SK has chosen a global hydrogen company as its first investment destination this year. We are starting out in earnest in the hydrogen business, which is attracting attention as a key area of ESG investment and energy of the next generation dream.
SK and SK E&S announced on the 7th that they will become the largest shareholders by securing a 9.9% stake in Plug Power, a leading global hydrogen business based on the industry’s best core technology. This investment was made in a way that SK Corp. and SK E&S each invested KRW 800 billion to jointly invest about KRW 1.6 trillion (USD 1.5 billion).
Established in 1997, Plug Power is a vehicle fuel cell (PEMFC) within the hydrogen business value chain, water electrolysis (a technology that produces hydrogen by supplying power to water) core facilities such as electrolyzer, liquefied hydrogen plant, and hydrogen charging station construction technology. It has a number of core technologies. Plug Power is recording a high sales growth of about 50% every year, and its market capitalization as of the end of last year reached about 16 trillion won.
In addition, Plug Power also possesses hydrogen-based mobility business capabilities such as forklifts and trucks that use hydrogen as fuel. Plug Power has a virtual monopoly on the entire U.S. hydrogen forklift supply market, including exclusively supplying hydrogen forklifts to global distribution companies such as Amazon and Wal-Mart.
Recently, it has entered the mid- to large-sized truck market by utilizing the hydrogen charging station network established throughout the United States, and is diversifying the use of hydrogen fuel cells for drones, aircraft, and power generation. In addition, high growth is expected in the future as it is actively promoting business expansion to the European market to build a hydrogen ecosystem.
In the second half of this year, the world’s largest fuel cell production plant with an annual capacity of 1.5 gigawatts (1.5GW) will be completed in New York, USA, and production will begin in earnest. Through this, the production cost of fuel cells and water electrolysis facilities, which are the core products of Plug Power, is expected to be significantly lowered, and cost competitiveness will be secured to solidify its position as a global leader.
As SK has secured the position of Plug Power’s largest shareholder with this investment, it is planning to accelerate the securing of leadership in the Asian hydrogen market through synergy between the two companies. In Korea, the strategy is to use Plug Power’s technology to accelerate the creation of the hydrogen ecosystem that SK envisions, and to preempt new business development opportunities by using the network of SK Group in China and Vietnam.
To this end, SK plans to materialize the business model by jointly entering the Asian hydrogen market through the establishment of a joint venture with Plug Power.
Last year, SK established the’Hydrogen Business Promotion Group’, an organization dedicated to hydrogen business, composed of 20 experts from affiliates such as SK E&S, SK E&C, and SK Innovation, which are energy-related companies, and immediately started implementing business strategies.
SK is focusing on fostering the hydrogen business as the next-generation flagship energy business by integrating the value chain from production, distribution and supply of hydrogen with a total hydrogen production capacity of 280,000 tons by 2025, starting from domestic production of 30,000 tons in 2023. He has announced plans to do it.
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An SK official said, “We plan to continuously increase our influence in the global hydrogen market by combining SK Group’s business capabilities and various external partnerships. We will establish ourselves as a leading ESG management company by creating an eco-friendly hydrogen ecosystem one step ahead. I said.
Meanwhile, the investment transaction was consulted by Citigroup Global Market Securities and STB (Simpson Thacher & Bartlett), a global law firm.