THP-E181: Who Really Benefits In The Hydrogen Industry From The US Inflation Reduction Act?

January 16, 2023 • Paul Rodden • Season: 2023 • Episode: 181

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Welcome to The Hydrogen Podcast!

In episode 181, The Wall Street Journal discusses Plug Power and the future of the hydrogen economy. I’ll go over the article and give you my thoughts on today’s hydrogen podcast.

Thank you for listening and I hope you enjoy the podcast. Please feel free to email me at with any questions. Also, if you wouldn’t mind subscribing to my podcast using your preferred platform… I would greatly appreciate it.

Paul Rodden



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The Wall Street Journal discusses Plug Power and the future of the hydrogen economy. I’ll go over the article and give you my thoughts on today’s hydrogen podcast.

So the big questions in the energy industry today are, how is hydrogen the primary driving force behind the evolution of energy? Where is capital being deployed for hydrogen projects globally? And where are the best investment opportunities for early adopters who recognize the importance of hydrogen? I will address the critical issues and give you the information you need to deploy capital. Those are the questions that will unlock the potential of hydrogen and this podcast will give you the answers. My name is Paul Rodden, and welcome to the hydrogen podcast.

In an article in the Wall Street Journal Amrith Ramkumar writes Washington bets on green hydrogen and company’s lineup to cash in. Andy Marsh tried for 14 years to make a profit running plug power. Last summer he went to Washington and came away with a potential windfall while senators battled over the climate tax and spinning bill. There was surprising agreement that hydrogen plug powers business needed a big dose of support. In a quote from West Virginia Senator Joe Manchin, my biggest concern that I have right now is we have not invested the money that we need to invest in hydrogen. He said this at a hearing in July when he was blocking the overall package. Mr. Marsh takes some credit. He shuttled back and forth to Washington made a trip to West Virginia and agreed to build plants in New York at the urging of Senator Chuck Schumer, all appeared for not when Mr. Manchin rejected plan after plan. When the two senators surprised Washington with a deal Mr. Marsh got what he asked for. He said it’s been a pretty harrowing ride.

At plug power’s first green hydrogen facility and a Southeast Georgia Industrial Park in Kingsland, Georgia, construction workers lay pipe and concrete, where the company is soon expects to produce about 15,000 kilograms of liquid hydrogen a day. That’s enough to power roughly 10,000 forklifts or about 300 trucks for a day. Hydrogen has long been a dream of clean energy advocates, it can produce energy with water as the only byproduct. Climate change has made it a favorite of oil companies, steelmakers, airlines and other industries under pressure to reduce carbon emissions. China, Japan, Australia and Europe have a head start on the US but Congress passed a new law the inflation reduction act with goodies meant to urge American production of renewable energy and its technology. Few companies have more to gain than plug power from the government cash, which turns an expensive and money losing fuel source to a potentially profitable one. If plugs succeeds, it would be a dramatic transformation for the supplier of power equipment for forklifts, which hasn’t turned a profit in his 25 year history.

Plug Power stock has twice soared to bubble levels 20 years apart and crashed. Mr. Marsh is being sued by investors for cashing in on the last boom. Today, plug power shares are off about 80% from the most recent bubble peak. The government’s push into hydrogen and plug powers decades of experience with fuel cells have transformed the company into a potential leader in a hot new industry. In a quote from Wesley Edens, the billionaire co chief executive of Fortress Investment Group LLC, and Chief Executive of liquefied natural gas company new fortress energy said they’ve got a one lap lead and a very, very competitive race. New fortress plans to use plug power equipment to make green hydrogen and a Texas facility. Plug Power was founded in 1997 to sell fuel cells, devices that mix hydrogen with oxygen to produce electricity. It went public in boom of 1999 as one of several companies that investors believed would overhaul the energy industry. Plug Power shares surged from $15 to near $1,500. In a few months, investors have gotten ahead of themselves. Fuel cells are expensive to make and the price for natural gas which is used to make most hydrogen was rising, the stock fell again into single digits.

Mr. Marsh became chief executive in 2008, when the company was still searching for applications of its main product. His father had researched hydrogen fuel cells for space applications while working at General Electric Company in the 1970s but decided that the costs are too high, Mr. Marsh now 66 did find a use for fuel cells. Forklifts fuel cells are more efficient and cleaner than diesel engines in forklifts and government incentives helped ensure they saved money for customers like Walmart and Amazon. The business remained unprofitable. The stock fell below $1 And was running out of cash in early 2013 When an investor named Hans Black tried to take over the company blaming its problems on management and the board. Mr. Marsh fended off a takeover attempt at one point cursing at his rival on the phone by raising several million dollars from a hydrogen producer Air Liquid SA and others. Six years later plug powers shares were again in the low single digits when the idea of producing hydrogen itself and making it green walked in the door.

