- Plug Power (PLUG) stock is posed to get a big lift fro mthe rapid proliferation of green hydrogen
- Two huge recent deals by Plug Power suggest that the company is at the center of the green hydrogen sector
- The EU and U.S. governments are rolling out tremendous support for the sector
- The valuation of PLUG stock does not come close to reflecting its potential
Two recent huge deals by Plug Power (NASDAQ:PLUG) stock indicate that the company is poised to become a dominant player in the rapidly growing hydrogen-fuel sector.
Meanwhile, the company looks very well-positioned to benefit a great deal from governments’ actions, and PLUG stock remains drastically undervalued.
Two Very Large, Impressive Deals for PLUG Stock
On May 17, Plug Power announced that it would provide “a one gigawatt (GW) electrolyzer to hydrogen company H2 Energy Europe.” H2 plans to use the electrolyzer to “enable the production of up to 100,000 metric tonnes per year of green hydrogen” that will be used by ” fleets of heavy-duty fuel cell trucks,” Plug Power explained.
In another blockbuster deal, Plug Power announced on April 19 that it would supply Walmart (NYSE:WMT) with “up to 20 tons per day of liquid green hydrogen to power material handling lift trucks across Walmart distribution and fulfillment centers in the U.S.”
Taken together, the deals suggest that major transportation and retail companies in the U.S. and Europe are rapidly embracing green hydrogen and that Plug Power is becoming a leading supplier of green hydrogen in the regions.
As I’ve noted in previous columns, green hydrogen is being used to decarbonize large trucks and other types of transportation that cannot be easily powered by battery-electric systems. Supporting that idea, Dane McFarlane, the institute director of research at the Great Plans Institute, a think tank, said “Hydrogen is a powerful decarbonization solution for multiple sectors and numerous end uses that are difficult to electrify, such as industrial process heat, heavy trucking, iron and steel production and marine shipping,”
And for the EU, hydrogen is being used as a means of becoming less dependent on Russia for energy.
Help From Governments Is on the Way
Speaking of the EU, the bloc in March decided to support the creation of “ten million tonnes of green hydrogen a year by 2030..” The target represents a 300% increase over the EU’s previous goal. As part of the initiative, the bloc promised ” to fast-track market reforms to promote development of hydrogen projects and infrastructure such as storage.”
In the U.S., the bipartisan infrastructure law appropriated $10 billion to support the rollout of hydrogen. Washington plans to spend 80% of those funds on “hydrogen hubs,” which were defined by Engineering News-Record as “network(s) of clean-hydrogen producers, with customers and infrastructure to connect them.” Each hub is slated to receive $500 million to $1 billion from Washington, and hub participants are expected to match DC’s contribution.
Plug Power has teamed up with “New York, Connecticut, Massachusetts and New Jersey” to form a hub. It’s an excellent bet that a hub which includes four states will receive love from the President Joe Biden administration, especially because the Energy Department is looking to roll out “six to ten” hubs nationwide. And the department is reportedly seeking to move quickly on the initiative.
While it could still be six-to-eight months before the funds are doled out, investors should soon get excited about Plug Power getting some of the money.
With green hydrogen poised to proliferate in the U.S. and the EU and Plug Power at the center of the sector, the $9.5 billion market capitalization of PLUG stock clearly greatly undervalues the company’s potential.
On the date of publication, Larry Ramer was long PLUG stock.