January 30, 2023 • Paul Rodden • Season: 2023 • Episode: 185
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In episode 185, Nikola announces their new Hyla brand and plug power pulls out of their deal with Fortescue Metals Group. All of this on today's hydrogen podcast.
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Nikola announces their new Hyla brand and plug power pulls out of their deal with Fortescue Metals Group. All of this 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 a press release on January 25, Nikola highlights its integrated hydrogen solution and introduces new hydrogen energy brand Hyla. Nikola Corporation, a global leader in zero emission transportation and energy supply infrastructure solutions, announced at a special event on January 25, that it has created a new global brand Hyla to encompass the company's energy products for producing, distributing and dispensing hydrogen to fuel at zero emissions trucks. More than 300 fleet government supplier energy and media representatives were on site for the announcement at Nicholas US headquarters in Phoenix, which highlighted the progress made by Nicolas energy and truck businesses. And in a quote by Nikola's CEO and president Michael Lohscheller. Nikola is the only company that is successfully integrating a revolutionary new product, the hydrogen fuel cell truck and the full hydrogen energy infrastructure supply chain under one roof.
The unveiling of their Nikola tre fuel cell truck and flexible mobile fueling trailer demonstrates a real and sustainable competitive advantage for their customers and are significant proof points that they are accomplishing what they set out to achieve. And in a quote from Carey Mendes, president of Nikola energy. The Hyla brand represents Nikola's hydrogen focused energy business by supporting their fuel cell electric vehicles and those of other OEMs hydrogen energy is the catalyst for the hyla brand and serves as a forward looking solution for their customers to help them achieve their sustainable energy goals and dramatically reduce the overall carbon emissions in the transportation sector. Now, in this press release, they target three specific sectors for the hyla brand. The first one is hydrogen production. It says under the Hyla brand Nikola is developing access of up to 300 metric tons per day of hydrogen. This supply is expected to be supported by the previously announced projects referenced here, which includes the city of Buckeye, Arizona production hub, which is a phased development of up to 150 metric tons per day. Plug Power, which is a multi regional offtake agreement of up to 125 metric tons per day.
Terre Haute Indiana Wabash Valley resources of 50 metric tonnes per day Crossfield, Alberta TC energy which will be 60 metric tons per day and Clinton County, Pennsylvania key state 100 metric tons per day. They're also looking at Hyla hydrogen stations, with the intent to have 60 hydrogen stations in place by 2026. The first announced hydrogen stations will be in California and Colton Ontario and a location servicing the Port of Long Beach. California is a launch market for Nikola and these stations intend to support key customers to help advance the state's effort to decarbonize the transport sector. And lastly, they talked about the Hyla flexible mobile fueler. The Hyla flexible mobile fuel or solution is an integral part of Nikolas flexible customer service, and its early years by distributing hydrogen to its fuel cell evey customers at locations which meet their needs the mobile fueler cools and compresses hydrogen to rapidly fill 700 Bar FCV heavy duty trucks coupled with a hydrogen tube trailer with a capacity of 960 kilograms, the mobile fuel can refuel customer trucks back to back. The mobile fueler program includes its own mobile fuelers as well as a number of third party mobile feelers, which will provide Nikola customers with a variety of flexible fueling options. The first mobile fueler has completed commissioning and testing and will be released for market operation. Nikola has additional hydrogen mobile feelers being commissioned in q1 of 2023.
Okay, so some interesting news that I really didn't expect from Nikola, but I'm not surprised that they did it. And that is becoming more of a vertically integrated hydrogen solution provider. And one of the things I find most interesting is this hyla flexible mobile fueler. I've mentioned a couple of times in the past of some other companies developing a similar solution, but it sounds like Hyla may have the first mobile hydrogen fueler in operation, and On a sidenote surrounding this news, Nicolas stock spiked 8% and continued to stay at that level for the rest of the week. Next in some rather surprising bit of news. In an article from reuters.com Sonali Paul writes Plug Power scraps electrolyzer plant partnership with Fortescue. Plug Power has walked away from building an electrolyzer manufacturing plant in Australia with Fortescue Metals Group, as the economics did not work. This according to plug power Chief Executive Officer Andrew Marsh on Thursday, January 27th. The project announced in October of 2021 is a key plank for Fortescue is ambition to become a major green energy company through its Fortescue future industries FFI arm and produce 15 million tonnes a year of green hydrogen. By 2030. Fortescue had planned to build the world's biggest factory to make electrolyzers with plug power and begin construction in Gladstone and Australia's northeast last February aiming to produce their first electrolyzer in 2023. In a business update on Thursday, plug power CEO Marsh said the plant deal with Fortescue was off, he said, One, we decided that we didn't want to build a factory with them because we saw the economics. We could do better. This in a transcript of one of the conference calls with the analysts. And while Fortescue never announced that the Plug Power Partnership had collapsed on a quarterly call on Friday, FFI CEO Mark Hutchinson confirm the company would be going ahead with the project using its own technology, Fortescue will still be spending $83 million on the first phase of the plant, which is originally planned. Hutchinson is also quoted as saying we always expected to cover the whole cost. Fortescue wants to use its own electrolyzer technology instead of plug powers technology, although it will buy electrolyzers from the US company for some of its hydrogen projects.
Fortescue founder and executive chairman Andrew Forrest said, I think Hutchinson said plug power is very much locked in to certain technology and on a production cycle. He also continues by saying, what we're good at here is building things at scale. And exactly what we're going to do on the electrolyzer side, adding that it will be built quote on time. So again, some interesting news that plug power and FFI have terminated their agreement. Now, the truth is, with Plug Power ramping up its business so fast, they may not have time for this project. It's also easy to understand that if the economics weren't just right, the plug power pulled out of the deal. Right now, they have to be hyper focused on their economics over the next two to three years, to be able to hit their projected targets of $5 billion in annual sales by 2026.
This news also came a day before their stock price fell by nearly 6%. And the cause of that was explained by JP Morgan analyst Bill Peterson, that in a call to investors, plug told them that even though they're maintaining its guidance of 1.4 billion in sales, and for achieving a positive growth margin of 10%, that they also dropped something of a short term bombshell. And that is it instead of its growth revenues of 80% in 2022, as they promised, Plug Power said that revenues actually grew closer to 45 to 50%. Last year. And even more specifically, this means that plug will probably miss their estimates for 2022 sales by anywhere from 75 million to 100 million. And so with all of that being said, it can be very likely that we see plugged power start pulling out of certain deals based specifically on their economics, and really start being much more strategic in their project partnerships going forward. But even with that news, Peterson insists that he remains bullish about plugs, long term prospects. And while lowering his price target on the stock to $24 a share. He's maintaining his overweight rating on the stock.
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