Plug Power Inc. (ISIN: US72919P2020) is on its way to become a global player in the upcoming „green hydrogen“ economy. Strong cooperation partners worldwide, momentum from the current legislative initiatives in the home market. The „nebenwerte-magazin“ had the opportunity to question the „head“ behind this development – exciting. Due to many follow-up questions, the following is the English version of our interview with Andy Marsh, CEO of Plug Power Inc:
nwm: It’s great that you’re taking the time to answer the nwm’s questions. Do you actually know how popular Plug Power Inc is on the European, especially German-speaking, capital market? Any idea why this could be?
Marsh: Yes, we are aware that the German capital market is watching Plug closely. Investors have clearly realized the enormous potential of the hydrogen and fuel cell market. Starting in 2020, a great focus on hydrogen values emerged in the wake of the many subsidy measures in Germany. In recent months, the invasion of Ukraine sparked a global conversation on energy independence, particulary in Europe, which has led to many new conversations about how Plug can provide green hydrogen in these countries.
nwm: Can you comment to your results in the second quarter of 2022?
Marsh: We continue to execute on our targets and path to profitability. In the second quarter of 2022, Plug reported $151.3 Million. This initially means that product demand continues to rise, but as we know, the operating income is decisive for the stock market price. Despite the significant increase in natural gas prices Plug had to absorb in the second quarter of 2022, we saw fuel margin expansion of 5% over the first quarter of 2022. With continued progress in the build out of our green generation network, we expect to see a step change of over 50% reduction in the cost of molecules by the second half of 2023, and another step change in 2024. Costs are also rising due to our ambitious expansion, especially in Europe. We’re expecting $3 billion in revenue and an operating margin of 17% by 2025. Overlay our movement towards profitability, 30 % CAGR growth, and the outsized opportunity and markets presented for us in electrolyzers, on-road mobility, stationary power, green hydrogen production with the growing bellwether clients we can expand with – Plug really stands to lead this energy transition from both as a global corporation and as a global citizen.
nwm: What could it have been? Higher costs due to the unchanged high natural gas prices should actually become less important with every electrolyser of the plug network in the USA that goes into operation. When can you replace the blue or gray hydrogen with your own green hydrogen? When can you replace the blue or gray hydrogen with your own green hydrogen?
Marsh: We are making large investments in building our green hydrogen ecosystem globally. We are on track to build out 500 metric tons of liquid green hydrogen production daily by 2025.
Currently, we purchase hydrogen supply for our customer applications which is a transitionary solution to green hydrogen, in which we are investing heavily. The future is green hydrogen – nobody will buy blue if green is available. We believe that our green hydrogen production will outperform blue hydrogen in cost, availability, and environmental attributes. In the USA, the recently passed PTC bill should accelerate our fuel margin expansion as we bring green hydrogen plants online. Today, every dollar/kg of hydrogen cost impacts gross profit by $10-$12 million.
For mobility applications, our first generation of green hydrogen plants will deliver green hydrogen at price-parity to fossil-fuels. We believe that green hydrogen will follow a similar cost reduction trajectory to renewable solar and wind energy and, ultimately, it will be the lowest cost fuel for transportation, significantly cheaper than either blue or grey hydrogen.
nwm: Don’t the increased natural gas prices ultimately even help on the way to cost parity for green and gray hydrogen?
Marsh: Yes, we expect the increased prices for natural gas will accelerate the process of price-parity.
nwm: What price per kg of green hydrogen do you expect in the next few years? Where are you in 2025 or 2030? What role do you want to play on this journey?
Marsh: We will produce 70 TPD of green hydrogen (the equivalent of 140,000 gallons of gas a day) by the end of 2022. The 500 TPD of green hydrogen we will produce by 2025 will replace 4.3 million metric tons of carbon dioxide emissions, through a network of plants in North America and Europe. By 2025, Plug will be the leading producer of green hydrogen.
Clean energy legislation supports and reinforces Plug’s strategy of building a global green hydrogen ecosystem, resulting in meaningful competitive advantage, given Plug’s first mover position. The Clean Hydrogen Production Tax Credit (PTC) of $3/kg for green hydrogen should result in improved plant payback by 4-5 years and incremental cash flow of $500 million per year at 500 tons per day (TPD) with targeted production by YE 2025.
nwm: You have just confirmed your 2025 forecast again. How conservatively have you considered the development opportunities of the potentially large-volume joint ventures on all continents (Fortescue, Acciona, Renault, SK Group,…) in this forecast?
