11:00 AM EST, 12/05/2024 (MT Newswires) -- Ballard Power Systems ( BLDP ) signed Thursday a new Long Term Supply Agreement with Canadian Pacific Kansas City (CP.TO), including the initial supply of 98 fuel cell engines for use in the North American freight rail market. No financial details were provided

A statement noted each engine has a nameplate of 200 kW, totaling approximately 20 megawatts (MW) of fuel cell power. It said deliveries of all 98 engines are expected in 2025.

Thursday's statement noted the LTSA builds on an existing partnership between Ballard and CPKC, which started in 2021, and has included delivery of approximately 10 MW of fuel cell engines to date and the successful integration of Ballard fuel cell engines into hydrogen-powered locomotives for regular switching and freight service applications in Alberta, Canada. The fuel cell engines purchased from Ballard will support the expansion of CPKC's hydrogen locomotive program.

The statement noted prototype diesel freight locomotives retrofitted with hydrogen fuel cells, hydrogen storage and battery packs have undergone various testing at CPKC since 2022. CPKC currently has three hydrogen locomotives in operation.

Ballard kept its Sector Perform rating and US$2.50 price target after the news, National Bank of Canada said in a Thursday note.

The bank said the target was based on a 3x EV/Revenue multiple on FY'26. For the rating, National Bank said it considered slow adoption rate of hydrogen in other markets.

"We view development in the rail industry as a positive, and believe BLDP is doing a good job balancing waiting the market out and maintaining its leadership position in the industry," the bank said.

Ballard's share price was up more than 9% at $2.23 at last look on the TSX.

Price: 2.24, Change: +0.20, Percent Change: +9.56