Plug Power and SK Group Partnership

January 8, 2021

On January 6, 2021, Plug Power announced a $1.5 billion investment from SK Group and the intention to form a joint venture in South Korea. We followed up this announcement with a conversation with Jim Cramer on Mad Money January 7th. We have received many questions regarding this exciting announcement and what it means for the continued growth of both Plug Power and the global hydrogen economy! If our press release and document signing video weren’t enough, we have drafted this Q&A to seek to answer some of your questions below:

Who is SK Group?

SK Group is the second largest conglomerate in South Korea, with its largest businesses primarily involved in the chemical, petroleum, and energy industries.

What will Plug Power and SK Group be doing in South Korea?

Plug Power and SK Group are partnering to accelerate hydrogen as an alternative energy source in Asian markets. The anticipated scope of the JV will include manufacturing facilities in Korea, including an Asian gigafactory, to produce and sell products across the entire hydrogen economy value chain, including Plug Power’s GenSure stationary power fuel cell, ProGen fuel cell engine, GenFuel liquid hydrogen and dispensing equipment and Plug Power electrolyzer products. The JV will focus on near-term opportunities in South Korea, taking advantage of captive applications with SK Group.

What makes this relationship so exciting?

The deal with SK Group is exciting for a number of reasons. On a financial level, this is the largest U.S. clean energy Private Investment into a Public Entity (PIPE) in the last 20 years. 

From a market perspective, in January 2019, the South Korea government committed to leading the hydrogen market in both public and private sectors, including making the country the #1 producer of hydrogen-powered cars and fuel cells globally by 2030. Its ambitious goals include production of over 5MM tons of hydrogen per year, over 6MM fuel cell EVs, 1,200 refilling stations and 15 GW of fuel cell power generation,  and expects the cumulative economic value of its hydrogen economy to reach ~$40Bn by 2040. With this governmental support, South Korea is an incredible place to make an impact on emission-free, clean energy and Plug Power will be integral to this mission. This partnership provides Plug Power a great opportunity to grow their business well beyond current projections for 2024.

What drove the timing for this new relationship?

Plug Power identified SK Global many months ago as an ideal global partner to continue expanding the hydrogen economy due to their reach and renowned professionalism as a business partner. Given the scale we have achieved in the United States, we believe that Plug Power is equipped to leverage our existing platform to effectively expand into Asia, where there is significant demand for our products and services. The opportunity with SK presents an attractive and timely opportunity to establish a foothold in this market with one of South Korea’s leading industrial conglomerates.

What markets will the JV be targeting? What is the market entry strategy?

The JV will focus on near-term opportunities in South Korea, taking advantage of captive applications with SK, and establish local support capability and services in the region. Additionally, we believe that there are significant expansion opportunities in China, Vietnam and other Asian markets.

Did you consider other partners?

Given our growth objectives, we regularly evaluate all potential partnerships to expand our platform. SK group is the 2nd largest conglomerate in South Korea and is a highly attractive partner for Plug. SK has established a strategy for building out the hydrogen economy and we believe that SK will be critical for accelerating our expansion into Asian markets.

Why was SK Group interested in Plug Power?

SK Group recognized that Plug Power built the first viable hydrogen and fuel cell business.  That made this deal possible. In executing this partnership, Plug Power has been recognized by one of the leading energy companies in Asia, SK Global, to be their partner in scaling the hydrogen economy both in South Korea and throughout Asia.

Why is the equity investment necessary for the partnership? Are there additional cash requirements for Plug?

With approximately $1.5Bn of cash and cash equivalents on our balance sheet, we believe that Plug Power is well capitalized to support our growth objectives and this additional capital will only help to accelerate our growth. The equity investment itself confirms that Plug and SK’s interests are aligned and that we are focused on a long-term partnership. 

Plug Power continues to grow in our mission to build the clean hydrogen economy and our new partnership with SK Group is integral to this global mission. We invite you to follow us as we work hard to make the world a greener, more livable place.