Opto Sessions – Invest in the Next Big Idea

Plug Power CEO: Is PLUG Stock Ready for a Hydrogen-Fuelled Comeback?

• Haydn Brain & Ed Gotham

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Andy Marsh, Plug Power CEO, joins OPTO Sessions to discuss the current state and future of green hydrogen, emphasizing how hydrogen production can free up scarce grid electricity for other uses while accelerating national sustainability goals. He explains the company’s playbook to profitability - scaling electrolyzers, locking in offtake, and driving costs down - highlighting real-world deployments and growing customer momentum.

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Welcome to Opto Sessions, Andy. So how are things? Well, almost a labor day here and the summer's almost over. And for me and Plug, it's been a good summer. just keep on pushing, working, and moving ahead. Absolutely. Yeah, look forward to hearing about some of that momentum in due course. Where are you talking to us from? I am in Slingerland, New York, and I suspect your office is saying, where the heck is Slingerland, New York? Well, it's about five minutes from Albany, New York, the capital of the great state of New York, at about two and a half hours north of New York City. Lovely. We've just opened, well, in the process of opening an office over in New York. So, yeah, interested to visit ASAP. I'd be happy to see you in your office there and do another interview. Yeah, that would be great. Let's do a live one. Hopefully in the next couple of months, we can get over there and do a live session. That'd be great. m I've got a couple of questions here, I suppose, just to set the context and introduce Plug Power to any of our listeners that are unfamiliar with the company. So first of all, for anyone who hasn't been following the hydrogen revolution closely, perhaps you can just paint us a picture. What exactly is Plug Power building and why should people care? Well, first, we're actually the ones who have built more than anyone else in the world. We didn't enter hydrogen yesterday. We've been doing it for 25 years. And if you just span around, go around the world. I'm sitting in our office here outside Albany, New York, which is a 350,000 square foot facility where we integrate fuel cells. and electrolyzers. About an hour and two hours west of us is our facility in Rochester, which is the largest stack manufacturer in the world. uh You go around, we have about 300 people in Europe, many of them developing electrolyzer projects for uh the hydrogen activity going on all around the world. We have people in Pune, India. We operate the largest electrolyzer liquid hydrogen plant in the world, producing 15 tons per day out in Georgia. And we have two other hydrogen plants. So if you want to actually see the hydrogen at work today, it's a Plug. Yeah, fantastic. Well, let's dig into that then. Yeah, because you mentioned 15 tonnes there. I read that it was 40 tonnes daily across Georgia, Tennessee and Louisiana. Help us kind of visualise that, you know, how many Amazon delivery trucks or homes is that fueling? So the best way to think about it is about five years ago, the largest user of liquid hydrogen in the world was actually NASA. And Plug is bigger than NASA today. And so that just gives you a scale. So first, we're the largest user in the world. When I think about 40 tons of hydrogen, that's 40,000 kilograms. And about a kilogram of hydrogens, about equal to two gallons of gasoline. So that's how much hydrogen we produce. And that hydrogen is being used 24-7. About every two to three seconds in the United States, uh there's probably a product, fuel cells for forklift trucks at places like Walmart and Amazon, are being filled up with hydrogen produced by Plug. uh Here in the States, which is just a portion of our business, about 30 % of retail food actually moves through products that are produced by Plug Power. Yeah, fantastic. That helps to make it all less abstract for me and the listeners as well. m I want to come back to your customer base, but before we do, obviously a big part of hydrogen use is the benefit it provides in terms of CO2 prevention. So give us the real numbers. How much CO2 are you preventing and is green hydrogen truly green yet? Yeah, so it all has to do with the, you if you look at it, it's at the source of electricity, just like the source, you know, if you think about our electrolyzers, just like the source of electricity for battery electric vehicles, you know, our electrolyzers produces zero CO2. So then if you go back to the source, you know, if you're running from wind, like we will be doing in Texas, you know, even from a end-to-end point of view, it'll be zero carbon emissions. And what's really important is you build just like everybody wants charging stations built. uh And look, some charging stations are powered by coal. Ultimately, those charging stations are going to be powered by renewable energy and the infrastructure is in place. In many ways, that's what we're doing with electrolyzers. A lot of times we run from very, very clean sources like nuclear and solar and wind. But in the end, what's really critical is that these devices are there as the grid becomes more more renewable, our hydrogen becomes from end to end solution, completely green. Yeah, fantastic. Let's move on to recent growth. You've touched on a couple of the key growth drivers and also your customers as well. So let's cover all of that now. You recently posted 21 % revenue growth to $174 million, I believe. So in a market where many clean tech companies are struggling, perhaps you can tell me whether that's a fair characterization as well. What's working at Plug that others are missing? Well, I think the fact that we've always thought about value and the value has to many cases have to be more than just green. When you think about our work in material handling, uh