What happened

An abbreviated, post-holiday trading week started off on a sour note for fuel cell investors Tuesday. As of 2:22 p.m. EST, shares of Plug Power (PLUG -0.90%) are down 6.7%, FuelCell Energy (FCEL 6.34%) is off 8.3%, and Bloom Energy (BE 6.67%) is doing worst of all -- down 10.4%.

Curiously, though, the only news afoot today in the fuel cell sector today concerns Plug, and on the face of it at least, it's good news.

Cartoon fuel cell car on palm of hand putting out H2 bubbles as exhaust

Image source: Getty Images.

So what

As Plug announced this morning, it has just signed a memorandum of understanding with Spanish green energy company Acciona S.A., whereby the two companies envision forming a 50-50 joint venture to supply "cost-efficient and competitive green hydrogen to multiple end markets" in Spain and Portugal.  

Similar to Plug's partnership with SK Group in South Korea, announced last month, the new joint venture "will develop, operate, and maintain green hydrogen projects, serving the growing demand in the Iberian Peninsula," including by providing "storage, transportation, and delivery services." In this particular joint venture, Acciona will provide "clean electricity" (a phrase that usually means electricity generated from renewable sources such as solar and wind). Plug will use this electricity to separate water molecules into their constituent parts -- hydrogen gas being the part the venture is most interested in. Then that gas can be sold to power fuel cell vehicles.

Now what

"What's wrong with that," you ask? Why is Plug stock going down on the news -- and why does it seem to be taking the rest of the fuel cell industry down with it?

It's hard to say for certain which part of this agreement investors are quibbling with. On the one hand, we're only talking about a memorandum of understanding at this point -- not a definitive agreement. But even so, the companies say they expect the partnership to launch in the first half of this year.

The companies say they are targeting only a 20% market share in Spain and Portugal's hydrogen economy. Yet 20% could be pretty sizable, when you consider that Spain, for example, aims to "achieve climate neutrality" and have "a 100% renewable electricity system" by 2030. Simply put, 20% of any country's energy economy is a lot.

But why investors seem to be treating good news as bad news for Plug is a bit of a mystery. It's much easier to figure out why Plug's news could be bad news for rivals FuelCell Energy and Bloom Energy. With every capital raise Plug announces, and with every joint venture agreement it secures (and there have been a lot of them these past few months), Plug appears to be securing and lengthening its lead over rivals to dominate the global hydrogen economy.

Simply put, what's good news for Plug may be bad news for any fuel cell stock that wants to compete with Plug.