A hydrogen tank for fuel cell automobile.
Krisztian Bocsi/Bloomberg
Hydrogen is a zero-carbon emission fuel that industry wants to use to cut its carbon footprint, and hydrogen fuel cell technology company Plug Power is trying to capitalize on that fact.
On Wednesday, Plug (ticker: PLUG) and South Korea’s SK E&S announced plans to build a hydrogen gigafactory that will make fuel cell and electrolyzers to serve South Korea and other Asian markets.
( Tesla (TSLA) is the company that popularized the name gigafactory for manufacturing facilities. Other companies have adopted its naming strategy.)
Electrolyzers can make so-called green hydrogen gas by passing electricity through water. If the electricity comes from renewable sources then no carbon dioxide is produced making hydrogen gas, making it “green.” So-called grey hydrogen gas is made by splitting natural gas. That process produces carbon dioxide—the main gas blamed for global climate change.
Fuel cells are like batteries that run on hydrogen gas. Companies such as Plug want to produce fuel cells for heavy duty trucks and other vehicles, replacing traditional engines that run on diesel fuel.
“ Plug Power has proven its ability to scale hydrogen infrastructure quickly, expertise which aligns perfectly with [SK Group’s] exceptional local knowledge, capabilities, and vision for a green future,” said Plug CEO Andy Marsh in the company’s news release.
SK E&S is part of SK group. SK Group made a $1.6 billion investment in Plug earlier in 2021 and holds about 10% of the stock outstanding.
The new plant should be operating by 2024. The new joint venture also plans to distribute hydrogen gas produced by SK E&S to 100 hydrogen refueling stations in Korea.
The Plug announcement is the second piece of big hydrogen news of the day. Chemical giant Dow (DOW) said Wednesday it will build a new chemical facility in Canada powered by hydrogen gas. It’s part of Dow’s plan to eliminate carbon emissions from its operations by 2050.
Plug stock isn’t really reacting to the new—investors already expect investment and growth. Plug is valued at about 20 times estimated 2021 sales. Plug stock is down about 1.8% in premarket trading on what looks to be another rough day for stock markets. S&P 500 futures are down about 1%.
Shares are down 28% year to date, trailing behind the 16% and 12% comparable, respective gains of the S&P 500 and Dow Jones Industrial Average. Still, Plug shares have gained 50% over the past 12 months as investors have become more positive about hydrogen opportunities.
Write to Al Root at [email protected]