Sanjay Shrestha, a Nepalese born clean energy developer and banker visited the company’s Latham, New York headquarters. He said wind and solar power had gotten so cheap, they could replace natural gas and make hydrogen a green fuel. He said the company’s stock should be worth about $15 Plug Power made Mr. Shrestha, its chief strategy officer and acquired a small hydrogen startup in 2020. As one of the few potential green hydrogen companies in the US plug power again became an investor darling. It was backed by funds managed by Vanguard Group and BlackRock Inc. South Korean conglomerate SK Group invested 1.6 billion in early 2021. Plug Power shares went on their second wild ride, more than doubling to $75 and valuing the company above 30 billion Mr. Marsh made $36 million selling stock at the 2021 peak. It was another fleeting moment of success for the company. The first crack was caused with an unusual deal that plug power reached with Amazon which was ramping up its purchases of fuel cells FOR FORKLIFTS to respond to surging pandemic demand. As reward for its purchases. Amazon got warrants on Plug Power stock, they give it the right to buy shares at a set price. The huge rise in Plug Power shares meant that the set price was far below where shares were trading, the discount grew to $900 million. accounting rules say that the cost of issuing the stock $438 million must be deducted from revenue since the amount was higher than the company sales for 2020. Plug Power reported in negative revenue for that year, something rare in the annals of corporate finance. The bad news came next Plug Power said that according to errors it made in recent years, many would have to restate financial results.

Mr. Marsh’s stock sale before the accounting errors were disclosed, drew the ire of investors and prompted shareholder lawsuit. He and the company has said that the sale was routine and not timed just before negative company news Plug Power share price was down roughly 80% last summer. Mr. Marsh turned his attention to Washington in a statement he gave to Senator Chuck Schumer during a meeting at his DC office in July. If the US doesn’t have a policy that supports renewables and green hydrogen and Europe does the majority of investment is going to go there. Mr. Manchin was still blocking the bill. In a meeting with West Virginia Senator Mr. Marsh told Mr. Manchin that his state could attract more investment during the energy transition by supporting the hydrogen industry. And so with the bill pared back to alleviate Mr. Manchins concerns about inflation, the senator dropped his opposition. Mr. Marsh went to the White House for a celebration of the bill in August, the global hydrogen market is projected to more than triple by 2050. With green hydrogen, accounting for nearly all of that growth, this consulting firm would McKinsey forecasts, it would become one of the biggest industries in the energy sector. Right now the cheapest hydrogen, which is made from natural gas costs about $1.50 A kilogram to produce green hydrogen costs roughly $5 A kilogram or more plug power plants to sell green hydrogen to customers like Amazon and Walmart for about $6 A kilogram. The new tax credit up to $3 a kilogram, which will be shared with the customers will make the product more than twice as profitable.

Shortly after the bill signing Plug Power announced another agreement with Amazon to supply roughly 10 million kilograms annually starting in 2025. At the GA facility devices called electrolyzers will split water into hydrogen and oxygen then the hydrogen will be cooled and compressed. The plant will initially run on power from the local utility, some of which is generated from hydrocarbons, so plug will pay for renewable energy certificates to qualify the hydrogen as green. It is plenty facilities in New York, California and Texas, plus an expansion in the Georgia facility. It is also adding to its fuel cell production. Mr. Schumer cut the ribbon at a plug power fuel cell manufacturing facility in New York on Thursday. Big hydrogen producers Linde and Air Products and Chemicals have also ramped up their US Green hydrogen commitments. Air Products. $4 billion project in Texas will be one of the largest globally when it begins operating in 2027. Oil and gas giants are also investing in the sector, roughly 120 Hydrogen startups privately raised about $2.6 billion in 2022. And nearly 50% increase from the year before this, according to PitchBook figures, funding in 2021 almost matched the total from the previous six years combined. And a quote from Sheldon Kimber chief executive of wind and solar developer Intersect Power LLC, people have begun to realize the switch has flipped, it plans to use its renewable projects to produce green hydrogen, after raising $750 million from the TPG Inc, and other investors last year.

Okay, so a good general overview of the history of plug power, their financials, and a good look at what we can expect to see in the coming years for financial investments and incentives. Now, I do believe very much that eventually electrolytic hydrogen will become cost comparable with hydrocarbon derived hydrogen. But I still think a lot of research and development needs to be done to get their economics down low enough to not have to rely on government incentives for price parity. Now, if you haven’t yet listened to our interview with Andy Marsh, I suggest you do so he really gets into some good details about the company, where they’ve been, and where he sees plugg going along with the hydrogen industry.

Alright, that’s it for me, everyone. If you have a second, I would really appreciate it. If you could leave a good review on whatever platform it is that you listen to Apple podcasts, Spotify, Google, YouTube, whatever it is, that would be a tremendous help to the show. And as always, if you ever have any feedback, you’re welcome to email me directly at And as always, take care. Stay safe. I’ll talk to you later.

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