Plug Power's CEO Marsh: Bullish on Potential for Green Hydrogen to Decarbonize an Array of Commercial Applications 

Issue: 
Andy Marsh

While hydrogen fuel cells (HFCs) are well-known for powering light, medium, and heavy-duty vehicles for transportation, VX News interviewed Andy Marsh, Plug Power’s President & CEO, to elaborate on the role (and potential) for HFCs and green hydrogen in decarbonizing an array of commercial applications. Marsh shares how Plug Power clients, like retail giants Amazon, Walmart, and Home Depot, are driving demand for green hydrogen as a fuel for zero-emissions material handling equipment  and long-duration energy storage. He also shares how today, Plug Power has built more hydrogen stations than anyone else in the world. 

As a leading provider of hydrogen engines and fueling solutions, talk about the tipping point here in the North American market for green hydrogen and Plug Power’s role in that marketplace.

Andy Marsh: We’ve been focusing on building out the hydrogen economy over the last dozen years, with a focus on fleet vehicles. What we have successfully done is build demand for hydrogen as a fuel. By years end, we’ll use 40 tons of hydrogen a day. Just to give you a feel, that represents about 15 percent of the US’s liquid hydrogen capacity.

Our big customers are Amazon, Walmart, and Home Depot and they’ve now turned to us with sustainability goals—they want green hydrogen, not grey hydrogen. That's really what started our journey to build out our hydrogen business. We have something really unusual; we have demand and customers who want green hydrogen. Now we are putting the processes in place in place to build out those plants and support those customers across the United States.

Plug Power collaborated on a study called a Roadmap to a US Hydrogen Economy. Can you elaborate on that roadmap?

The roadmap was managed by the Fuel Cell and Hydrogen Energy Association for the US. There were many interesting participants through a broad range of applications: SoCalGas, Plug Power, Air Products, Air Liquide, and 15 or 20 companies who came together and asked, “What will the US look like in the hydrogen economy come 2030? 2050?”

We looked at four or five different applications where green hydrogen made sense. The real sexy one that everybody loves talking about is transportation. Transportation overall represents 26 percent of the carbon footprint in the world, so it is important.

One that's really important for green hydrogen that doesn't get as much press is industrial application where the where the carbon footprint is just as large. When you think about the carbon footprint that comes from steel and cement manufacturing and the high temperature burning characteristics of hydrogen, this makes it really the only viable solution if you're going to reduce your CO2 footprint.

There were also some interesting applications for natural gas replacements in pipelines with hydrogen to provide residential and commercial heating. And finally, lots of activity is going on with power processing and hydrogen fuel cells to provide backup—anywhere over 11 hours of storage on the electric grid, hydrogen has a unique advantage over batteries.

What I loved about the roadmap were the experts from all sorts of different companies with different expertise who came together to map what the future of the US should be in hydrogen.

Elaborate on the uses of fuel cells for residential and commercial applications.

Let's talk about commercial space; it's probably clearest there. I have a personal bias where I believe hydrogen, over the next decade, is primarily a B2B activity. In California, the state is saying to companies like Microsoft and Walmart that they need to think about having 96 hours of backup power, because of the reliability of the grid. In those cases, fuel cells are really the only solution to provide clean, long-term backup power, and that has to do with the energy density of fuel cells versus battery. It’s the same dynamic with storage over 11 hours that you see with long-term backup power applications.

Plug power, for example, has developed a product for data centers, and we'll be doing deployment next year, demonstrating replacements for large scale diesel generators, with fuel cells. It's a real exciting application and real interesting way to continue to build out this hydrogen economy.

We also do it on a small scale. We actually operate with the Southern Company, a pure 5g network. Most networks are built on top of each other, and we've actually deployed 500 backup power systems for the Southern Company, which had a lot of usage over the past couple of weeks with all the hurricanes coming through, and they work just great.

You’re obviously driven by the private sector opportunities in the market, which the Bloomberg New Energy Fund says are tremendous. What's the role of the public sector and regulation in incentivizing and growing this mark?

We're about to grow this business and Plug Power, whether the public sector supports her or not. That being said, thoughtful policy that weighs the value of carbon, drives behavior of companies and corporations, and puts in all the externalities that should increase the cost  for exampleof a diesel generator or other items, will really help propel new technologies, and in the long term, make sure there's a price of carbon.

