After a stellar 2020 for Plug Power—which saw a massive growth in its stock valuation—the New York-based hydrogen fuel cell firm is looking to expand globally through developing partnerships or acquisitions. 

Plug Power last year raised almost $1bn of new capital from equity markets, its biggest ever round of fundraising, during a transformative year. It extended its relationships with both Amazon and Walmart’s e-commerce networks. And it acquired US hydrogen producer United Hydrogen Group and electrolyser developer Giner ELX, allowing the company to start manufacturing electrolysers to complement its fuel cell offering.

The company has followed this up with a strong start to 2021. On 7 January, it revealed it will expand into the Korean hydrogen market, facilitated by selling a 10pc equity stake to South Korean industrial giant SK Group in a $1.5bn deal.

Plug Power has built well over 115 hydrogen fuelling stations, manufacturing centres and distribution centres in the US. Its recent fundraising round will help it build at least five green hydrogen plants in the US, which are expected to generate over 100t/d by the end of 2024.

Andy Marsh, who has led the company as president and CEO since 2008, expects revenue to increase by 30-40pc this year, to about $325-30mn. It closed the third quarter with $1.7bn in cash on its balance sheet.

“We have developed a great deal of technology, and I think we have an exciting roadmap for the future,” he tells Hydrogen Economist.

Investors and traders seem to agree; Plug Power’s share price is now more than 11 times higher than a year ago, making it the highest-valued pure-play fuel cell stock in the world.

Partnerships and acquisitions

Having taken an aggressive stance to capital raising in 2020, the firm is looking to expand its business globally in 2021, says Marsh. Some of that expansion will be with partners, which will “position [us] even deeper into the mobility and power generation segments”, he says.

“And we will also continue to look at acquisitions that could help accelerate [development of] the hydrogen economy even more rapidly.”

The kind of companies that Plug Power may consider acquiring or partnering with are those in other parts of the value chain or associated with specific technologies involved in building large-scale hydrogen generation plants.

Engineering, procurement and construction companies could also be of interest, as well as those with capabilities in certain areas in “hydrogen generation”, says Marsh. Also, Plug Power could consider companies involved in cryogenic hydrogen, where low temperatures allow storage at almost twice the density, he adds.

“What we have found, with hydrogen and fuel cells at this stage of development, is that you often need to provide customers with a total system solution. That is why we have built so many hydrogen stations along with fuel cells, as well as an aftermarket service.”

He adds the firm has interest in “moving towards companies that maybe have strong sales channels, maybe into certain sectors that could especially help our electrolyser sales process”, he says.

“Those areas are ripe for us to either make acquisitions or develop the partnerships with other companies.”

US sector to grow

The US fuel cell sector is prepared for a potentially game-changing 2021, as US president-elect Joe Biden enters the White House and the Democrats take hold of the Senate. Biden wants to fund research into technology, including large-scale electrolysers, to help make green hydrogen costs match conventional natural gas-sourced hydrogen within a decade.

$1bn – Equity capital Plug Power raised in 2020

“Under the Biden administration we expect, when we look at some of its plans that have been outlined to date, to see greater federal support for generation of green hydrogen,” says Marsh.

Having spent a lot of time talking to congressional representatives and senators, he believes Republicans “are not nearly as anti-environmental issues as is sometimes portrayed in the press”. For example, the Covid-19 stimulus bill renewed in December by Congress extended fuel cell tax credits to 2023.

Nonetheless, Democratic control of both houses of congress means “there will probably be subsidies on green hydrogen”, he says, likely in the form of tax credits. “And we will also probably see expansion of tax policy, which will accelerate the build out of the hydrogen economy.”

While US federal policies are obviously important, Marsh says companies' commitments to sustainability are also key.

"The people I deal with every day at companies such as Amazon and Walmart are incredibly committed to reducing their carbon footprint. So, regardless of what the government’s policy is, companies’ and investors’ policies—especially when you look at all the environmental, social and governance investment funds in the world—are really committed to climate change."

Plug Power has been attracting more institutional investors. Its investor base has shifted from 30pc institutional in January 2020 to over 60pc. “When we go to conferences, we have more requests for meetings with ESG investment funds than we can take,” says Marsh.

Indeed, many investment managers and industry experts view hydrogen as a key component of the future US energy system. Hydrogen from low-carbon sources could supply about 14pc of America’s energy needs by 2050, according to the Roadmap to a US Hydrogen Economy report, which was created through the collaboration of industry executives and technical experts.

Plug Power’s ambitious roadmap for global expansion, aligned with strong investor interest, places it in a strong position to capitalise on the growth of the green hydrogen economy.

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Author: Stephanie Baxter