Marsh: We have very ambitious goals for our joint ventures. The joint venture with Renault is leading the way to a complete ecosystem of fuel cell powered LCVs, green hydrogen and refueling stations across Europe. We are targeting a market share of 30% of the fuel cell LCV market in Europe by 2030.
Together with Acciona, we are looking to accelerate the growth of the hydrogen economy in the industrial, mobility and pipeline gas sectors in Europe. The partnership aims for 20% market share of green hydrogen in Iberia by 2030.
The collaboration with SK Group will provide hydrogen fuel cell systems, hydrogen fueling stations, electrolyzers and green hydrogen to the Korean and other Asian markets. The partnership includes a $1.6B strategic investment from SK Group into Plug Power. This partnership is fueled by the 2040 targets of the South Korean government. Their goal is a number of 6MM+ hydrogen fuel cell vehicles and 1,200 hydrogen refueling stations.
Plug and Fortescue formed a strategic partnership to manufacture electrolyzer technology in Australia. The partnership includes plans to build a gigafactory in Queensland, Australia. Under the agreement, FFI will also purchase 250 megawatts of Plug’s electrolyzer solutions with the ability to expand into fuel cell systems and other hydrogen-related refueling and storage infrastructure in the future. The partnership will leverage Fortescue’s world leading track record of innovation and development of large-scale integrated infrastructure assets in order to deliver FFI’s vision of green hydrogen, with an initial plan to produce 15 million tons per annum of green hydrogen by 2030.
nwm: Not afraid to overdo it? Where do all the managers come from?
Marsh: Plug prides itself in having a diverse and talented global workforce with backgrounds from various industries, including energy, automotive, science and so forth. We currently have more than 300 job openings for positions around the world, and we continue to grow to keep up with the demand for green hydrogen solutions.
nwm: When do you think Plug will break even for the first time? Will there be enough liquidity by then?
Marsh: Over the next 12 months, Plug is targeting a 30% reduction in unit service costs and 45% by the end of 2023. With our new GenDrive fuel cell, we have already improved our service margin by 30% compared to the fourth quarter of 2021. We expect to reach the break-even point in the fuel cell business as early as the end of 2022.
nwm: Plug has a broad base in Europe – in addition to various customers, there are the two JV partners Renault and Acciona. Your European headquarters are located in the center of Europe – the city of Duisburg. How do you see Plug’s prospects in Europe?
Marsh: As mentioned, our facility in Duisburg is a service and logistics center. The facility is of strategic value for us as it establishes Plug at the center of the European hydrogen ecosystem. Europe is a key market for us with huge potential. Over the past 18 months, we multiplied our workforce in Europe by almost 10x. We have 140 engineers working every day on the system integration of our electrolyzers in the Netherlands. We recently teamed up with MOL Group to build one of Europe’s largest-capacity green hydrogen production facilities at MOL’s Danube Refinery in Százhalombatta, Hungary. We announced the first sale of a 1GW electrolyzer in Denmark. The partnerships with Renault and Acciona are essential parts of our strategy to drive the adoption of green hydrogen in the industrial and mobility sectors.
We also have a strategic collaboration with the French group Fives and the Swedish Atlas Copco to improve performance and reduce costs of liquefaction plants. We are building a green hydrogen generation network in Europe to be able to achieve our goal of 1000 tons of green hydrogen per day before 2028.
This is just a start as we will certainly further expand our presence in Europe. This market is a key element of our strategy.
All this reflects the strategic importance of Europe for Plug, but also the role Plug can play in driving the hydrogen economy in Europe.
nwm: Will you benefit from the REPowerEU program?
The European Commission’s plan to make Europe independent from Russian fossil fuels well before 2030 certainly puts a stronger focus on renewable energies. Plug Power can play an important role in achieving energy security in Europe.
nwm: Is there perhaps also a production site for electrolysers in Europe in the near future, possibly in Duisburg, where there would be enough space?
Marsh: In June, we announced a green hydrogen generation plant that will produce 35 TPD as soon as 2025, in the middle of the port of Antwerp, two hours away from Duisburg. What I can say is that there will be several major announcements on our activities in Europe by the end of the year, and the demand for Plug’s solutions continues to grow.
nwm: Where in the world do you currently see the greatest momentum for a future hydrogen economy? And how do you want to participate in it?
