Andy Marsh | Plug Power as one-stop-shop enabling the green hydrogen industry
In this podcast, we learn from Andy Marsh, CEO at Plug Power, how Plug Power is a one-stop-shop enabling the green hydrogen industry.
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This article is part of the series: Hydrogen Innovators Podcast
Transcript
[00:00:00.00] [Music Playing]
[00:00:02.96] Andy Marsh: Over that journey, we've really understood that it was critical to provide customers a complete system, everything from hydrogen to service to the fuel cells, that really distinguished Plug. And it became the basis of how we became this vertically-integrated company.
[00:00:23.87] I've worked in a lot of areas where it's not defined. And you've got to define either what the business model is or what the technology is. That's one of the joys of Plug.
[00:00:35.40] And as a leader in an environment like that, you're often a follower because there are people who know more than you. And you have to learn from them. And you have to integrate their great ideas into your business model and how you go about approaching the world. And I think that's the joy I have at Plug every day.
[00:00:58.41] [Music Playing]
[00:01:06.62] Karen Baert: Welcome back to the Hydrogen Innovator podcast. This is a podcast series produced by the Stanford Hydrogen Initiative, and a podcast where we spotlight bold innovators in hydrogen, in academia, and in industry. And you can find the podcast series, Hydrogen Innovators, on Spotify and on Apple podcasts.
[00:01:25.32] I'm Karen Baert, recent Stanford MBA graduate, entrepreneur, and innovation strategist at the initiative. And today, we have the privilege to welcome Andrew Marsh, the CEO--
[00:01:36.62] Andy Marsh: Andy Marsh. Andy Marsh, Karen.
[00:01:39.26] Karen Baert: --Andy Marsh, the CEO of Plug Power. Let's start with a bit of background on Andy. So, Andy, you hold a Master's Degree in Electrical Engineering from Duke University and a Master's in Business Administration from SMU in Texas.
[00:01:56.49] After school, you spent around 18 years with Lucent Bell Laboratories in a variety of sales and also technical managerial positions. But then, you went a very different route, right? You co-founded Valere Power, served as a co-founder and CEO, all the way from the inception to its sale. I think the sale was in 2007.
[00:02:20.01] The core of Valere Power's business was selling DC power products to the telecommunications sector. The company grew from nothing to a 200 employees and around $90 million annual revenue. And then, you joined Plug Power as President and CEO, 2008.
[00:02:37.75] And you've been at the helm ever since, turning the company into a key provider of turnkey hydrogen solutions in the global clean hydrogen economy. Let me tell you a little bit about how I've known Plug Power over the last years. And you're very welcome--
[00:02:53.61] Andy Marsh: I was about to say, Karen, boy, you make me feel old going through all those things I've been around.
[00:02:59.99] [LAUGHTER]
[00:03:01.89] Karen Baert: I would call it experience.
[00:03:04.29] Andy Marsh: OK.
[00:03:04.69] [LAUGHS]
[00:03:06.72] Karen Baert: To me, Plug power, especially in the very early days of the clean hydrogen industry a few years ago, when there was still a lot of skepticism on clean hydrogen is too expensive. There's no customers. There's no supply that meets demand, et cetera.
[00:03:22.36] I always saw and brought Plug Power up as an example because you really see how it shows end-to-end that it works, right? And specifically, material handling, the core of Plug's business. Plug Power provided this end-to-end solution, everything from hydrogen production, storage, handling, delivery, and transportation, and then even dispensing of the hydrogen, so a great example where clean hydrogen met the needs of the customers while decarbonizing the economy.
[00:03:53.35] Andy, welcome to the podcast. Today, we'd love to start with a bit of an overview on Plug Power. Under your leadership, Plug Power grew from a fuel cell company to an end-to-end solution provider for clean hydrogen. Can you give us an overview on Plug today, and its ambition to build the green hydrogen ecosystem?
[00:04:13.52] Andy Marsh: Sure. Well, thank you, Karen, for having me today, and those kind words about Plug, and the kind words about myself. So thank you. So we've been doing this a long time.
[00:04:26.55] And we've been in business for over 25 years. And prior to my joining Plug, the company was really a technology company. I think what we uniquely found was a business where fuel cells and hydrogen made sense.
