Plug Power’s CEO on raising money during meme stock manias and finding green energy competitiveness deep in the heart of Texas

What’s it like running a green energy company operating in “the reddest district in the world,” hoping that the Trump administration keeps its predecessor’s eleventh-hour, billion-dollar loan guarantee intact?

It’s a question that Plug Power CEO Andy Marsh is uniquely qualified to answer.

Marsh has navigated a number of shifting political winds while leading the fuel cell and green hydrogen producer since 2008. During that time, profitability has proved elusive. Next year, though, he aims to have generated positive earnings before interest, taxes, depreciation, and amortization through a mixture of increased scale and more opportunism in electricity markets to keep costs down.

Plug Power has also long been my pick for the most interesting stock market chart in the history of forever.

Hydrogen is the first element in the periodic table, and, during the first GameStop mania, Plug Power briefly became No. 1 in the Russell 2000 by market cap. While some people have called meme stocks YOLO plays, Plug Power is living proof that you don’t only live once. The stock went parabolic during the dot-com boom, mooned in late 2013 through early 2014, and again from mid-2020 through early 2021.

We sat down with Marsh to discuss the “hectic” policy backdrop, how to drive positive unit economics for the hydrogen company, and how past manias in the stock have influenced his approach to corporate financing.

This interview has been edited for clarity and length.

Sherwood News (SN):  I want to start with the policy environment. Plug is making use of some initiatives from the Biden administration, like the 45V tax credits and the Department of Energy loan guarantee. Why are these important to Plug, and what would the operating environment and outlook be like if these didn’t exist?

Andy Marsh (AM): People are looking around the world and seeing that there’s a little bit of lack of predictability at the moment about all these things you’ve mentioned, but I probably feel a little bit better than the world. When you have a change in administration, it’s often a time for people to go back and look at what was done by the previous administration.

But let’s go through the different issues at a higher level. The US government is convinced it wants to be a leader in all sorts of energy, and hydrogen is certainly a demand that’s going to be there in the future. I mean, I just got done talking with some folks I know at McKinsey and we were just having that discussion.

Regardless of who’s in power, there is going to be a demand for hydrogen and green hydrogen. And 45V is actually not only supported by folks like me, but, fortunately by folks in the oil and gas and fossil fuel industries, because when they look at hydrogen and derivatives of hydrogen, it looks very much like the business they do today So we don’t expect that Congress — and Congress, remember, is who decides this — is going to make any changes to the 45V.

With our DOE loan for our plant in Texas, we’re probably in the reddest district in the world. I think there may have been two Democratic votes in the district and those people hit the wrong button when they voted. It’s a place where we’re building the largest electrolyzer plant in the Western world for liquid hydrogen. With the construction of that plant, we’ll become the second largest provider of liquid hydrogen in the world, and when a Louisiana plant comes online this month or this quarter, we’ll be the third largest.

I see that the DOE loan will be supported. It’s a contract with the government. I’m not too worried; it’s not out of line with the goals of the Trump administration. So, you know, from a policy environment point of view it feels hectic at the moment, but I’m really not that concerned that these things will all work themselves out.

SN: I know you’ve made some suggestions in the past about possible tweaks of improvements that could be made to some of these programs, the tax credits in particular. Can you unpack this a little? Because Plug is a leader in green hydrogen and a lot of these are more environmental requirements, it seems like the kind of thing where the stricter these measures are, they should disproportionately benefit Plug! Is this an occasion where there are particular measures, like the hourly matching requirement, that affect Plug and should be tweaked, or is this a broader message about the development of the hydrogen industry in general, and the bigger the pie, the better for Plug? What’s your aim here?

AM: First and foremost, I was the chairperson of the Fuel Cell and Hydrogen Energy Association for four years. And in that role I supported “all of the above” to help the hydrogen economy, because I think a bigger hydrogen economy is good for all of us. When I think about green hydrogen, you mentioned time matching. I actually view electrolyzers a lot like electric charging stations. You don’t go up to the electric charging stations and say, is it green electricity today? Is it fossil fuels today? Those electrons are coming from all sorts of sources. 

But what the charging stations provide is an opportunity as the grid becomes greener and greener and greener for people to be able to cause less pollution, and the sale of vehicles actually helps the deployment of electric charging stations. To try to say I only can charge my car when when the sun is shining, probably is not going to sell. And electrolyzers are the same way. 

If you look at it, where you want to be in the world is, when the grid becomes greener and greener, you can make green hydrogen, which is going to be critical not only for the sexy products like vehicles on the road but also things that are less exciting, but probably more critical, that help make plastics and ammonia.

That’s really where we want to head and drive things. And that’s why hourly time matching additionality, where those green molecules are coming from, shouldn’t be that strict. But if you look at what we’re doing in Texas, we’re actually going to generate more green electricity from our PPA with NextEra than would have been generated. It’ll generate energy that’s green versus what I will use, and when you start thinking about that, does it really matter if it matches exactly with times? I would suggest no. 