so much of it is tied to the fact that they're able to be more productive. The vehicles, the forklift trucks run longer. They fuel faster. of all those kind of attributes. uh You need less labor. So you move 8 % less goods. So the value proposition isn't just sustainability. Our customers do care about sustainability. When you think about our electrolyzer business, I think, uh especially your listeners in Europe and Australia and around the world, maybe a little bit more than the United States. recognize the commitments that lower CO2 is real. And when customers come to our plants in Georgia, the value is we can actually make the products. uh We talked about earlier the great factories we have, but we actually have products that work and uh long experience working with customers. It's a lot different. I worked at Bell Labs. You're probably too young to remember what Bell Labs was, but it was the premier research lab in the world in the United States. And uh we're a lot of theoretical type of folks. And theory is great. Making things that work and run every day, that's what Plug does. And that really differentiates us. Yeah, fantastic. Well, let's get on to some of the applications of the technology that you've described so far already. Amazon and Walmart are already customers. I think you've mentioned that. And beyond the forklifts that we've discussed as well, what new applications of your technology will drive adoption at scale, do you think? But I think the important item, and I'm going to, you know, I think uh interesting, and you may not think about this. ah There's two which are almost indirect. And I can talk about other products like our stationary. But I'm going to talk about the fact that when you look at what we've done already, we've taken off the equivalent of 400 megawatts of electricity off the grid. ah And we either did that through time shifting in many cases by cleaning up dirty hydrogen sources and cleaning it up. We've actually prevented electricity. 400 megawatts is really equivalent to a medium-sized power plant. And when you start thinking about the drive for data centers, think about the fact that by moving the fuel cells, hydrogen more electricity is available for other usage. And I don't think people think about that a great deal. The second area that I give a lot of thought to is that our electrolyzers products make renewables possible. Now, one of the biggest challenge with renewables is, you you take a place like Germany and may over 15 % of the electricity was negative. If you could be generating hydrogen when electricity prices are low, you're actually making the electrolyzers load on the grid, which makes value proposition for solar and wind stronger and really help to create growth in those industries. I could go on and talk about the interesting stationary products we're doing. There's a forest fire out in California at the moment for a challenge. We actually, with a uh partner, have over 8 megawatts, which is powering a city when there's a fire using Plug-powered fuel cells and Plug-powered hydrogen. And those kind of products also become very important for the grid long term, because when the wind's not blowing, wind doesn't shine. The sun shines. uh You can be running uh your grid through fuel cells and hydrogen, and that hydrogen was produced when uh there was way too much wind and way too much solar. So it really makes the possibility of a complete renewable network realizable. And it's going to happen. I can't tell you it's going to happen tomorrow, but the steps are in place for it to happen for the future. Yeah, really exciting times. You mentioned your electrolyzer product a couple of times. I just want to circle back on that because obviously it's very important. And I think sales for that nearly tripled to $45 million. So huge growth there as well on the monetary side. So give us a sense of who's buying the product, what's driving the surgency in that particular. So if you look around, I think there are two drivers. A lot of it is uh nations' goals to meet sustainability. know, within the EU, uh you have uh companies which have, you know, countries have goals to reduce their CO2 footprint. Because they understand that There's externalities which aren't just captured in price. Unless you do something to facilitate technologies which are clean, it's not really viable long term for the world. And now, I think what has changed over the past couple of years, and this is really important, that folks recognize, call it 25 % of world's CO2 comes from industrial processes and things which are molecules in many cases. So if you look at the markets where hydrogen is taking off today in electrolyzers, it's really in those kind of applications. It is things like green ammonia. I think everybody knows the war in Ukraine really created a crunch for ammonia. uh It's applications like, believe it or not, oil refinery. probably the biggest user of gray hydrogen today. And we have some great projects going on with Galp in Portugal, in Spain with Iberdola and BP that is changing out the process. I know today we're doing a tour with uh a large South America oil producer who's looking to move to green hydrogen. So those kind of applications and uh one that uh I see over and over again as people looking to use electrolyzers to produce SAF. And there in Europe, where you're in the UK, is one of the leaders that really try to drive this. UK has a real aggressive program to build out hydrogen infrastructure. Spain has a real aggressive program. Now, I had a wonderful time being up in Northern Ireland on the 4th of July. uh And they already have six gigawatts of wind power. And they have a dream of building it out to 36 gigawatts of wind power on the island. And using that wind to create SAF, to create green ammonia, to be able to ship it around the world out of the Port of Belfast. It's really uh how you use your natural