May 28

Plug Power Rides Hydrogen High Into Asia

Editorial Staff
Jan 12, 2021

Image: Morning Brew via Unsplash

Plug Power, a leading US provider of hydrogen fuel cells and fueling solutions, has seen its shares rise by more than 50% after clinching a $1.5 billion investment deal with South Korean SK Group.

SK Group is South Korea’s third-largest conglomerate and one of Asia’s top producers of oil and electric vehicle batteries. Through the Plug Power deal, it will acquire a 9.9% stake in the Latham, New York-based company and get it started on a major roll-out into Asian markets before embarking on a joint venture in 2022.

Governments and corporates are seeking to develop green hydrogen as a clean alternative to fossil fuels to battle global warming. The latest deal – and the market reaction – show that investors aren’t just giving token support to the effort. They are putting their money where their mouth is, and that’s been a trend even before the recent deal. Plug Power’s market capitalization has topped $25 billion after being worth roughly $1 billion at this time last year.

Hydrogen produces no greenhouse gases when burned or used in fuel cells. Plug, alongside its industry competitors, is developing new emission-free techniques to manufacture “green” hydrogen, keeping the entire cycle carbon-free.

The new collaboration between Plug Power and SK Group represents a lucrative new opportunity for Plug. Having already raised $1 billion in November to fund its US operations, the company is now pushing further afield and expanding. It intends, via this new partnership, to provide hydrogen fuel cell systems, hydrogen fueling stations and electrolyzers to the Korean and broader Asian markets. While other US and South Korean companies have embarked on similar ventures, this one dwarfs them in size, scope and value.

South Korea has put environmental policies at the top of its agenda, rolling out a comprehensive Hydrogen Economy Roadmap to 2040. This roadmap sets out some pretty ambitious goals and predicts the South Korean hydrogen economy to be worth circa $40 billion by 2040. Through its partnership with SK Group, Plug Power has signalled its intent to get an early foothold in this emerging market.

Investor interest in green energy sources is unlikely to decrease anytime soon, with incoming US President Joe Biden making environmental concerns a priority for his administration. Biden’s commitment to bring the US back into the Paris Agreement to combat climate change has already seen the WilderHill New Energy Global Innovation Index, which includes Plug and dozens of other clean-power companies, rise by more than 70% since the election. With at least four years of a progressive US government that is finally on board with the climate conscious EU and UK, this trend is likely to continue.

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