Plug Power Inc (NASDAQ: PLUG) is in the green this morning after Amazon.com (NASDAQ: AMZN) Inc struck a deal with the clean energy company to further its sustainability goals.
Amazon wants to switch to green hydrogen
Amazon wants to power its transportation and building operations with green hydrogen. To that end, it’s signed an agreement with the Latham-headquartered company for nearly 11,000 tons of renewable energy annually.
That supply commitment goes live in 2025, by which, Plug Power expects to be producing 500 tons of green hydrogen per day in North America. In the press release, its CEO Andy Marsh said:
Landing a green hydrogen supply deal with a customer like Amazon validates our multi-year investment and strategic expansion into green hydrogen. We’re excited to expand our relationships with Amazon.
The multinational has been working with Plug Power since 2016. Amazon shares are also up more than 1.0% today.
What’s in it for Plug Power?
Such an arrangement will help Plug Power deliver on its target of $3.0 billion in revenue by 2025. In return, Amazon gets a warrant to buy up to 16 million of its shares; the first nine million of which are exercisable at a per-share price of $22.9841.
To fully vest these warrants, it has to spend a minimum to $2.10 billion on Plug Power products over seven years. According to Kara Hurst (VP of Worldwide Sustainability at Amazon):
We’re relentless in our pursuit to meet our Climate Pledge commitment to be net-zero carbon across our operations by 2040, and believe that scaling the supply and demand for green hydrogen, will play a key role in that.
Earlier this week, Amazon was reported to be interested in buying Signify Health Inc.
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