And finally, the DOE has been really beneficial in driving this technology and promoting fuel cells. Hydrogen would not be as commercial as they are today without government help over the last two decades and all the good that's been done by the state of California, in promoting hydrogen fuel cells, has really helped create this industry.

There is a sense that California has, for the last few years, been very focused on battery storage. Factor that into how you see the market opportunities here in the largest state in the country.

I live in New York, and we actually want to compete with you. There's a lot of activity here in New York to really help build out the hydrogen economy, and I think that the state of California is really beginning to look at this in a thoughtful way. When you talk to leadership in California, they understand the limits of batteries from an energy density point of view. Fuel cells have 10x the energy density that batteries have after certain point. When you're looking at long term storage, people in California are spending a lot of time looking at the caverns and natural gas lines in California, and how hydrogen can be used as a long-term storage element.

On top of that, I think that there's a growing recognition of the big polluters in California; for example, the ports. Hydrogen makes best sense today in asset intense applications for long run times, fast fueling applications where you're moving things, and not only is the energy density, but the gravimetric density are really important advantages of hydrogen over batteries.

I think the state of California is giving real thought to trucking and ports—huge polluters—and beginning to make those segments much more interesting. As you know, the carbon goals in California for 2035 and 2045 will have a huge impact on the growth of hydrogen and batteries. I'm not a purist; I believe there's a place for batteries, hydrogen, and biofuels, and California has been continued to be thoughtful in their policy development to support all three.

Under review in California, both at the Energy Commission and CARB, and likely  at the federal level after these elections are those incentives and policies that will drive the markets with respect to fuel mix. What are you looking for in the way of policy tweaks that will help grow this industry to realize its potential?

I've spent a lot of time on the federal level, working with people who are like competitors some days and other days we work together. We have a strong belief that promoting green hydrogen is really important. If you look into some of the climate plans that have been introduced, and tax credits to the development of green hydrogen plant could be really beneficial in promoting the activities we're involved in.

There's also work going on to provide greater credits for fueling stations and to continue credits for vehicles on the road. Plug and many other companies, like Toyota and Honda, are huge proponents of this kind of legislation.

Talk about the global marketplace for green hydrogen and your industry from your perspective at Plug Power.

Europe has taken this horrible COVID crisis and really thought through how they are going to use incentives to build the industry, past the COVID crisis. 20 percent of the money that's going to be used for stimulus in Europe is geared towards hydrogen, and most of that is towards green hydrogen.

Places like Germany are targeting $9 billion by 2023 for green hydrogen. When you look at it, they're looking to be building out, between Europe and North Africa, over 80 gigawatts of electrolyzers with deployments by 2030. Europe has a clear vision of how they're going to be generating green hydrogen. You go to places like Australia and New Zealand. I know we'll be doing deployments for green hydrogen with electrolyzers in 2021 in New Zealand. Lots of activity we have ongoing in Australia. Then, places like China, Japan, and South Korea all have aggressive goals. I was in Europe and talking to a CEO of a leading auto company, and he said to me, “Every time he sees a minister, he gets asked, ‘What are you doing with hydrogen?’”.

How are you raising your capital and deploying it?

One of the things I've noticed was that, since I've been working from home, our stock price has gone up. It's given us opportunities to raise more capital. Over the past six or seven months, we've actually raised about $500 million. Some of that supports acquisition. Plug has to build five green hydrogen plants throughout the United States by 2024, and we’re looking to break ground on two of them soon.

We announced deals with both Apex, a huge provider of wind electricity, and Brookfield, a supplier all sorts of renewables, and will be breaking ground in early 2021 with two of the facilities, and I would think by year-end probably five facilities. That's how we're deploying the capital.

With green bonds?

We did use a green bond to raise about $225 million, which has been really beneficial to the holders of those green bonds since they were issued. We've also raised about $250 million in straight equity. It’s been a good year, and the company is well capitalized and well positioned to continue to be a major player in fuel cells and green hydrogen.

 

“Hydrogen would not be as commercial as they are today without government help over the last two decades. And all the good that's been done by the state of California, in promoting hydrogen fuel cells, has really helped create this industry."—Andy Marsh

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