Plug Power is set to contribute just under half of this amount, corresponding with its 49% stake in the partnership.
Plug Power just announced a partnership with SK E&S, a South Korean LNG company, to jointly build a $710 million gigafactory for the production of hydrogen fuel cells and water electrolysis systems. Hydrogen To Tackle Climate Change As Partnerships Ramp Up And Down
Hydrogen is set to play a material role in this. The global momentum is getting intense with the EU boosting a target for the share of renewable energy in its energy mix to 42.5% of total consumption from 32% by 2030. The 2022 US Inflation Reduction Act looks set to open the floodgates to North American hydrogen adoption and provides a significant $3/kg production tax credit for green hydrogen production.
Bulls would of course be right to highlight that the post-pandemic reality is increasingly being defined by a near-visceral need by most developed economies to transition to greener sources of energy. The company is still trading at a sales multiple that is 500% more than the median multiple for its peer group. Hence, the current pullback has realigned Plug Power with its pre-pandemic trajectory in many ways. Indeed, the Latham, New York-based company would see its sales multiple go north of 700x. The pandemic years were abnormal with widespread euphoria around the potential of hydrogen to facilitate the decarbonization of carbon-heavy industries driving Plug Power's multiple to highs that could only be prudently described as stratospheric. The company is now swapping hands at a 7.68x price-to-sales multiple, an 83% decline versus its five-year average multiple of 45.18x. The factory is now ramping up electrolyzer manufacturing to produce 100 megawatts of capacity per month and plans to add more output over the summer.The last year has been brutal for hydrogen stocks with Plug Power ( NASDAQ: PLUG) down 56% to trade at its lowest level in three years. Plug’s Rochester gigafactory denotes the fact that when fully operational, the facility will annually manufacture enough electrolyzers with a combined total electrical output of 2.5 gigawatts - enough to power about 750,000 houses. When processed in a fuel cell, hydrogen can make electricity through a chemical reaction. Plug Power has been making deals across the globe to create massive green hydrogen factories using electrolyzer technology. To make green hydrogen, the electrolysis must be done using renewable electricity sources such as wind, hydro or solar. Hydrogen is typically made from methane or natural gas, but electrolysis only requires water. In addition to making fuel cells that run on hydrogen, Plug Power is developing hydrogen fuel infrastructure - and it wants to be the biggest supplier of so-called “green” hydrogen in the world. “We are delighted to welcome our invited guests to our state-of-the-art gigafactory, where they can witness firsthand that we are not only selling and deploying tangible products but have also scaled up operations.”Įlectrolyzers are machines that split the elements of water into hydrogen and oxygen. “Plug has successfully established a thriving business,” Marsh said. Marsh also promised that visitors to the Rochester facility, which Plug Power has been ramping up significantly, will see the surge in potential revenue. Shares of Plug started the week at $9.18 and were trading Tuesday afternoon just below $11, an increase of more than 19 percent. That $1.4 billion number is the key - analysts who follow Plug Power were expecting $1.29 billion on average.
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