The long-term CEO of Plug Power is repositioning the fuel cell manufacturer as a producer of hydrogen fuel made from water and renewable energy to reduce industrial carbon pollution caused by climate warming in the steel, oil and agricultural industries.
On a hot afternoon in Los Angeles, the temperature was close to 100 degrees Fahrenheit, but it was very cool in the bustling Beverly Hilton Hotel. Andy Marsh, CEO of Prague Power, just made a speech at a technical conference to promote the so-called green hydrogen energy.
He is wearing a casual short sleeve shirt and is optimistic. He is preparing to meet a congressman who does not want to be named. The congressman hopes to understand one aspect of this kind of carbon free energy that crosses political boundaries and has broad prospects: employment.
Andy Marsh, CEO of Prague Power, told Forbes with a unique southeast Pennsylvania accent that:
"Solar and wind energy projects will not continue to create large numbers of jobs. There are jobs that produce hydrogen. It is much more than building battery plants."
For decades, hydrogen has been a mirage of "water on the road": an attractive and unlimited clean fuel, which is always in front, but never within reach. Critics such as Elon Musk believe it will always be so.
Since the 1990s, major automobile manufacturers have invested billions of dollars in hydrogen fuel cell projects. However, in California, the largest market for such vehicles, fewer than 15000 vehicles are in operation - compared with nearly 900000 battery and plug-in hybrid vehicles in California. But providing power for transportation is not the direction of Marsh, who has led Prague Power for 14 years.
At the age of 66, when many long-term CEOs may wish to end their careers, he is repositioning the manufacturer that has long produced fuel cells for zero emission forklift trucks and fixed power generation equipment. His goal is to turn it into a leading hydrogen producer. He has been buying hydrogen for Prague's fuel cells and supplying it to heavy industrial users.
But not in any form. He is expanding a zero carbon way to produce and liquefy the most abundant elements in the universe by extracting from water, making hydrogen the main factor in mitigating climate change.
As Prague Power expands its sales of hydrogen and production technology, the company expects its sales to jump from $900 million this year to $5 billion in 2026, and reach $20 billion at the end of the decade.
It also predicted that, as the company changed from hydrogen buyer of other companies to producer and seller, by the end of 2023, its operating revenue would be blacklisted and net profit would be achieved in the next few years. Globally, Prague Power estimates that the overall market for green hydrogen will grow to US $10 trillion in the next few years.
The mass production of hydrogen is mainly through the use of steam to extract from natural gas, in which process carbon dioxide is released.
The Department of Energy estimates that, of the more than 100 million tons of hydrogen in the world, the United States produces about 10 million metric tons of hydrogen annually for industrial applications such as steelmaking, oil refining and agriculture, and almost all of it is "gray" hydrogen: it is made of natural gas and emits carbon pollution.
However, the improved technology of fuel production with electrolyzers -- equipment that uses renewable power to convert water into hydrogen and oxygen -- is shaking the clean energy world. Marsh hopes that Prague Power, headquartered in Latham, New York, will not only become the top producer of this fuel, but also become the manufacturer of special tankers transporting this fuel to customers and the seller of electrolyzers that others can make themselves.
If all goes well, the green hydrogen plant in Prague will produce 500 tons of fuel every day by the end of 2025. Amazon AMZN plans to purchase more than 10,000 tons every year, with a transaction value of up to 2.1 billion dollars. Prague Power will also provide Wal Mart with enough fuel for 9500 warehouse fuel cell forklifts.
The company also plans to sell electrolyzers to customers, including New Fortress Energy, an energy company owned by billionaire investor and Milwaukee Bucks owner Weiss Edens, for an industrial scale hydrogen plant in Beaumont, Texas.
Jeffrey Osborne of Cowen Equity Research said:
"I am in the camp, (Prager Power) can hit it and have the right puzzle."
So far, Daxin has raised US $5 billion, including US $1.9 billion investment with SK Group, a Korean conglomerate. In addition to some strategic acquisitions, Prague Power has also used the funds to build 13 hydrogen refineries in the United States and Europe, and is building in Georgia, New York, Tennessee, Texas, Louisiana and California. It has also prepared projects with Belgian partners, including France, Spain, Portugal, South Korea and Australia.
However, a key obstacle to hydrogen, whether it is made of water and renewable energy or methane, is that it is inherently inefficient and requires more energy to produce, compress or liquefy and maintain ultra-low temperatures, rather than simply using the same electricity to power the battery.
Advocates point out that the power produced by large solar and wind farms has been surplus, especially in the Midwest and Southwest of the United States, which exceeds the processing capacity of the grid during peak periods. As the cost of solar panels and turbines declines, more people will join. Too much green energy seems to solve the problem of low efficiency of hydrogen energy.
Paul Martin, a chemical engineering consultant and member of the Hydrogen Science Alliance based in Toronto, Canada, disagreed. He said:
"The low efficiency method can work, but only if its capital cost is low. The problem with green hydrogen is that its capital cost is high and its efficiency is low. Therefore, the resulting energy is very expensive."
