➤ Plug Power is ramping up efforts to blend green hydrogen into natural gas infrastructure worldwide.

➤ Green hydrogen equipment, fuel and transportation costs are expected to continue to decline despite rising commodity prices and supply chain bottlenecks.

➤ Consumer sentiment is driving hydrogen adoption among customers like Amazon and Walmart in the U.S.

U.S. green hydrogen fuel cell provider Plug Power Inc. plans to develop production facilities in California and Pennsylvania and is already building a plant and electrical substation in New York. The company also has several joint ventures in Europe and Asia to capitalize on growing interest in the fuel as a key component of decarbonizing the economy and combating climate change.

S&P Global Commodity Insights spoke with Plug Power CEO Andy Marsh about opportunities for hydrogen across the globe and how existing infrastructure can help facilitate large-scale deployment. The following conversation is edited for length and clarity.

S&P Global Commodity Insights: Can you break down what Plug Power does?

Andy Marsh: Plug Power created the first market in the world for fuel cells by putting fuel cells into forklift trucks. During that journey we became the largest user of liquid hydrogen. We built 165 fueling stations, more than anyone else in the world. We've done it with large customers like Amazon.com Inc. and Walmart Inc. that need to move goods every day.

[In February], we broke ground on a new facility with Fortescue Metals Group Ltd., one of the largest mining companies in Australia, to make green ammonia using Plug Power electrolyzers. If we go to Europe, you'll see that Plug Power has a joint venture with Renault SA to produce hydrogen fuel cell commercial vehicles, and Plug owns half the vehicles.

We've been hearing more about hydrogen as a clean source of energy. What's changed in the last decade that has you more optimistic about the fuel's future?

Here in the U.S. it's really driven by consumer sentiment, and that's ended up driving companies like Amazon or Walmart to set out goals to become net carbon zero. That dynamic did not exist five years ago, and then on top of that you're beginning to see government policies that recognize that in order for this energy transition to happen, hydrogen will represent probably 20% of the world's energy to meet those goals. Without hydrogen, the ability to achieve a 1.5 degrees C increase in the temperature is not really achievable.

Given what's happening in Ukraine, do you think companies like Plug Power eyeing large-scale renewables deployment in Europe have a bigger opportunity?

It's a huge opportunity for us. Two weeks ago, the message about hydrogen and green hydrogen specifically was to meet the 1.5 degrees C goal. Today, it's much more than that — it's also a national security issue, not only for Europe but for the whole liberal democratic world.

We can provide the green hydrogen. We can help Europe move past their present position. I was meeting with the CEO of one of the largest natural gas pipeline providers in Europe [earlier in March] and we were talking about how to convert their pipelines to green hydrogen much quicker.

We're seeing a lot of interest from energy companies across the U.S. in partnering to construct hydrogen hubs. How many of those hubs can the country accommodate?

In the bipartisan infrastructure bill passed by Congress, there were four hydrogen hubs and it could extend beyond that. The real focus, I believe, is that these hubs should be the start of building blocks to expand the hydrogen economy. I see them as ... bridges for growing the networks.

This idea of one hub or four hubs or five hubs probably limits what hydrogen will be in the future.

Several U.S. gas pipeline companies are exploring hydrogen blending as part of their transportation businesses. Is Plug Power planning to use existing midstream infrastructure to distribute hydrogen?

We actually have a deal that we've already announced for 10 tons per day with [compressed natural gas transporter] Certarus USA Ltd. to provide that to customers like National Grid PLC, so that's a reality today. But I think we see that as a much, much bigger opportunity.

We've been working with most of the natural gas pipeline providers in the U.S. I think most people feel comfortable in this country with blending 15% to 20% hydrogen in a pipeline today. If you go over to Europe Snam SpA ... highlights the fact that 91% of the pipelines in Europe are capable of delivering 100% hydrogen today. You can turn some of those pipelines not five years from now, but today, into hydrogen pipelines.

Snam often talks about the five pipelines that run between Tunisia and southern Italy, and those could become hydrogen pipelines overnight if demand was available. If you think about the renewable capability in northern Africa, I think that possibility is sooner rather than later.

What does the U.S. have to do to catch up with Europe in that respect?

The U.S. is the leader in hydrogen fuel cells and I think that sometimes gets lost in the U.S. market. ... The U.S. is not behind, but it's different. Much of the activity is consumer-driven rather than government-driven, so I think the message sometimes gets blurred, but the U.S. is not behind Europe and Plug Power is a perfect example of that.

Supply chain bottlenecks and rising commodity prices are contributing to higher power costs. How does that impact the business case for green hydrogen?

We can demonstrate that [generation] equipment will be coming down in cost 25% every time you double the number of units that are in the field. We've shown that in fuel cells and I think it's very similar to what people have experienced in industries like wireless or broadband. If you think about the cost of transportation, so much of that can be dramatically changed by moving to pipelines.

It is true that there have been some recent hikes [in renewable electricity costs]. I think Plug's view is that it is a temporary change and that long-term that goes down to one cent per kWh and you're already seeing deals around the world under a cent per kWh. That makes hydrogen incredibly cost-competitive even without government assistance.

If you take a look at our fuel cell products today, the cost of rare metals only represents about 5% of the total cost and in that case it's platinum. When you look at the cost and usage of platinum, it will actually decline in fuel cell products as companies design products that require less rare metals to meet their customers' needs.

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