resources. And it provides great opportunities for uh countries and uh cities that you would never think be part of the energy generation business. And let me tell you, the wind blows in Northern Ireland. It was blowing 30 miles per hour when I was up there at 60 degrees on the 4th of July. ah Not my warmest 4th of July ever, it was, you know, when you see that, you can see how it all is possible. And you have government and people and universities and great companies just not plugged. really thinking about how to build that future. Yeah, fantastic. I'm really interested to hear about that momentum closer to home for us here at UK. m I guess, next, I'm interested to hear about how that translates to the company's bottom line and your overall balance sheet. Margins have improved, I think, versus last year. Still negative, I believe, but walk us through your playbook to reach breakeven and then beyond. Yeah, it's actually the breach breakeven is actually pretty straightforward. There's really three elements. One, we have to sell them. And we have to do over $200 million in a quarter. I talked about these great facilities. They also carry fixed load with them. So even if they're not cash burdened, they're burdens on the income statement. So we have to reach. about 200 million revenue. uh We've taken the necessary steps uh in our hydrogen activity, both with building our plants, as well as working with some key supplier to make sure that our costs are lower. That's actually a given. The third one is our service business, and we've seen dramatic improvements, and that is continuing. And we believe those three elements allow us to reach a gross margin break even by the end of this year. And probably more important, the steps we're taking really position the company to be EBITDA as positive by the end of 26. Great. Fantastic times ahead then. And back in 2023, we read, anyone interested in imply will have read about auditors issuing a going concern warning to the business. having talked about the positives, let's cover a quick negative. What was the kind of bet the company moved that pulled you back from the brink? You can tell me whether that's a fair characterization or not. And yeah, give us a sense of what happened there and how you're moving forward. Well, you know, it's funny. I was thinking about, know, it really didn't when you were talking there. I really wasn't on the brink. I know we knew exactly what we were going to do. Unfortunately, our timing for raising capital between the end of the third quarter and the beginning of the fourth quarter, you know, the auditors had to follow the rules and they gave us a going concern. Uh, but you know, by, you know, the next filing that was gone. And if you really look at it, when the orders do analysis, even today, they looked 15 months ahead and, uh we have a clean opinion. Uh, we have one blimp. Um, but, uh, it was really never. I knew that we had customers and one of our products. I knew we had a business plan that would allow us to execute. And look, we brought our hydrogen plants online. That helped us a great deal. So I can't say that I was ever worried about that I was in a position that the company was ever at risk. Yeah, fantastic. But there's a couple more recent news then. I read again that the DOE just conditionally approved a $1.66 billion loan guarantee. Talk to us about how or what needs to happen for that conditional to become a done deal and what could potentially derail it, if anything. Yeah, mean, we've been, look, you know, obviously the environment in the United States changed with the change of administration. And, but the administration is very supportive of hydrogen. And if you take a look at the recent bill passed in the United States, from a fuel cell point of view, it was much more beneficial than the IRA. Our fuel cells have a tax credit of over 30 % through 2032. That really wasn't available under the IRA, which actually helps the growth of our fuel cell business here in the United States. I think what we're trying to work through with the DOE with is the final steps and we're looking to bring an equity provider into the project itself. DOE, you know, I have to tell you, I've met with the new head of the DOE loan program, top, top notch. know, the Trump DOE is actually quite now, you know, it's a business environment and it's transactional. And we're working to make sure the transaction's good for the United States and good for Plug. Yeah, fantastic. And I suppose to move on, having covered some risks or challenges to the business, uh I'm also interested to hear about the competitive landscape. You you're competing with Tesla, Rivian, for example, and other cleantech giants for talent I'm talking about specifically here. How do you go about winning that fight and attracting the best in class talent to Plug? It's, you know, I would think the culture Plug is uh really important to the company. You know, it's, we fundamentally believe uh everybody adds value. You know, from our service people in the field, from the people in the factory, that's really important to Plug. The community of uh how we work together. Not one, know, Andy Marsh is not going to make Plugs successful. It's everybody working together. I think the, this is a very, and our survey showed it, it's a very comfortable place to work because you can be yourself. uh You know, my personal philosophy, uh Even though I've been here 17 years, I think it goes back to the original history of the company. My personal philosophy is I don't care what I don't care where you came from, what religion you are, what sex you are, what your orientations are. If you can help make the company better, I want you on our team. And I think people who come work here recognize that that culture is very valuable. And look, there's great upsides. Plug financially. It's a great place for engineers to innovate. mean, all those other