[00:04:46.10] And when I look back, it's very much-- and it is, as you mentioned, in material handling, where we have a dominant position with people like Walmart and Amazon. Over about 30% of US food that gets transported around actually touches our products. But during that journey, and we have about 60,000 units out there in the field, fuel cells at the moment, have built over 200 fueling stations.
[00:05:15.55] Over that journey, we've really understood that it was critical to provide customers a complete system, everything from hydrogen to service to the fuel cells, that really distinguished Plug. And it became the basis of how we became this vertically-integrated company, where, today, we sell everything from electrolyzers to liquefiers to the cryogenic trailers that deliver hydrogen to the liquid storage capabilities that we put at our customers sites to fuel cells for material handling for on-road vehicles with our great partner Renault, for large-scale stationary, which we're doing with our other great partner, SK.
[00:06:03.56] So the company today is-- what's interesting is that probably this year, somewhere along the year, electrolyzers will become our biggest business. So the world has changed for us. And we have a wonderful position. And we've done more and experienced more than anyone else in the world. And that's that experience, that real-life experience with customers is really what distinguishes Plug.
[00:06:36.50] Karen Baert: That is a massive and really impressive change indeed. To me, the hydrogen industry is an industry there are a lot of challenges, and opportunities, and different players are tackling different challenges. I'm really impressed to see that Plug is playing across these different pieces of the value chain.
[00:06:52.92] How do you manage to do all of that? You mentioned partnerships. Is that a big enabler to that vertical integration?
[00:07:00.44] Andy Marsh: Partnerships are important, but I also think we did a really good job of merging with companies to really expand our capabilities. We bought a company that was experts in liquefying natural gas, who knew how to build equipment to do that, called Jules Technology, which today we're using to liquefy hydrogen.
[00:07:32.00] We bought a team in the Netherlands that were experts in oil and gas industry, whose skill sets are critical when you think about building out these large-scale hydrogen plants. And we're able to leverage those individuals to really start building out our electrolyzer portfolio. So we did a lot of it through the appropriate mergers.
[00:07:59.91] We've done it with great partnerships, as I mentioned before, folks on MEAs and precious metals, like Johnson Matthey, with Renault, as I mentioned before, for vehicles, for ACCIONA in Spain to build out hydrogen plants, so really a whole array of opportunity partners, as well as internal capabilities, as well as mergers, which really made this all possible.
[00:08:27.17] Karen Baert: You so mentioned electrolyzers, so hydrogen production as becoming the biggest business at Plug Power. These are PEM electrolyzers, proton exchange membranes. My understanding is that Plug Power is also building hydrogen production capacity, with the goal of getting to 1,200 tons per day of clean hydrogen in and 2030. What does it take to build a hydrogen plant like that today? And what are the challenges?
[00:08:54.81] Andy Marsh: Oh, lots of learning. But if you go down to Georgia, you will see the largest electrolyzer plant in the US, which is capable of 15 tons per day of liquid hydrogen. So there's everything from permitting to financing to design of the plant itself to having customers who want to use that hydrogen.
[00:09:26.86] And when I look at it, Karen, I think the biggest challenge wasn't the electrolyzers. The electrolyzers actually came up almost flawlessly. But, you know, you look at this facility, so you have a 135-megawatt substation that we had to get constructed.
[00:09:50.05] You have transformers, and control rooms, and rectifiers, which feed the electrolyzers, which alone is not that complicated. But when you are one of the first companies to put together those large-scale building blocks to feed electrolyzers, that's a challenge.
[00:10:12.78] Making sure you have adequate water. I'm from Philadelphia, so that's why I say water that way-- adequate water to be able to split. And what I have found most fascinating is when you start really commissioning the liquefier. And it takes about 90 days to really make sure.
[00:10:36.81] Hydrogen is liquid around 25 degrees Kelvin. And to make sure that liquefier is dried out, you actually drive things down to minus 65, minus 70 degrees F dew point. That's a tough process. And you have to make sure the catalyst is dried out. You have to make sure everything inside that cold box is dried out.
[00:11:02.39] And what I like to remind people is you have thousands, and thousands, and thousands of components. And if one of them doesn't work-- I mean, this facility has over 8,000 pipes, just imagine that, to move hydrogen around-- if one of those leaks or doesn't work, the plant doesn't work. So it is a real, real interesting engineering project. But once you do it once, it becomes much easier to do it a second time.
