SK Group’s $1.5 Billion Hydrogen Bet Adds Fuel to Surging Market

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SK Group’s $1.5 billion investment in the U.S. fuel-cell maker Plug Power Inc. marks one of the biggest hydrogen deals ever, reflecting a booming appetite for the alternative fuel in Asia and Europe.

The companies are forming a joint venture to provide hydrogen fuel-cell systems, fueling stations and electrolyzers in SK’s home market of South Korea and elsewhere in Asia, according to a statement.

Hydrogen investments and deal-making have surged in the past two years, particularly in electrolysis, the process of generating hydrogen from water. Governments and companies around the globe are pushing to use hydrogen in power plants and vehicles instead of fossil fuels. It can also be stored until needed and produces no greenhouse gases when burned.

“Hydrogen is becoming exciting for people today,” Plug Chief Executive Officer Andy Marsh said in an interview Thursday. “The time has come.”

SK Group’s $1.5 Billion Hydrogen Bet Adds Fuel to Surging Market

Hydrogen, however, has a long way to go before breaking into the mainstream.

Plug, based in Latham, New York, has spent more than 20 years losing money as it pushes to find profitable applications for hydrogen fuel cells. It’s best known for offering fuel cells that run forklifts and other freight-handling gear. But the company announced in June two deals for hydrogen companies that bolstered its ability to supply the gas and expanded its strategic focus.

“That showed we had a complete solution from hydrogen generation to hydrogen plants,” said Marsh.

That also made the company appealing to SK Group. The South Korean conglomerate is acquiring about 51.4 million shares of Plug Power for $29.29 apiece, about a 9.9% stake. Through this deal, Marsh expects to see his technology used in Asia as soon as 2022. The company’s shares surged 35% Thursday.

The Plug investment “would be one of the biggest, if not the biggest, deal that we’ve heard of,” Meredith Annex, a BloombergNEF analyst in London, said by email Thursday.

South Korea has aggressively pursued fuel cells and hydrogen, making it a prime focus for U.S. fuel cell companies. Bloom Energy Corp. recently signed a deal with SK Engineering & Construction to deploy 28 megawatts of fuel cells in the country.

SK Innovation, the energy and chemicals unit of SK Group, is currently building two electric car vehicle battery plants in Georgia, with initial operations at the first facility scheduled to begin this year.

©2021 Bloomberg L.P.

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