items. But to me, it's that everyday culture. I like being in this environment. I like coming to work every day, most days. uh And it's important to the leadership team at Plug and the board that employees like coming here every day. Yeah, absolutely. Really interesting to get that kind of on the ground insight into your culture and the working environment. So thanks for that. I mean, we typically end these sessions by focusing on looking ahead, I suppose, and getting an idea of the vision for the business and the kind of landscape that you expect over the next five to 10 years. So I've got one question on China. China is going all in on hydrogen at the moment. Are you planning or are you playing offense or defense in relation to that and in relation to your international strategy? I think I have a lot of respect for everything the Chinese have done. ah But I believe that, and I quite honestly know today our technology is ahead of China. Just like in any competitive environment, we need to continue to innovate and keep on making sure our products are better. ah We need to service our customers. And now I have a great chairman, and he's always told me over the 17 years, don't worry about the competition, worry about serving customers. And that's how we at Plug think about it. Yeah, fantastic. Okay, well, as I say, looking ahead five years from now, where do you see Plug powers role in the global energy transition? Look, think it's the questions where what's hydrogen's role and Plug will be a leading player in hydrogen. And I think that, you know, we'll be building more more hydrogen plants, uh not only here in the United States, around the world. ah Some of those plants uh will be built on and operated. ah Some will be in partnership with customers. You know, for this industry to succeed, low cost available hydrogen is really, really important. And that's really a critical goal for Plug and has been for the last 17 years because nothing works unless hydrogen is competitive. And we talked about as the grid becomes more renewable, that's really an opportunity for hydrogen to become very, very competitive. There's going to become a point. And it's not too far out where hydrogen is on par with natural gas from energy content. Because we will be able to be generating that hydrogen late at night. When everybody's asleep, hydrogen will be being produced. And when the cost of hydrogen is equal to the cost of natural gas, there'll be no reason for people to buy natural gas turbines. uh natural gas generators. Everybody will be moving to hydrogen. So applications today where people say we can't do it because of cost, we're going to be on the same track as solar, where there's going to be a day, call it five years from now, where people are going to look at the cost of moving the fuel cells in hydrogen versus the cost of using natural gas or oil. And they're going to sit back and say, 50 % of the time, I want hydrogen. And when that day comes, we're building for it, we're ready, we have the facilities in place, we have the people in place, we have the capabilities in place. Plug's gonna be a big, big winner in that journey. Yeah, fantastic. Really exciting picture you're painting there. And it's just to build on that with a final sort of closing question then. You piqued my interest. But it was too good an answer that you piqued my interest so much I need to ask a follow up now. The OptoSessions tagline is invest in the next big idea. So we're interested to hear from public company leaders about the next big idea within their particular industry or their sector that's perhaps underrepresented, underspoken about that you think deserves more visibility? So is there an innovation in your space, a particular product line, something even more niche or nuanced than that that you think needs to be spoken about more and that represents the next big idea in the hydrogen space? And I think it may not sound like a big idea, but it's really important. Do you know what my biggest challenge is? My biggest challenge is construction costs. If you take a look at building a hydrogen plant, probably 60%, 65 % of it is construction costs. when we think about products like our stationary to power the grid, or our electrolyzer project. It's how to, and this is no different than how people may be thinking about how you build homes in the future. We have to design our products so that they can just be dropped in place. That there's very, very little construction next to interconnects happening. I talked about that vision of how we're competitive with natural gas. If 60 % of my cost is construction, that's the part that I need to reduce. And that's really where our next generation products will actually be designed so that they're more drop, more Lego style, drop and play. And uh customers have to do very little. It accelerates the time to market. It makes costs dramatically lower. uh really makes it possible that hydrogen's competing with other energy sources immediately. That's the key. And it's not as sexy as telling you we're going to develop the next MEA without precious metals. Those sort of activities don't compare to what it costs to construct. And as I said, know, Plug lives in the real world every day. And, you know, I come from a very scientific background, but in the real world, uh that's the difference and that's going to accelerate it. It's just as simple as how oh making fueling stations available for electric vehicles made that industry take off, made it easy. The construction is a simple item that will dramatically uh drive this industry and drive Plug to success. Yeah, fascinating. Glad I asked it. That was, as promised, indeed my final question. I really enjoyed the discussion today. Thank you very much, Andy. So did I. And just thanks again for joining us on Opto Sessions. It's been a real pleasure. real pleasure. Thank you very much. Take it easy now.