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Hydrogen economy

SK Group inks $1.5 bn deal to acquire US hydrogen fuel cell maker Plug Power

By Jan 07, 2021 (Gmt+09:00)

SK Group inks />.5 bn deal to acquire US hydrogen fuel cell maker Plug Power

South Korea’s SK Group has signed a $1.5 billion deal to acquire a controlling stake in US hydrogen fuel cell maker Plug Power Inc. and launch a joint venture to advance into the rapidly growing Asian fuel cell market.

SK Holdings Co. and SK E&S Co., a natural gas subsidiary, will each invest 800 billion won ($750 million) to acquire a 9.9% stake in the Latham, New York-based company, the Korean conglomerate said in a statement on Jan. 7.

With the investment, SK Group will become Plug Power’s single-largest shareholder. SK expects to close the deal in the first quarter.

Both sides have also agreed to form a joint venture in Korea to provide hydrogen fuel cell systems and fueling station services in Korea and the broader Asian market, including China and Vietnam.

Citigroup Global Markets Inc. and New York-based law firm Simpson Thacher & Bartlett advised SK Group on the investment.

HYDROGEN, A FUTURE GROWTH ENGINE

SK Group inks />.5 bn deal to acquire US hydrogen fuel cell maker Plug Power

The deal comes during a global shift from polluting fossil fuels to clean energy amid tighter environmental regulations.

SK Group, whose energy portfolio ranges from refineries, natural gas and batteries to renewable energy, announced in December that it is fostering the hydrogen business as one of its future growth engines.

It has launched a task force committed to the hydrogen business and unveiled a plan to create a value chain from production to distribution and supply of hydrogen. Under the plan, SK plans to ramp up its hydrogen production capacity to 280,000 tons by 2025 from 30,000 tons in 2023.

In January 2019, the South Korean government announced a hydrogen economy roadmap through 2040, with ambitious goals including over 5 million tons of hydrogen per year; over 6 million fuel cell EVs; 1,200 refilling stations; and 15 GW of fuel cell power generation. Korea expects the cumulative economic value of its hydrogen economy to reach $40 billion by 2040.

PLUG POWER, A LEADING US HYDROGEN PLAYER

Established in 1997, Plug Power has several technologies related to electrolyte membrane fuel cells (PEMFC); electrolytic cells, a key facility for water electrolysis; and construction of liquefied hydrogen plants and hydrogen-charging stations.

Capitalized at approximately 16 trillion won as of the end of 2020, Plug Power has been posting an annual sales growth rate of 50% for years.

SK Group inks />.5 bn deal to acquire US hydrogen fuel cell maker Plug Power

In the US, Plug Power is the exclusive supplier of hydrogen-powered forklifts to global retailers such as Amazon and Walmart, according to SK Group.

Recently, the company advanced into the mid- to large-size truck market utilizing its hydrogen-charging station network across the US and is diversifying its use of hydrogen fuel cells to include drones and aircraft. It is also seeking to expand its business to Europe.

In the second half of this year, Plug Power is expected to complete the construction of a 1.5 GW-a-year fuel cell production plant, the world’s largest, in New York State.

Write to Jun-ho Cha at chacha@hankyung.com

In-Soo Nam edited this article.

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