[00:11:37.12] Karen Baert: Right, right. And that's so interesting because I think I can call it the balance of plant, right? We're talking about [INAUDIBLE], electricity supply, water input. And that's something that hasn't been talked about that much, but it's obviously very crucial to the whole system.
[00:11:55.63] Andy Marsh: So, Karen, I'm an engineer. And it's easy to draw little building blocks, and little squares, and say, this is water purification. This is liquefier box. This is a rectifier. It's a lot more challenging to make sure all these pieces work together.
[00:12:12.67] Karen Baert: Absolutely. Now you also talked about customers, Andy, [INAUDIBLE] to better understand there. Did you need to have the offtaker agreements locked in before you could actually finance the project or start building?
[00:12:27.52] Andy Marsh: We were able to finance most with equity. So that made things straightforward. And we did have customers already. As you mentioned, we have built a big business in material handling. So, I mean, already we're using about 50 tons of liquid hydrogen a day, which we purchased from good partners like Linde.
[00:12:53.38] And so we have a way to use that hydrogen immediately for our own internal needs. And so, for us, that challenge is not as-- that wasn't as big of a hurdle for us as it is for others. And that's one of our real strengths, are these customer relationships.
[00:13:17.47] Karen Baert: Yeah. And again there, that vertical integration is a huge plus.
[00:13:22.45] Andy Marsh: It is a huge plus. Absolutely. And the sale of hydrogen helps sale of fuel cells, which helps sale of storage devices, which helps sales of cryogenic trucks. So it all really ties together.
[00:13:39.71] Karen Baert: Great. So we talked about production. Let's talk about use cases. So Plug Power started in the material handling space, looking at clean hydrogen there.
[00:13:48.11] Andy Marsh: But before you go off production, I should mention that those electrolyzers use MEAs, which are built in the largest gigafactory in the world for making fuel cell PEM electrolyzers in Rochester, New York. So that's all Plug too. But now we can go off to use cases, Karen. Manufacturing's important. And Plug has almost a million square feet of manufacturing space to support all these businesses.
[00:14:21.95] Karen Baert: Wow. Great. OK, so use cases. Plug started with material handling as a key use case for clean hydrogen, and then switched over or rather expanded the use cases all the way to mobility and broader stationary applications. Can you talk us a little bit through each of these, and specifically, in mobility, what use cases is Plug focusing on? And then, same thing for the stationary power products.
[00:14:50.57] Andy Marsh: Yeah. So we've looked at, and probably us and Renault have a little bit different view. And this is why being close to customers is important. I think we believe pretty strongly about 35% to 40% of the last mile will actually be hydrogen fuel cells, mainly because you can't afford to have the downtime to charge batteries.
[00:15:19.11] And if you look at what's going on in Chicago today, where it's really cold, I read where all the charging stations are having issues. And all the batteries are having issues. If you have to get goods to people home, including food and other items, you need something that can work all day long.
[00:15:43.35] And what hydrogen fuel cells do versus battery is give you twice the range, which is twice the run time. It gives you a fueling just like a vehicle is fuel today. And when we talk to our critical partners, especially in Europe, where by 2030, many, many European cities will not allow internal combustion engine vehicles, we really believe our JV with Renault idea really will have a unique advantage.
[00:16:21.21] And I think when you look at long-haul vehicles, it's a great opportunity, especially for hydrogen generation business. And I think that there's not a question that when you look at the power level required by a class 8 vehicle, one is really going to need a hydrogen fuel cell if you're really looking to decarbonize. I am really excited about the stationary market.
[00:16:51.27] And our roadmaps really interesting because it's really a 10-year journey. But it's a 10-year journey which you can make sales with today. So if you start thinking about places where the grid doesn't exist or places where you can't provide sufficient grid power, and that goes everywhere from charging EVs at scale to issues with where folks want to put down data centers to factories.
[00:17:29.88] What we have found with our stationary products, and it's a niche market today, Karen. But the niche market is going where the grid doesn't exist or is difficult to bring. And we have, I believe, and I can tell you, I had one of the largest data center operators in the world here visiting us.
