Plug Power(PLUG), a leading maker of hydrogen fuel cells, is trying to rebound as momentum in renewable energy lifts shares. Is PLUG stock a buy right now?
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Latham, N.Y.-based Plug Power supplies hydrogen fuel cells mainly for forklifts in large warehouses. Its fuel cells replace conventional batteries in equipment and vehicles powered by electricity. Plug Power clients include retail giantsAmazon(AMZN),Walmart(WMT),Nike(NKE) andHome Depot(HD). PLUG stock went public in 2002.
The company aims to produce more than half of its hydrogen energy from entirely renewable sources by 2024. It also aims to branch out from forklifts to heavy-duty vehicles to serve ports in the U.S. and Europe, as well as stationary fuel cells to power data centers and distribution hubs.
Currently, Plug Power has five pedestal customers: Amazon, HomeDepot, Walmart, Stellantis and Mercedes.
Belgium Plant
Right now, Plug power is in growth mode. Plug Power will build a 35-tons-per-day green hydrogen generation plant at Port of Antwerp-Bruges in the heart of Europe. It signed a 30-year concession agreement to build the plant at the Belgian port, the second largest in Europe, the company said in a statement.
Plug plans to erect a 100-megawatt green hydrogen plant, using its own electrolyzer and liquefaction technology, on 28 acres of land leased under the agreement. It will produce up to 12,500 tons per year of liquid and gaseous green hydrogen for the European market.
Construction of the plant is expected to begin in late 2023. And initial production of green hydrogen is expected in late 2024, while plant commissioning will be in 2025.
European Expansion
Plug's previous expansion plans in Europe includes a Denmark project. On May 17, Plug said it had been awarded an order to deliver a one gigawatt electrolyzer to hydrogen company H2 Energy Europe.
Earlier, on Nov. 30, 2021, Plug and Spanish energy firm Acciona Energia finalized their 50-50 joint-venture. Incorporated as AccionaPlug, the joint-venture is headquartered in Madrid and will develop, operate, and maintain green hydrogen projects throughout Spain and Portugal.
On July 14, 2021, Plug Power announced it was partnering with Charlottesville, Va.-based Apex Clean Energy in a 345 MW wind power purchase agreement and a development plan to open a green hydrogen production facility. Terms of the deal were not disclosed.
On June 3, Plug and French carmaker Renault said their Hyvia joint venture to make hydrogen-powered vans was under way. The partnership plans to begin building three types of fuel-cell vans at existing Renault plants in France by the end of this year. The three models will be based on the Renault Master platform of vans and use the same electric motors that now power the all-electric version of the Master.
The project also includes the installation of hydrogen charging stations across Europe, supply of carbon-free hydrogen as well as maintenance and management of fleets.
In April, oilfield supplierBaker Hughes(BHI) joined Plug Power and Chart Industries to establish a private fund that provides capital for large-scale, clean-hydrogen infrastructure projects.
Meanwhile, on Feb. 25, 2021, South Korean conglomerate SK Group closed its $1.6 billion investment into a joint venture with Plug Power to expand hydrogen energy in Asia.
The partnership will provide hydrogen fuel cell systems, hydrogen fueling stations and electrolyzers to South Korea and other Asian markets.
Walmart Deal
On April 19, Plug Power announced an agreement with Walmart for an option to deliver up to 20 tons per day of liquid green hydrogen to power material handling lift trucks across Walmart distribution and fulfillment centers in the U.S.
This is one of the first green hydrogen supply contracts for Plug Power, the company said in a statement.
Walmart has worked with Plug Power to adopt and expand hydrogen fuel cells throughout its facilities for over a decade, beginning with a 50-fleet pilot in 2012 and expanding to a fleet of 9,500 and growing.
Clean-Energy Stocks Rebound Amid Oil Price Spike
As hydrogen becomes cheaper to make, experts say it will increasingly be seen as a low-cost alternative to petroleum-based fuel and batteries. That's fueled interest in new energy stocks in recent weeks, as oil prices soar and even as investors rotate out of growth stocks amid rising interest rates.
Still, roadblocks remain. For example, states that have until recently been huge supporters of clean-energy subsidies, like California, appear to be mulling incentives reductions.
However, Sen. Joe Manchin recently reversed course and voted in favor of an economic package that included new spending on clean-energy programs. The bill passed the Senate on Aug. 6. Next, it goes back to the House, which expects to pass the bill. Then it will be sent to President Biden for signing. Passage of the bill improves PLUG stock's outlook.
Finally, on Feb. 24, CFRA Research analyst Richard Wolfe lowered his price target for PLUG stock to $23 a share from $35, citing continued margin pressure in Q4 from global supply chain challenges and higher hydrogen costs.
That said, Wolfe adds that he believes investors will be more interested in how "the company plans to expand medium-term margins, progress toward green hydrogen production goals, and the order backdrop for electrolyzers."
Plug Power's Partnerships
However, Plug appears focused on forging partnerships. On Dec. 15, 2021, Plug Power announced an agreement with South Korea's Edison Motors to develop and market a hydrogen fuel cell-powered electric city bus in 2022. The buses will use Plug Power's ProGen fuel-cell system. The buses will be mass produced and distributed in South Korea by the first half of 2023.
On Dec. 14, 2021, Plug Power announced it will provide Certarus with up to 10 tons of green hydrogen per day to Certarus. Initial deliveries expected in Q1 2022.
Certarus' integrated logistics platform and fleet of compressed gas delivery trailers will move hydrogen directly from production locations to Plug Power's and Certarus' end users.
End users include leading mining, power generation, natural gas mid-stream and industrial energy users.$Plug Power(PLUG)$
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