When you think of hydrogen fuel cell companies, Plug Power is likely to be one that springs to mind. But back in 2013, on the cusp of the hydrogen revolution, the company was on the brink of collapse.
Speaking of these dark times and the bright future ahead of the company, in this exclusive online feature, is Plug Power CEO Andy Marsh who is interviewed by gasworld Web Editor Stuart Radnedge.
How was Plug Power started as a business? Whose idea was it to create the company?
It actually has a long history. The company was formed in 1997 as a JV between the Albany company MTI and the utility Detroit Edison. MTI’s history probably goes back longer than that and had links with General Electric, and was involved in alternative energy. When it was formed, the idea was fuel cells to power the homes – using natural gas.
The company got caught up in a wave of exuberance in 1999 – there was a lot of hype surrounding fuel cells. It went public and it was predicted every home would have one of these fuel cell boxes, running off natural gas, to power their home.
The challenge was when reality set in, in 2001/2002, that the market price for manufacturing such a product was just too high and there was no clear path to profitability.
Between this time and 2008, Plug Power was chasing multiple fuel cell technology options – looking a different fuel sources, how much power it would produce.
When I joined Plug Power in April 2008, I recognised that the work done during the 01-08 time frame just mentioned, this was the R&D and market research stage, which formulated the basis for the growth we have now due to our product being marketable.
With my previous business experience, I had the ability to identify that Plug Power had no clear market vision. The company was making these products but for who? With no clear value proposition, how can you sell it?
That’s why when I came along I noticed the savings hydrogen fuel cells could make for material handling companies – it goes well beyond carbon savings. People want to move to green technology – but don’t want to spend extra money. Our fuel cells are running in 2-3 minutes, saving them money through not spending 6 or 7 hours of lost time spent in recharging a forklift’s battery. Batteries decline in performance throughout a shift – fuel cells don’t, and we were able to free up the room required for battery charging stations needed to power forklifts. This value Plug Power created could help companies drive down costs.
The second point identified was that there are over 6 million forklift trucks in the world – so it’s a large market and potentially lots of customers.
In 2010/2011 we fully committed to providing our products for material handing customers. Initially, we had some issues which created some concerns. We raised our hands and admitted we had issues. There were concerns with our customers. But by late 2012, we overcame the quality issues and focused on serving, even over-serving, our customers.
The problem was we were running out of money. I did a horrific fundraiser at the end of 2013 / beginning of 2014 where I made $2.5m at 15 cents a share, just to keep the doors open. Then Air Liquide called and said what do you need?
I said “$6m” and that’s what they did. They invested $6m and it saved our company and allowed us to go on, but they also made a lot of money from it as well!
Clearly Air Liquide’s investment saved Plug Power financially. How important was the deal?
It was Air Liquide and a Swiss company called 5T that invested in us at the same time. Both these deals saved us financially. But our customer base was already there. What the financial backing provided was not only monetary resources and credibility with the investment community, but also the reassurance to our existing customer network that we weren’t going to collapse or suddenly disappear. The customers wanted to buy from us. We just had to be secure financially.
About a year later from the Air Liquide investment, the company withdrew a majority of the shares it held. Was there a fear customers could also withdraw?
No. Not at all. Our customers are Plug Power customers. There can be no doubt that Air Liquide got us over a bump in the road, and they still have some shares and still sit on our board. It’s not an issue – it’s not critical to our long-term goals. They deserve a lot of credit for what they did, but I don’t think Air Liquide is driving sales today.
Moving on, Plug Power recently undertook a six state tour of the US in a road show. During this event, the company secured many deals. How important was it to get on the road to promote the brand around the United States?
The roadshow was valuable to us as an opportunity to speak face-to-face with our investors. We have a rather large retail investor base, and they don’t have the chance to speak to us often enough. So we went to them, not only to tell them about how we can help them, but also to highlight how successful we will be in the future. If you listened to the unique themes at each of the shows, it became clear just how much we plan to grow the business and hit financial growth targets we have set. For example, we expect to hit $500m in the next 3 to 5 years.
What does the future hold for hydrogen fuel cells in the US, and the world, for Plug Power?
In the US we will continue to remain laser focused on material handling in the next one to two years to maintain our unique position as a leader here for hydrogen fuel cells. The future of vehicles is electric – more specifically electric drive trains. They will either be powered by battery or hydrogen fuel cells. There is no one in the world that has the experience Plug Power has in powering electric drive trains with fuel cells. We do 95% of the material handling market’s hydrogen fuelling in the world. Our products operate as many hours in a year as a car will see in a life time, while operating at -25°c and driving out at 25°c. I see Plug in a very strong position to not only be the leader in the US, but a leader for the world. That $500m previously mentioned in the next 3-5 years will mostly come from material handling in the United States, but some of that will come from Europe.
So an expansion outside of the US is in the cards? Can you tell us a little more about these plans?
I can’t say too much at this stage. But yes there are plans. More information on this shouldn’t be too long away from being announced. An expansion outside of the US and into the European market will further enhance our business. We are currently in the process of establishing a sales team in Europe.