[00:17:53.36] And I was told that they visited 14 companies. And they didn't see anything like the Plug stationary product. You know, I would also couple that with the fact that the next big market for us is actually a rather unique market, where we'll be deploying hundreds of megawatts of power with SK into South Korea, where we'll actually be using waste hydrogen stream from plant like a chloralkali plant to generate electricity that you can put directly on the grid as prime power.
[00:18:31.79] That's a rather unique situation, but it gives us a great learning. Because by the end of this decade, we'll probably have over a half gigawatt, if not even more, of stationary products delivered. We think that, ultimately, stationary products will replace natural gas generators.
[00:18:55.70] So peaker plants, in the future, you'll be combining wind, solar, maybe nuclear to really provide power for those instances. It's cold here in New York today. It's about 15 degrees outside and snowing where I am. And natural gas turbines are running all day.
[00:19:23.05] Ultimately, that's going to be hydrogen fuel cells, which are going to be providing that additional power during peak periods for homes and facilities. And that's really without hydrogen, you don't get to a renewable world.
[00:19:40.45] Karen Baert: Mm-hmm. Interesting. So you're saying we're starting here with backup generation or energy where there's no or limited access to the grid. But then broader, you're talking about replacing natural gas peaker plants and peaker plants in general with hydrogen on the long-term. Is that the right summary?
[00:20:03.58] Andy Marsh: You did it better than I did it, Karen. Yes, you are correct.
[00:20:07.19] [LAUGHS]
[00:20:09.64] Karen Baert: Now if we talk about that backup generator piece first, how would that look like? So are we talking about we need to get liquefied hydrogen to a certain remote area, and then we use fuel cells to turn that into electricity?
[00:20:22.87] Andy Marsh: And I don't think people fully appreciate this. It takes 3 and 1/2 years to connect the new plant to the grid. That's the backup that sits in the US at the moment.
[00:20:37.24] And I know myself, when we build facilities, that getting power is one of the biggest challenges. We're finding that folks actually are looking to use fuel cells instead of the grids because it is really, really critical that they have power available. And, we're looking to use, for example, with a 1 to 2-megawatt plant, over about a ton of hydrogen, liquid hydrogen a day.
[00:21:15.06] And it's one of the reasons we really believe that build out is important. Those plants, if you're using them for backup power, we've had lots of discussions with potential customers about using them as providing power during peak energy times, loss of energy times at their own facilities. So if you're running a data center and, during peak, it's costing you $0.20 to $0.25 a kilowatt hour, a fuel cell with hydrogen can deliver power more cost effectively.
[00:21:50.66] Karen Baert: What do you think the size of that market will look like? So today, in the US, there's around 10 million tons of hydrogen produced a year. Just trying to understand the magnitude of the opportunity here.
[00:22:04.22] Andy Marsh: By 2035, we think it's hundreds of billions of dollars. And that's work we've done with one of the largest outside consultants in the hydrogen industry. When we looked at the size and the potential of this business.
[00:22:20.39] Karen Baert: Big opportunity, indeed.
[00:22:22.41] Andy Marsh: Big opportunity, Karen.
[00:22:23.93] Karen Baert: Yeah. And if we take a step back and think about Plug Power in 2024, there's no time like today to work in clean hydrogen, lots of opportunities and challenges this year. I'm sure you have a lot of goals, aspirations. Fast-forward to December 2024. What do you want to achieve here with Plug for 2024 to feel like a productive year?
[00:22:49.63] Andy Marsh: I think it's a really important that we continue to build out hydrogen plants. And we're actually working very closely with the DOE on a $1.5 billion loan, which would allow us to really pursue our vision of building out clean hydrogen across United States.
[00:23:16.93] We believe hydrogen-- I've been around this for 15 years. And one of the things I've learned is hydrogen is the key. And we have very big ambitions in Europe, including the work going on in Spain, Finland, as well as the Port of Antwerp. Plug is, from a financial point of view, is looking to generate cash. And we generate cash by shipping more and more of our products and making sure we're getting the right price for the products we ship.
[00:23:46.38] Karen Baert: Great. Look forward to continuing to follow your progress from the sidelines. And wish you and the team best of luck with these admirable and ambitious aspirations.
[00:23:59.34] Andy Marsh: Yes.