Marsh: We see the US, Europe and Asia-Pacific as our key markets. These are markets with high activity in mobility, natural gas blending and industrial applications. Each market is very much different, of course. For example, the framework and the challenges for mobility are totally different in the US compared to Germany where you don’t have such long distances to cover. Plug Power wants to play the leading role in driving the hydrogen economy in each of these markets, based on our knowledge and know-how and by leveraging strong partnerships.
nwm: What would be your next important milestones in the development of Plug’s for …?
Marsh: We remain focused on building out the green hydrogen generation network with targets of 70 TPD commissioning by the end of 2022, 500 TPD in North America by 2025 and 1,000 TPD globally by 2028.
In Europe, Plug signed a 30-year concession agreement to build a green hydrogen generation plant at the Belgian Port of Antwerp-Bruges, the second largest in Europe, with Plug’s 100MW PEM electrolyzer. The plant is expected to produce up to 12,500 tons per year of liquid and gaseous green hydrogen for the European market. Construction of the plant will begin upon completion of the permitting process, which is anticipated in late 2023. Initial production of green hydrogen is expected in late 2024, with plant commissioning expected in 2025.
We are strategizing on other ways we can make green hydrogen adoption easy in Europe, and we look forward to sharing the news as it becomes available.
nwm: Finally, something personal: how long have you been with Plug? How much passion do you put into Plug?
Marsh: I’ve been honored to lead Plug for 14 years where I’ve committed myself to making green hydrogen adoption easy and affordable. Being passionate about Plug has been easy because I work alongside a talented team determined to help the world reach net-zero.
nwm: Have you had any doubts about Plug’s success at any point in the last few years?
Marsh: I’ve never doubted that Plug has the technology and talent to build an end-to-end green hydrogen ecosystem that customers around the world desperately need to decarbonize its operations.
nwm: What will Plug in 2030 look like? Where are your goals then? What do you need, what do you want to achieve?
Marsh: Plug has built the foundation to lead the $10 trillion hydrogen economy with several acquisitions, joint ventures, partnerships and more. In 2030, we expect global customers to think of Plug when they think about how to decarbonize their businesses and become energy independent. This is just the beginning for Plug.
nwm: Thank you Andy and good luck with your plans! And when will we see you again in Duisburg? Or at European events?
Marsh: Plug will be showcasing its solutions from Sept. 6 to Sept. 8 at the IMHX Logistics Solutions Show in National Exhibition Centre in Biringham.
Andy Marsh | CEO Plug Power Inc.
Andy Marsh joined Plug Power as President and CEO in April 2008. Under his leadership, Plug Power has been a leading innovator in the alternative energy field, helping to create an entirely new hydrogen fuel cell (HFC) market in the material handling space as the world moves towards electrification in mobility applications.
As President and CEO, Marsh plans and directs all aspects of the organization’s goals and objectives. He is focused on building a company that leverages Plug Power’s combination of technological expertise, talented people and focus on sales growth to continue the company’s leadership stance in the future alternative energy economy.
Mr. Marsh is a member of the Board of Directors of the California Hydrogen Business Council, a non-profit group comprised of organizations and individuals involved in the business of hydrogen. He holds an MSEE from Duke University and an MBA from SMU.
About Plug Power Inc.:
Plug Power was founded in 1997 and is headquartered in Latham, New York. The company has more than 3000 employees. Plug Power is building an end-to-end green hydrogen ecosystem, from production, storage and delivery to energy generation, to help its customers meet their business goals and decarbonize the economy. In creating the first commercially viable market for hydrogen fuel cell technology, the company has deployed more than 50,000 fuel cell systems and over 165 fueling stations, more than anyone else in the world, and is the largest buyer of liquid hydrogen. With plans to build and operate a green hydrogen highway across North America and Europe, Plug is building a state-of-the-art Gigafactory to produce electrolyzers and fuel cells and multiple green hydrogen production plants that will yield 500 tons of liquid green hydrogen daily by 2025. Plug will deliver its green hydrogen solutions directly to its customers and through joint venture partners into multiple environments, including material handling, e-mobility, power generation, and industrial applications.
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