SK Group announced on the 7th that it will invest about 1.6 trillion won in plug power, a US hydrogen company. It is the largest investment in clean energy in the US ever. SK plans to make large-scale investments by setting the establishment of a’hydrogen ecosystem’ that encompasses hydrogen production, distribution, and supply as a new strategic business.
SK will become the largest shareholder by investing $1.5 billion (about 1.6 trillion won) in Plug Power and securing a 9.9% stake. SK Corp. and SK E&S decided to share the investment in half. The acquisition price is $29.2 per share, and about 51.4 million common stocks (9.9% stake) will be acquired. The transaction is expected to close in the first quarter of this year after approval by US regulatory authorities.
Plug Power, established in 1997, manufactures fuel cells for vehicles and electrolyzers necessary for the production of green hydrogen. It also possesses technologies such as liquefied hydrogen plant and hydrogen charging station construction. Last year’s estimated sales were about $300 million. It is listed on the US NASDAQ and has a market capitalization of $15.5 billion (approximately 1.6 trillion won, based on the closing price on the 6th).
The two companies decided to actively participate in the government’s hydrogen ecosystem construction project in Korea. It decided to join forces with the installation of a hydrogen fuel cell system and a hydrogen charging station. It also agreed to establish a joint venture (JV) next year to build a hydrogen ecosystem in Asia as well as in Korea.
SK E&S President Hyung-wook Choo said, “This investment was made in order to strengthen the environment, society, and governance (ESG).” I look forward to it.”
Invested 1.6 yen in US hydrogen company Plug Power
SK Group’s first large-scale investment in the new year was to secure hydrogen technology. It will become the largest shareholder by investing 1.6 trillion won in plug power, a US hydrogen company, and acquiring a 9.9% stake. SK, a major business in semiconductors, telecommunications, and oil refining, has challenged new businesses that are not familiar. The market estimates that it has made a leading investment to secure the leadership of the hydrogen energy industry, which is just in the stage of market creation.
○Securing new hydrogen technology… “Let’s take the lead”
Plug Power, which SK decided to invest in on the 7th, is a small business in terms of sales. It generated sales of 230 million dollars (about 250 billion won) in 2019, and it is estimated that it recorded 300 million dollars (about 330 billion won) last year. Nevertheless, the enterprise value reaches about 16 trillion won (based on the market capitalization at the end of last year). This is the result of investors paying attention to the growth potential of plug power, which is rare in the world by commercializing hydrogen technology.
Plug Power’s core technology is related to the automotive fuel cell (PEMFC) field. PEMFC is a high-power fuel cell with a large current density. It can be used as an energy source in various industries that require great power. Plug Power uses this fuel cell technology to produce hydrogen forklifts and supply them to Amazon and Wal-Mart in the US. It holds a dominant position in the US hydrogen forklift market. In recent years, it is expanding its application to hydrogen trucks, hydrogen drones, and hydrogen power generation.
Plug Power also possesses the equipment technology necessary for the production of’green hydrogen’. Currently,’by-product hydrogen’, which utilizes what comes out as a by-product from oil refineries and steel mills, and’blue hydrogen’ obtained by reforming natural gas, are mainly used.
Green hydrogen is produced completely differently. Hydrogen is released when strong electricity is applied to water, and this hydrogen is collected and obtained. It is called green hydrogen because no carbon is emitted during the production process. Plug Power is attracting attention because it possesses the electrolytic cell manufacturing technology necessary for the production of green hydrogen.
Plug Power will build the world’s largest fuel cell production plant with a capacity of 1.5 GW in New York, USA in the second half of this year. It is planning to significantly reduce the cost compared to the existing production method by mobilizing all the core technologies of Plug Power.
○ Expanded into China and Vietnam
SK plans to build a hydrogen energy ecosystem not only in Korea but also in Asian markets using Plugpower’s hydrogen technology.
SK formed a’hydrogen business promotion group’ last month in a structure in which affiliates such as SK Corporation, SK Innovation, and SK E&S collaborate. SK Chairman Tae-won Choi’s will to generate results in the hydrogen business by synergizing the affiliates in the related business within the group is expressed. A sketch of hydrogen production and distribution business also appeared at this time.
However, the core fuel cell technology and green hydrogen production were left as long-term tasks. No one in the group has this skill. SK actively participates in the government’s hydrogen ecosystem construction project using Plugpower’s technology. It plans to jointly develop and supply hydrogen fuel cell systems, hydrogen charging stations, and electrolyzers.
SK Group, such as China, Vietnam, and other overseas markets are also pushing for entry into the hydrogen energy market. To this end, SK and Plugpower have agreed to establish a joint venture (JV) next year. Andy Marsh, CEO of Plug Power, said, “We decided to actively target the Asian hydrogen energy market through a JV with SK. We expect to generate profits in earnest from 2024.”
Reporter Ahn Jae-kwang [email protected]