various cities in the country.
Rising Clean Energy Demand
Opportunities are a plenty in China on the back of rising demand for clean energy mass transportation alternatives in the nation. Per the company release, to address severe air quality issues in 48 cities, China has come up with a new energy program whereby the nation will deploy 1,000 clean energy buses in each of the participating city.
Ballard Power has already seized the opportunity given the string of contracts for its next-generation fuel cell modules and technology solutions. The company's revenues may witness healthy growth should the Chinese transportation companies continue deploying Ballard Power fuel cell technology in transit applications.
Ballard Power currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the Electric - Miscellanies Components industry include Active Power Inc. ACPW , Mobileye N.V. MBLY and TDK Corporation TTDKY . All three stocks currently sport a Zacks Rank #1 (Strong Buy).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.