Nevertheless, Marsh said that he saw support for green hydrogen even in Texas, Louisiana and West Virginia. The hydrogen refinery being built by Prague Power "looks like an oil and gas plant." Marsh said that he spent a lot of time in Washington in the past year to elaborate his views.
They use pipelines similar to natural gas plants, which means construction and continuous maintenance work, and will transport liquefied fuel by truck and train, requiring drivers and other support personnel. "About 20% of our workers come from the oil and gas industry." He said.
Prague Power faces many competitions in the emerging green hydrogen field, including engine giant Cummins, which is also building its own electrolytic cell business, clean energy giant Nextera, and start-ups like Nikola that are expanding their production of green hydrogen to provide fuel for their electric trucks.
General Motors has been developing hydrogen fuel cell technology since the 1990s. It is also becoming a participant in the green hydrogen space by cooperating with Nel of Norway, a leading electrolytic cell manufacturer, to find ways to reduce costs.
"I think (Plug) can do this and have the right puzzle," said Jeffrey Osborne, an equity research analyst at CowenCOWN His stock rating of Plug Power is better than the market.
"They control all parts and have enough cash to complete it. The challenge is that all these (green hydrogen plants) sites need new green energy built by interconnections and partners. This may take time."
The landmark Inflation Reduction Act (IRA) has brightened the prospects of Marsh and Prague. When President Joe Biden signed into law in August, the bill attracted attention because of its generous incentives for electric vehicles, domestic battery production, and wind and solar power generation to curb carbon pollution.
The bill also includes an innovative tax credit for green hydrogen. It provides a tax credit of up to $3 per kilogram for producers of the fuel.
"IRA is the most important, because (Prague Power) started this process before the announcement of IRA." Osborne said.
Unlike the past efforts of the automobile industry to commercialize hydrogen fueled vehicles, Marsh did not initially target the transportation industry. Instead, he said, he was pursuing something "not so exciting" but a major source of carbon pollution.
Almost all of this hydrogen will be used for stationary power generation, forklift fuel, agriculture and "green" steel, not cars. Marsh said that the combined carbon emissions from steelmaking and other industrial applications "account for about 26% of the world's carbon emissions, while the transportation industry accounts for 26%".
"The problem of green hydrogen is high capital cost and low efficiency." Paul Martin of the Hydrogen Science Alliance said.
Marsh also believes that trucks are good candidates for hydrogen energy, especially at the end of this century, Prague is cooperating with Renault to develop fuel cell delivery vehicles.
Martin and Robert Howarth, a professor of ecology and environmental biology at Cornell University, both believe that green hydrogen can play a role, but its best use is to replace the dirty industrial varieties made of methane and to produce ammonia for agriculture.
"Today, about 80% of the earth's population is still alive, because we have made synthetic nitrogen fertilizer. This is crucial." Howarth said, "If we can do this in a cleaner way, and green hydrogen is much better than gray or brown hydrogen in this respect, then this is a good use."
For 40 years, the development of electric power system has been Marsh's top priority. Marsh is an electrical engineer with degrees from Temple University and Duke University and MBA degrees from the Southern Methodist Association. He began his career in the early 1980s at the legendary Bell Laboratory in New Jersey, which is famous for developing technologies such as transistors, lasers, photovoltaic cells and radio astronomy. Its scientists won nine Nobel Prizes.
"If you are a disgusting engineer, that will be the place you admire. This is a place worth going to." Marsh said in his office at Prague Power headquarters.
After working at Bell for 17 years, he founded and ran Valere Power, a venture backed company that made electrical equipment for the telecommunications industry until it was sold in early 2008. He then joined Prague Power as CEO to build its fuel cell business. Fourteen years later, Prague has deployed more than 50000 sets of fuel cell systems, mainly used for forklifts used by BMW, Amazon and Wal Mart, which is said to be more than any other company in the world. It also estimates that it is the largest buyer of liquid hydrogen to fuel forklifts and stationary power systems, and has acquired expertise in all aspects of manufacturing, transporting and using hydrogen.
Marsh firmly believes that the United States, with its rich and growing renewable energy infrastructure and IRA driven incentives, is expected to become the world's green hydrogen superpower.
"The United States has such a clear competitive advantage, which shocked people all over the world." Marsh quoted the recent comments of the European Hydrogen Industry Group and said: "Hydrogen Europe said that the United States has achieved great leadership in the production of green hydrogen and green ammonia, and the world will be difficult to compete with it."
As the risk of serious climate change caused by carbon dioxide increases, the industry, power generation and transportation industries urgently need to get rid of dependence on fossil fuels as soon as possible, so green hydrogen seems to be an increasingly attractive option. However, critics like Martin do not believe that Prague Power and its competitors are seeking the best solution to the problem of hydrogen efficiency.
"Details determine success or failure. In this case, he has a pitchfork marked with 'thermodynamics'. Every time you pass, he will wave it to you and poke at your sensitive parts." Marsh said.
