[SK E&S] SK Invested In a Leading U.S. Hydrogen Solution Provider to Accelerate Its Entry into the Global Hydrogen Market
SK invested in a leading U.S. hydrogen solution provider to accelerate its entry into the global hydrogen market
- SK invested in Plug Power a global leader in key hydrogen technologies to become the largest shareholder of the hydrogen company
- SK and SK E&S financed 800 billion won each for the purchase of 9.9% of equity in Plug Power to facilitate its hydrogen business in the global market
- The partnership will provide key technologies of hydrogen, the “dream energy” for SK, and take SK closer to creating a hydrogen ecosystem in Korea
- By creating a joint venture, the two companies will explore the Asian hydrogen market including China and Vietnam together
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Making its first investment of the year in a global hydrogen company, SK plans to accelerate its hydrogen business that is a core pillar of ESG investment and called eye-catching “dream energy”.
On January 7, SK and SK E&S announced that purchase of 9.9% of shares in Plug Power, a leading player in the global hydrogen market with its industry-leading key technologies, has made them the largest shareholder of the hydrogen company. For the investment of 1.6 trillion won ($1.5 billion), SK and SK E&S financed 800 billion won each.
Founded in 1997, Plug Power has a number of key technologies for the hydrogen value chain including PEMFC*, electrolysis (process of using electricity to produce hydrogen) and technology to build core facilities such as electrolyzers, hydrogen liquefaction plants and hydrogen fueling stations. The hydrogen solution provider is recording around 50% of an annual growth rate in revenues every year. As of the end of last year, its market capitalization stood at whopping 16 trillion won.
Plug power has also been doing hydrogen-based mobility business using hydrogen to power forklift and trucks. Technically, it has exclusively provided the U.S. with hydrogen-fueled forklifts by being the exclusive supplier of hydrogen-powered forklifts to global distributors such as Amazon and Walmart. Recently, it began business of providing hydrogen solution for medium and large trucks by using the network of hydrogen fueling stations scattered across the U.S, and diversifying its business using hydrogen fuel cells into areas including drones, airplanes and power generation. Plug power is also trying to expand its business in Europe which is proactively building a hydrogen ecosystem, showing a high growth potential.
Later this year, Plug Power is scheduled to complete the world’s largest fuel cell production plan with an annual capacity of 1.5GW in the State of New York and to begin production. The new plant is expected to reduce production costs of main products of the company such as fuel cells and electrolysis equipment significantly while making its products cost-competitive and helping it maintain its global leadership.
Being the largest shareholder of the hydrogen energy company by making the equity investment, SK plans to create synergy effects with Plug Power and to push its effort to become a leader in the Asian hydrogen market. On the home front, SK expects Plug Power’s technologies will contribute to creating rapidly a hydrogen ecosystem it is envisioning while the technologies can be integrated into the existing network of SK Group in China and Vietnam to explore new business opportunities faster than others. To this end, SK plans to create a joint venture with Plug Power to develop a business model and to enter the Asian hydrogen market together.
Last year, SK formed “Hydrogen Business Task Force” which consists of 20 specialists from its subsidiaries including SK E&S, SK Engineering & Construction and SK Innovation and is dedicated to facilitating its hydrogen business, and the task force immediately embarked on the business strategy. SK has already announced that it is targeting 30,000 tons of annual capacity by 2023. It plans to increase the number to 280,000 tons by 2025 and to manage a value chain for hydrogen from production to distribution and supply to focus on the hydrogen business as its next-generation energy business.
An SK official said, “We plan to integrate our business capabilities with partnerships with many companies to expand our presence in the global hydrogen market.” He added, “We will be committed to becoming a global leader in ESG management by creating a green hydrogen ecosystem faster than expected.”
*PEMFC(Polymer Electrolyte Membrane Fuel Cell): Fuel cell with higher output and higher current density compared to other types of fuel cells. PEMFCs use a membrane through which an ion passes as an electrolyte and are used for vehicles as they operate at low temperatures and provide fast output as well as pure hydrogen can be injected at them.