SN: To segue to the unit economics of Plug: I believe only a couple times on a quarterly basis in the company’s history have sales exceeded the cost of goods and services on a quarterly basis. What are you doing, and what are the critical milestones for the unit economics to really inflect positively and stay that way?

AM: There are two big ones. One is, it’s the reason we’re building the hydrogen plant. The hydrogen market today is controlled by a few companies and look, if I had their pricing power, I would charge as much as possible. Nothing wrong with that. That’s basic economics. What we’re doing is really disrupting the model by our plant in Georgia, by our plant in Tennessee, by our plant in Louisiana, so that we will become self-sufficient in hydrogen. And hydrogen, which drives a lot of our lack of profitability, will become a positive gross margin part of our income statement each quarter.

The other area is that we’ve been very focused on service, and that’s much like Tesla in the early days. You know, the product’s performance we’ve overserved, now the product performance we’re getting quite happy with, and the combination of those two we believe will drive gross margin positive in 2025 and EBITDA positive in 2026. So both of them are big, big drivers for Plug’s success. 

SN: Comparing green hydrogen to blue and gray, what do you think needs to happen to continue to drive a convergence in production costs? Especially if we’re talking production costs, ex any tax considerations. Both on the electrolysis system side and on the electricity cost side, what kinds of things should observers and investors be watching for on that front?

AM: There are two drivers to the cost. By the way, I would love if the oil and gas people gave up their tax credits, and I’d be thrilled to play on an even playing field. But from our perspective, there are really two items. One has to do with the cost of electricity and the second has to do with the cost of equipment.

The cost of equipment is going down. Every time you double the number of units in the field, we’ve shown that costs go down about 25%. So, scale matters to the cost of equipment. That’s pretty straightforward. I think the other item that really dominates 75% of the cost is the cost of electricity. And the cost of electricity is interesting. To us today, if it’s under $0.03 a kilowatt hour where Texas is, even without tax credits, it’ll be competitive with hydrogen made from natural gas.

As more renewables come on the grid, the cost of electricity can be negative at times. If you look at Germany, for example, in May of last year, about 11% of the time, the grid was negative, negative price. Therefore, the variable cost of hydrogen was actually below zero, because essentially, you’re providing loads when they’re generating power. So, as the grid becomes more renewable, there are actually going to be more opportunities to take advantage of negative pricing in the generation of hydrogen. I didn’t think of that myself. I actually have to give credit to my friends at Norges Bank who’ve taught me a great deal about thinking about the negative price of electricity in the future. But at $0.03 per kilowatt hour, we can compete with natural gas, without government subsidies.

SN: So is the plan that, between scale and capitalizing on variations in energy prices, that’s what you see as a bit of a sustained, repeatable strategy to be driving costs down?

AM: Yeah. You take the Texas plant and we’re actually connected to the grid, too. When pricing is high in Texas, we won’t be using that electricity for our own use — we’ll actually be selling it into the grid. 

SN: Makes sense. I’ve been on the record saying this, and I’ll say it a zillion times: I think Plug Power has the most interesting stock chart in the history of mankind. What do you think it is about either your industry or your company that can catalyze these periods of intense enthusiasm about the prospects for your company that drives pretty fierce rallies?

AM: I think anyone who’s involved in this industry actually knows we’ve done more than anyone else. When there are any sort of positive stories and dialogue going on about the industry, I think investors look at it and say, who has the best technology, who has the best customers, who has the best long-term prospects, and I think Plug goes to the top of the list, especially among the pure plays. And I’ve been through these ups and downs many times. I can tell you during the downs, actually some of the best work gets done and you come out of it.

By the way, I don’t think climate is going to miraculously get better. I don’t think there’s any possibility that you don’t need to store hydrogen long-term, coupled with solar and wind, because batteries aren’t going to get through long, long outages and seasonal outages. You’re going to need hydrogen stored like natural gas is today, in caverns, and you’re going to need electrolyzers to do that.

You’re going to need our stationary products if you want to move products long distances. You’re going to need hydrogen. Hydrogen is going to be and is needed for chemical processes and high heat applications like green steel. That’s the only way we’re going to decarbonize and really meet the goals that, look, we owe to the future.

SN: On that front, I believe in 2013-14, and then again in 2021, you’ve been able to take advantage of pretty big booms in the stock price and raise capital through stock offerings. When you think about the history that you’ve been able to observe in your time at the company, does that change your approach to corporate management?

For instance, is it necessary or prudent looking at the history of your stock chart to pretty much always have an at-the-market shelf offering available, given that this happens, it’s happened more than once, and it may well happen again?

AM: The answer your questions is yes and yes. But let me take another step back. Thinking how we get to EBITDA positive, I do put a lot of focus on how we don’t dilute shareholders and how to minimize that dilution. But I also recognize that if the stock were $30 to $35 a share and there’s a huge opportunity, yeah, look, we would raise capital. At $2 a share, it’s not nearly as exciting to raise capital. So we want to make sure that we do our best to manage it in a thoughtful way.

