Plug Power has cut its hydrogen production forecast for this year after cancelling plans for two plants and experiencing permitting delays at a third project.
New York-based Plug will be able to produce roughly 50 tons of green hydrogen per day by year end, compared to an earlier company forecast of 70 tons, Chief Strategy Officer Sanjay Shrestha said Wednesday during a presentation at Plug’s annual symposium.
The company experienced delays for a substation permit at its 45-ton plant in New York, setting the project back by about 12 months. Plug also explored but decided not to pursue two 30-ton-per-day projects, one in Canada and one in Pennsylvania, Shrestha said.
Shares in the Nasdaq-listed company declined more than 13% since Wednesday’s open, trading today at $16.40 per share and a $9.49bn market cap.
Meanwhile, Plug is focused on commissioning its first 15-ton-per-day liquid hydrogen plant in Georgia, and is expanding production at its Tennessee plant from 10 tons of liquid hydrogen to 15 tons, Shrestha said.
“We want to make sure that we’re being really, really prudent about capital allocation as we’re building this network, and not just focus on 50 versus 70 as a number,” he said.
Shrestha added that Plug is still on track to be commissioned for 200 tons per day of production by the end of 2023, and 500 tons per day by 2025.
To reach 200 tons per day, Plus is planning to expand its New York plant to 75 tons per day, and is breaking ground on a plant in Texas that will produce 45 tons per day. The company also has an option to expand its Georgia facility to 45 tons from 15 tons currently.
Multiplier effect
The approval of the Inflation Reduction Act in the US “makes green hydrogen economical versus every single form of grey hydrogen in the market today – period,” Shrestha said, including for refining, for green ammonia, and for methanol. “That is already a 25,000-tons-per-day opportunity.”
The IRA will also lead to major capital formation in hydrogen, potentially steering Plug and others to fund projects with around 30% of equity capital while leveraging the remaining project costs. Plug has been funding projects with 100% equity capital.
With the production tax credit in the IRA, “you will at least get a 4x – 5x multiplier on the equity capital,” he said, allowing Plug to use equity capital to pursue additional projects.
“This will follow a similar pattern to what you have seen in the solar and wind industry in the last decade,” Shrestha said.
