What happened
The Nasdaq is rebounding Tuesday after last week's steep sell-off, and hydrogen fuel-cell company Plug Power (PLUG +7.33%) is joining in the fun, up 4.8% as of 10:25 a.m. ET. Plug is partly coming along for the ride along with the rest of the tech-heavy Nasdaq, but it's also benefiting from some news unique to the hydrogen industry -- and to Plug itself.
NASDAQ: PLUG
Key Data Points
So what
The reasons for Plug's gains today are a bit convoluted, so let's take them step by step. First, although Plug Power is currently unprofitable, CEO Andy Marsh says his company's growing "green hydrogen" business will become price-competitive with diesel (for powering trucks) once the price of such hydrogen falls to $6 or $7 a kilo.
Next, commodity intelligence firm ICIS today launched the world's first-ever service tracking the price of green hydrogen. ICIS calls this "clean hydrogen" or "renewable hydrogen," but basically, it's the same stuff Plug is referring to when it says "green hydrogen" -- hydrogen produced by renewable energy (such as solar and wind). According to ICIS, while the price of producing hydrogen by ordinary, non-renewable means has shot up to around $14.45 euros as natural gas prices surged in Europe, the cost of green hydrogen produced by offshore wind in Europe is ranging from $5.88 to $7.85 -- and as low as $4.67 in Spain.
In Europe, at least, green hydrogen is finally cheaper than non-green hydrogen. It's getting closer to Plug's target price, and in at least one national market, it has reached it.
Now what
Here's the final piece of the puzzle. Last Friday, Plug announced it has partnered with local green hydrogen company "Lhyfe" to set up a floating 1-megawatt hydrogen electrolyzer plant, powered by offshore wind, off the coast of Saint-Nazaire, France.
It appears Plug has found a market in which it has a fair shot at earning a profit from the production and sale of green hydrogen -- and it's moving right into that market. Whether the project will be successful and enable Plug to reverse its decades-long history of losing money remains to be seen. But Plug is making a logical move here in pursuit of profits. For investors in Plug, this is good news.