I really don’t want to dilute shareholders at these kind of prices. If the stock price were at $30, I also don’t want to lose opportunities in the market that may exist as far as building out our leadership position. So it is a real balance. Would I have done things differently over the last five years if I knew some of the challenges we face here? I would have, but the fact of the matter is, this is going to be needed. I was talking to someone today again, you know, pretty smart person. He told me you’re going to be a $30 billion market cap company again soon.

I just wish, and probably your investors in Plug out there, that “soon” was today, but there is a lot of focus on that.

SN: On the other half of the financing equation, on the debt side, I believe you have a convertible note due around the start of June, about $60 million, and nearly another $140 million due in another convertible note about a year later. These were priced in 2020 and 2024, which were very, very different financing environments, to say the least. What’s your assessment right now of the financing environment on the debt side, as that may be something that you’re exploring or considering in the coming months?

AM: We’re certainly looking at those items, and we have a very, very strong — you know, if you look at our balance sheet, there’s over $4 billion there. We have a great deal of restricted cash in the $900 million range. I mentioned I don’t want to dilute, so we have been spending a lot of time in the debt market thinking about how to address the issues you’re talking about. 

SN: Just to go back to the policy environment a little, you did touch earlier on the need for Plug to be a part of a greener future. On the top-down commitment to getting to that future, I think there’s large agreement that some kind of government push is needed. If we look over at Europe, you had a joint venture there with Renault that recently liquidated, and part of the difficulty cited there was an insufficiently supportive backdrop for the development of the hydrogen market. So in Europe, which has been gold-plating a lot of the greening of the economy we’ve seen over the past decade and change, is there a big risk of a loss of momentum or a shift toward other priorities, like national defense? How do you make sure that political leaders are keeping this at, on, or near the top of the policy agenda?

AM: I think ultimately it comes down to what consumers want, right? Even if you go think through governments and everything, if you kind of look at the German election, the Green Party came in a strong fourth, right? And you probably have a coalition between the Greens and the Christian Democrats and the traditional socialist party. So, I guess policy matters.

I would like to see, quite honestly, policy be steadier across parties and across administrations and across governments that doesn’t change every time there’s a new administration. It’s actually not healthy for the US. It’s not healthy for Europe, and the problem’s not going away. And I think they’ll become realizations where voters will vote differently. 

That being said, it’s our responsibility to make sure we continue to promote hydrogen, why it’s important, and also develop the technologies at a lower cost so you can really have that breakthrough. There’s going to come a point where electricity, electrolyzers, and hydrogen all add up together, and you have a point where it accelerates at a rate none of us expected. Government policy is important, but actually what we do every day in driving down costs and creating value is equally important. If you take a look at what we did in material handling, what we did was create a value proposition that allowed people to move goods more rapidly, and that gave us a differential advantage. 

SN: We’ve talked a lot about America, brought in Europe, but looking around the rest of the world, China’s a massive hydrogen producer. You have Saudi Arabia, which through NEOM is also developing a burgeoning green hydrogen footprint. What are the opportunities for Plug in some of the BRICS nations and other faster-growing locales? 

AM: I can tell you one area where we’re spending a great deal of time — I actually went out to breakfast with a fellow who’s the CEO of Green Ammonia in Australia.

Australia is a really interesting marketplace because it’s kind of trying to figure out how to export the sun. We probably have $5 billion in opportunities in Australia alone to move green ammonia, which needs green hydrogen from Australia, into Japan and South Korea, where they’re looking to burn it to kind of help them beat their carbon goals. So Australia is really interesting. We’re probably the largest deployer of PEM electrolyzers in Europe, so we’re well positioned. We’re looking at hydrogen plants in Europe, which would be constructed with a direct connection to a customer sites, some really interesting deals. That’s a lot of our focus, on electrolyzers and green hydrogen, and that’s really a big part of our future. 

SN: One last question. Let’s put on our rose-colored glasses and look at the crystal ball: what does the policy environment and Plug look like in five years if all your dreams have come true?

AM: As I tell my employees each week, our goal is to be the dominant player in the hydrogen market; a company that actually likes its employees; and if you’re thinking about how you want to generate hydrogen, Plug’s the company to come to. If you want to buy hydrogen, we’re the company to come to. We’ve got fuel cells. If you want to buy them from us, we want to be a household name to people who want to be part of this hydrogen economy. 

From a policy point of view, if I were going to dream, I would ask leaders across the world to actually ask themselves the question of what can we agree on? I think we should all be able to say, OK, we think CO2 emissions are a problem, and I’m very open to saying, then what do we need to do to solve that problem, not just act like we’re not. For me, the perfect policy environment is one where people recognize there’s a problem and don’t debate reality, and then the right policies will come through.