[00:24:00.06] Karen Baert: Andy, we'd love to talk a bit more about policy, and specifically the Inflation Reduction Act, because I understand you're pretty savvy on that front, as well. So the big opportunity, as part of the IRA in hydrogen, is the hydrogen production tax credit, 45V. More details were released on these proposed rules relatively recently.
[00:24:23.92] And my key takeaways is that they were stricter, these rules, than expected and based on three pillars. One, it had to be new renewable resources to be able to tap into the tax credits. Two, the clean electricity must be physically deliverable to the electrolyzer.
[00:24:44.04] And three, you need to have hourly matching of the renewable production and the hydrogen production. There's been a lot of pushback from many, many energy companies on these new rules. What is your perspective?
[00:24:57.92] Andy Marsh: I think it's actually a administrative overreach. Plug was deeply involved with Senator Carper, Senator Manchin's office during the writing of the act. I think some senators, even including Pennsylvania senators, have been loud and clear that additionality was never a requirement.
[00:25:24.27] And quite honestly, we think if that doesn't change, I suspect there'll be lawsuits against the government, especially from the nuclear power industry. It is foolish that hydrogen is being asked to live up to standards that batteries have not lived up to, that the electrical grid doesn't end up to. There is no hourly time matching for charging your car. There is no hourly time matching associated with the-- when you look at the government's own clean building act, they only expect 50% hourly time matching in 2030.
[00:26:07.13] The tools don't exist. I do think it will change, but we're very, very disappointed. And I'm a big supporter of the administration, but I think they struck and missed on this one. And I think during the comment period, we expect that there will be a more thoughtful view of items like nuclear power, hydropower, grandfathering, and when it's really realistic, to add time matching.
[00:26:39.64] And the absurdity that the hydrogen industry has to go to perfect rules when other industries, like battery, like solar, like wind, do not is really very, very disappointing. So I stand side by side with the energy industry. And look, what it does, how it's written today makes Europe more attractive than the United States. And that certainly was not the intent.
[00:27:12.64] Karen Baert: So what are the next steps from here?
[00:27:16.12] Andy Marsh: Well, there is a comment period. And, obviously, we are talking to our friends on Capitol Hill to support us during the comment period. And we're working with the organizations like the Fuel Cell and Hydrogen Energy Association, as well as other companies, to make sure that the practical voice of what it takes to really build out the hydrogen economy gets integrated into the regulations.
[00:27:45.41] Karen Baert: Indeed. And it's so important that industry voices are being heard here so we can all move forward together and the same direction. Thank you for sharing that perspective. One more question on policy, specifically on the hydrogen hubs. Understanding that Plug has been pretty involved with the Appalachian Hydrogen Hub. Please correct me if that's not the right way to pronounce it.
[00:28:07.97] Andy Marsh: Yes, yes.
[00:28:09.36] Karen Baert: So that's the hub that stretches across Ohio, Pennsylvania, and West Virginia and was one of the winning hydrogen hubs. It comes with, I believe, $925 million of funding from the government. At least all of it needs to be cost sharing.
[00:28:23.88] How will this support the growth of the clean hydrogen industry in this region? And how is Plug planning to be involved here?
[00:28:31.79] Andy Marsh: Well, I think it is important. And we're certainly looking to be building hydrogen plants in the region. And we actually have engagement in six of the seven hubs and, I think, maybe all the hubs at certain levels.
[00:28:47.69] But it also comes back to why you look at certain hubs, like the Pacific Northwest hub, which use hydropower, and that they're looking to leverage the IRA to make sure it's cost competitive. The very, very strict requirements that exist today for the IRA, quite honestly, will damage many, many of the potential hubs.
[00:29:14.61] One hub that we're really excited about is the Midwest hub, which uses nuclear power, which is really tied closely to the IRA. So I don't believe, if they stick with the strict regulations, that the hubs will be nearly as successful as they could be. The hubs were built to make sure that hydrogen was available nationwide, so that fuel cells in this industry can grow.
[00:29:43.18] And with the IRA regulations, it's really going to put a dent on many of the hubs which were chosen, which we think, from our inside knowledge, won't be economically feasible. So it's really, really important that the government gets it right during this critical period.
