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Inflation Reduction Act ‘changes the dynamics completely’: Plug Power CEO

Plug Power CEO Andy Marsh joins Yahoo Finance Live to discuss the Inflation Reduction Act, its impacts on the energy space, building a green hydrogen ecosystem, profitability, and growth.

Video transcript

JULIE HYMAN: Shares of Plug Power up a bit today, but they did surge quite a bit last week on the back of the company's earnings report, despite seeing revenue missed expectations. The company got a boost from upbeat analysts' calls following the passing of the Inflation Reduction Act.

Joining us now to discuss is Plug Power CEO Andy Marsh. Andy, thanks for being here. So just give us in a nutshell what this new law is going to mean for you.

ANDY MARSH: Well, Julie, Plug was on a great track before the new law, where we were on-target for our $3 billion in 2025. But what it does is make the green hydrogen plants, which we're building across the United States, economically competitive with gray hydrogen across all sorts of applications, from fertilizing manufacture to green steel to green hydrogen for use in peaker plants. It actually just changes the dynamics completely with the $3 tax credit for green hydrogen.

Good for Plug. Good for the nation. Good for the world.

BRIAN SOZZI: OK, Andy, so how good? When should investors start to see the impact of this flow through to your bottom line?

ANDY MARSH: As we said on the earnings call, our CFO says it pushes our path to profitability up six months into early 2024.

BRAD SMITH: What are customers asking differently from you right now? Walmart is one of your biggest partners as well. And so with regard to the relationships that you have with those customers, where they're leaning further into that relationship, what are you hearing on the demand side?

ANDY MARSH: Well, I think what we're hearing on the demand side-- and you could see it-- another portion of our businesses are electrolyzer business. We're already 50% ahead of what we expect to book for the whole year on August 1. So what we're seeing is tremendous demand for our electrolyzers, which will be used for both here in the United States and in Europe.

We're seeing increased demand for our green hydrogen, for the 70 tons of green hydrogen per day that we'll be producing by the end of this year. All that's beneficial to Plug, all. And we're doing it, quite honestly, because customers like Walmart. Amazon, New Fortress Energy, all want us to be producing green hydrogen or building electrolyzers for them so that they could use green hydrogen.

JULIE HYMAN: So Andy, for potential clients, is the biggest thing holding them back the cost? And is that one of the reasons why this bill could be particularly helpful?

ANDY MARSH: I think cost is-- look, cost, it takes it off the table. Now green hydrogen is cost-competitive with gray hydrogen. Now green hydrogen can be easily added to natural gas. Yes, I think it is a big driver, which drives a lot of the industrial applications. And the industrial applications represent 26% of the world's CO2 emissions, which is equal to mobility.

It really takes it off the table. We don't have to discuss it anymore. And now we have security. This bill provides a 10-year tax credit for green hydrogen as well as a healthy tax credit for fuel cells through 2025, which turns to tech-neutral after that. So Plug and, I think, the industry, it provides insurance that it'll be around for the long run.

So that's why I think folks in both industrial applications as well as retail applications as well as mobility applications are all excited about this bill. It really has changed the landscape for our company and others.

BRIAN SOZZI: Andy, you mentioned you won't be profitable until 2024. So over the next 15 months or so, where are you going to be investing the most, what areas?

ANDY MARSH: Well, it certainly is in our electrolyzer and green hydrogen plants. I mean, we've announced we're going to be investing a billion dollars for our green hydrogen plants next year. Obviously, we have two new factories, one coming online, as we speak, in Rochester, a gigafactory for making stacks for green hydrogen plants as well as for our electrolyzers. That's where we're putting the dollars today.

BRAD SMITH: You've called data centers a $40 billion opportunity for Plug Power. Where do you start to realize some of those opportunities actually come to fruition? And how quickly does that become accretive to that path to profitability for the business as well?

ANDY MARSH: Well, we've announced that we'll be deploying 60 megawatts of products for the stationary market, which is more than just data centers, over the coming year. We expect that to be 200 megawatts over the next 18 months.

It'll be used not only for backup power but also for providing power to electric fans, which may seem odd, but it's a big market opportunity. In the long run, fuel cells and these stationary products replace peaker plants, very much what we're doing with SK, where we'll be deploying 200 megawatts by late 2024 and 400 megawatts per year from 2025 to 2040 with our great partner SK in South Korea.

BRIAN SOZZI: Plug Power CEO Andy Marsh, always great to chat with you. Good luck on the path ahead. We'll talk to you soon.