US green hydrogen technology firm Plug Power has confirmed it will no longer partner with Australia’s Fortescue Future Industries (FFI) on its 2GW/yr electrolyser manufacturing facility in Gladstone.

“We decided we did not want to build a factory with them because we saw the economics; we could do better,” Plug CEO Andy Marsh explained on a recent analyst call. “So we really did not think that was worthwhile to move ahead.”

FFI CEO Mark Hutchinson argues the firm has been developing its own proton-exchange-membrane (PEM) and alkaline electrolyser technology and is well-positioned to take the Gladstone facility forward on its own. “Plug Power is very much locked into a certain technology and on a production cycle. And what we are good at here is building things at scale, exactly what we are going to do on the electrolyser side.”

“Our belief is we can get the best economics out of our electrolyser facility,” he says, adding that FFI anticipates that both PEM and alkaline electrolysers will be necessary for scaling the technology. “We will be looking at this from a global perspective.”

“We really did not think that was worthwhile to move ahead” Marsh, Plug

Construction began on the Gladstone factory in 2022, with the first electrolysers due to be produced in 2023. “The facility in Gladstone is going ahead as planned: nothing changes,” Hutchinson confirms.

Both Plug and FFI are keen to stress that the split over the Gladstone factory will not impact other projects where Plug has been tapped to supply its technology. “We have a relationship ongoing with Plug Power: they are still suppliers with electrolysers in some of our projects. We are going to need all the OEMs to chip in at some stage,” says Hutchinson.

FFI plans to take FID on five projects in 2023, with the proposed 500MW green hydrogen and ammonia plant at Gibson Island likely to be one of the first projects the company will progress.

“We also have projects in the US moving very quickly. That market is developing very quickly. It is just a huge opportunity there for us to step in with customers and supply green hydrogen which, because of the Inflation Reduction Act, is very competitive immediately with grey,” says Hutchinson. FFI signed a memorandum of understanding in January with zero-emissions vehicle firm Nikola to co-develop large-scale projects in the US.

Plug has also seen recent success in the US. The company is involved in all concept papers for hydrogen hubs invited by the Department of Energy to move forward to a full application for up to $1bn in funding per hub.

The technology firm has experienced a disappointing year, missing its 80pc revenue growth target. Plug estimates that growth actually fell into the 45–50pc range, with Q4 revenue hit by product launch delays.

“New products came out a little slower than we had hoped. Manufacturing had a few more issues than we had hoped. But we feel that those issues have been overcome,” Marsh says. While he stresses that Plug has not seen major issues with its own supply chain, up to a third of missed revenue was due to customer construction delays pushing larger projects from 2022 to 2023. “We did not lose any backlog, we did not lose any deal. The business keeps on growing.”

Plug targets $1.4bn in revenue for 2023, with a gross margin of 10pc and operating income of -24pc. The firm expects that, at present run rate, it would require a quarterly revenue of $600mn and gross margin of 20pc to break even. “Key to that is scaling our factories” rather than driving sales, Marsh says. The firm’s near-term pipeline of electrolyser orders exceeds 2GW of capacity, with the wider sales funnel valued at $30bn.

---

Author: Polly Martin