[00:30:04.95] Karen Baert: Indeed To be continued.
[00:30:08.40] Andy Marsh: To be continued.
[00:30:10.92] Karen Baert: Great, Andy, I'd love to move on to the second and last part of the podcast, which is talking a bit about your personal leadership journey. So you founded Valere Power. And under your leadership, it grew from zero to 200 employees. But then, you joined Plug Power as CEO.
[00:30:29.65] And I think, at the time, the company was around 300 employees and grew to about 3,000 employees today. How different was it to inherit and run a big organization versus building something yourself from scratch? And did you approach things differently? Or, in hindsight, would you have approached things differently?
[00:30:49.30] [LAUGHS]
[00:30:50.04] Andy Marsh: Oh, in hindsight, you always approach things differently, Karen. I think when I built Valere, I was in an industry that I was involved with for 18 years. And I knew many of the people, not all the people, who, say, the first 50 people I brought in, I had experience with them. And there was a familiarity and, quite honestly, less risk.
[00:31:30.24] You're kind of inbred then, right? So you may not be as innovative as you would like if you had more outside forces. And I think at Plug, I was blessed. There's very few people who work here today who actually I worked with before, as a percent of the population.
[00:31:53.28] And I think that what really is unique, where Valere was really great at execution, Plug's innovators. And I was fortunate enough when I came here, some people who aren't here anymore, who've moved on and are continuing to innovate, and some that you have remained with us. But Plug had an outstanding bench of scientists and engineers in a field that I didn't know as well as the one I've worked in previously for 30 years.
[00:32:29.25] And that required a change in how I approached. This was not going to be an instantaneous success. I knew how to make Valere and instantaneous success.
[00:32:44.73] This journey has had more to do with listening, and learning, and engaging with others. And it's been an incredible, fulfilling experience for me to be able to spend time with great people, all the way from our factory floor to our service techs. I have marketing people on the phone here who are listening in and who've taught me a lot along the journey.
[00:33:18.91] For me personally, it's been a great opportunity to learn the power of listening and waiting. And have to be more thoughtful in this industry because it's not defined yet. And quite honestly, the fact it's not defined-- I know you have young people listening to this-- I can tell you, I've been fortunate in my life.
[00:33:48.20] I've worked in a lot of areas where it's not defined. And you've got to define either what the business model is or what the technology is. That's one of the joys of Plug. And as a leader in an environment like that, you're often a follower because there are people who know more than you.
[00:34:09.10] And you have to learn from them. And you have to integrate their great ideas into your business model and how you go about approaching the world. And I think that's the joy I have at Plug every day.
[00:34:23.84] Karen Baert: I love what you mentioned on the fact that the industry is not yet defined. And I can very much relate to that as an entrepreneur, that it's kind of equally scary, but also incredibly exciting.
[00:34:37.32] Andy Marsh: It is. It is the best part.
[00:34:39.84] Karen Baert: I want to end with the last question here, Andy, that we ask every guest in our podcast. I have this strong belief that we all stand on the shoulders of the giants who came before us. And to use Isaac Newton's words, it's standing on their shoulders is what makes us see further. In that context, who inspires you most and why?
[00:34:58.64] Andy Marsh: First, from a business point of view, I worked for a fellow named Jim Wallington, who was a chief technical officer of Lucent Technologies power business, his transparency, his humanity coupled with somebody who had over 50 patents in power electronics and really defined the power architecture for the telecommunication world we know today. I was fortunate enough to work for most of my career and remains a good friend after all these years.
[00:35:41.27] The other individual I would mention, I was fortunate enough to have a great dad. And my dad was calm during crisis. I never saw him let anything get to him, but he always moved forward. So both of them, I was fortunate enough. Both of them had great influence on my thinking and, I hope, my character. Character matters.
[00:36:14.58] Karen Baert: Character matters. Absolutely. Andy, thank you so much for educating us, and inspiring us, and for spending this hour with us, and look forward to continuing to follow your journey at Plug and far beyond that. Thank you so much.
[00:36:30.12] Andy Marsh: Great. Well, thank you for having me, Karen. I hope a lot of your audience go into the hydrogen and fuel cell industry because we need great engineers, great marketers, great business people. So I hope they come join us.
[00:36:44.79] [Music Playing]
