Plug Power Snags Walmart Fuel Deal As Green Hydrogen Revs Up Amid Oil Price Spike

There’s been a flurry of plans from big manufacturers and startups to build next-generation commercial vehicles powered by “green” hydrogen made from renewable energy in recent years. Now fuel cell maker Plug Power says it may have the biggest U.S. deal to date to supply that carbon-free fuel to Walmart–coming as Russia’s Ukraine invasion keeps oil prices high and international researchers call for faster action to cut greenhouse gas emissions.

Under the agreement Latham, New York-based Plug will supply up to 20 tons of hydrogen per day to the retail giant, enough fuel being to power as many as 25,000 forklifts for Walmart. Plug will deliver liquid hydrogen to Walmart distribution facilities in specialized tanker trucks. The companies aren’t providing financial terms of the deal, among Plug’s first to supply green hydrogen, or saying how quickly it can ramp up to that 20-ton target.

The retailer “has been an early adopter of innovative hydrogen and fuel cell technology for over a decade,” Plug CEO Andy Marsh said in a statement. “Now our green hydrogen solutions will provide Walmart with the ability to achieve significant carbon reduction.”

Though companies including Cummins, Toyota, Hyundai, Volvo, Daimler and Nikola intend to sell heavy-duty hydrogen-powered semis to trucking companies, Plug Power has focused on the forklift market where there’s long been a need for emission-free vehicles operating inside factories and warehouses and stationary power systems. Walmart has been a Plug Power customer since 2012 and the U.S. Energy Department estimated more than 30,000 hydrogen-fueled forklifts were operating in the country as of 2020.

“Hydrogen is critical to helping us power a more sustainable supply chain,” Jeff Smith, a Walmart senior director, said in a statement. The new project with Plug is part of the retailer’s plan to have operations that emit zero harmful emissions by 2040, he said.

Fuel cell technology has been advancing for two decades, with developers improving the durability and efficiency of the electrochemical devices and cutting the cost to make them. (Unlike batteries, which store electricity, fuel cells make it on demand, emitting only water vapor as a byproduct.) Traditionally, hydrogen used for industrial applications such as oil refining and in the food and chemical industries is grey–made from natural gas, a process that creates carbon pollution.

A big recent change is a growing expectation that green hydrogen, made from electrolysis of water and electricity derived from wind or solar power, will be a low-cost alternative to both petroleum-based fuels and batteries. That’s because both the cost of renewable energy and electrolyzers, the devices used to make hydrogen, are falling, Marsh tells Forbes.

This month the United Nations’ Intergovernmental Panel on Climate Change warned carbon emissions are rising to a dangerous level, yet held out hope that quicker adoption of clean power sources and new technology could halve the rate of increase by 2030. “Limiting global warming will require major transitions in the energy sector,” according to the April 4 report. “This will involve a substantial reduction in fossil fuel use, widespread electrification, improved energy efficiency, and use of alternative fuels (such as hydrogen).”

“I’ve been here the worst of times and the best of times. This is one of the best of times.”

Like Plug, companies including diesel engine giant Cummins and trucking upstart Nikola see an opportunity to grow by making green hydrogen. Nikola has said it expects to be able to make the fuel for as little as $2 a kilogram using water and surplus electricity purchased from Arizona’s main utility service and electrolyzers supplied by Norway’s Nel Hydrogen. Nikola is currently testing prototype fuel cells trucks in California and will begin making commercial versions late next year. It’s also begun delivering battery-powered Tre semis to customers.

To support efforts by individual companies the Biden Administration created the Hydrogen Shot program that includes $8 billion of federal research funds aimed at slashing the cost of making green hydrogen by 80% to just $1 per 1 kilogram by the end of the decade.

Plug aims to be able to make 70 tons per day of green hydrogen by the end of this year–the equivalent of 140,000 gallons of gasoline–but has plans to supply vastly greater amounts of the fuel worldwide. The company’s next goal is to be able to make 500 tons of hydrogen per day in North America by 2025 and 1,000 TPD globally by 2028. “We’re building a factory in Australia with Fortescue, we’re looking at building a factory in Korea with SK so that we be able to generate green hydrogen in Asia and we’re looking at doing the same thing in France,” Marsh said.

Recent oil price pressure–with crude oil prices this week up more than 70% from a year ago–and energy security concerns triggered by Russia are creating new opportunities. “I think I could sell anything I can build right now,” he said. “I’ve been here the worst of times and the best of times. This is one of the best of times.”

Plug Power shares fell less than 1% to $25.55 in Nasdaq trading on Monday.