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Has Plug Power pulled the plug on its upstate New York facility?
In 2021, top elected officials in New York state promised that Plug Power, a nascent company in the growing hydrogen industry, would build a large hydrogen fuel production facility in the Buffalo-Rochester area. It was supposed to make the state an industry leader.
Today, the project is looking more like a warning sign about the perils of being a first-mover in the unproven hydrogen business.
It wasn’t supposed to be this way. Plug Power, an American hydrogen and fuel cell producer founded in 1997, believed it would capitalize on rising demand for the liquid fuel when it broke ground at its hydrogen production facility at Genesee County’s Science, Technology and Advanced Manufacturing Park in 2021, a project known colloquially as STAMP. Heavy polluting industries like steel and transportation were chomping at the bit to strike supply deals for hydrogen, a liquid fuel that produces no carbon when burned. And this New York plant would on paper be particularly attractive from a climate perspective: It would be powered by hydroelectric dams at Niagara Falls, offering a potential carbon reduction of an estimated 14,000 tons of CO2 per year. It would also be the largest project of its kind in the Northeast.
Three years later and the project appears to be on ice, according to a phone call recording between New York county officials and a real estate developer that was obtained by Heatmap News.
Construction stopped in January, per the call, as did work Plug Power promised to do on an electrical substation that will also power a neighboring semiconductor manufacturing plant. Now energy-hungry data center developers are bidding to pick up the substation work instead in exchange for a spot at STAMP and access to some of the remaining hydroelectricity, and county officials are looking at buying Plug Power’s electrical equipment.
It is unclear whether the hydrogen production plant will ever be completed.
“They’ve put things on hold and now we’re coming to pick up the pieces,” Chris Suozzi, an executive vice president at the Genessee County Economic Development Authority, told one bidder – PRP Real Estate Management – on a call last month. PRP taped the call and shared it with us after it was first reported by local news nonprofit InvestigativePost. Suozzi also said on the call: “They’re not ready to go. They’re on pause. We don’t know what’s going to happen with them at this point.”
The New York Plug Power plant’s problems should be familiar to anyone in the climate tech startup space but for the unfamiliar, the company’s rapid growth seems to have run headlong into struggles with cash. A year ago Plug Power said in an investor filing there was a “substantial” concern the company may not have “sufficient funds to fund [its] operations through the next 12 months.” So problematic are Plug’s financial woes that they’ve become a political target; after the Energy Department offered a $1.6 billion conditional loan commitment to Plug for building hydrogen production plants, Republicans in Congress called for an inspector general investigation into the move.
But the New York production facility won’t benefit from the potential loan either. We’ve learned from two sources familiar with the matter that the project is not included in its potential loan application currently pending before DOE.
Then there has been the rollout of the Inflation Reduction Act. Even though the project relies on carbon-free hydropower, it may not qualify for the IRA’s hydrogen production tax credit because of proposed requirements for fuel to rely on new renewable energy sources (known as “additionality”). This has been a major sticking point in implementation of the credit, and Plug Power is quoted in InvestigativePost last week linking the work stoppage at the production facility on waiting for the final regulation implementing the credit. This is even as the company uses the yet-to-be finalized credit in its financial analyses for other hydrogen facilities in operation today, like this one in Georgia.
Environmental justice issues have also been a drag on development. The native Tonawanda Seneca Nation is opposed to the entire industrial park because of the resulting impacts on wildlife, noise and the visual landscape. In April, the Fish and Wildlife Service revoked a necessary permit for a wastewater treatment pipeline that would be used by companies at the park.
Earthjustice attorney Alex Page – who is working with the Nation to fight the project – told me the tribe was told last year by the Energy Department that Plug Power had withdrawn the New York site from its loan application. The Nation will continue to fight the project and DOE’s loan financing to Plug Power on the chance that money could be reprogrammed to the industrial park. Page said: “The Nation remains very, very much opposed.”
We sent Plug Power multiple requests for comment as well as Suozzi. A representative for Plug Power declined to answer questions about the project. I got a text from a number listed for Suozzi asking to chat later, but I didn’t hear back before publication.
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The week’s biggest fights around renewable energy
1. San Diego County, California – The battery backlash just got stronger after the city of Escondido, California, indefinitely banned permits to the entire sector in reaction to a battery fire last month.
2. Waldo County, Maine – The potential first floating offshore wind assembly site in America is now one step further in the permitting process, after Maine’s Department of Transportation released a pre-application alternatives analysis required for federal environmental reviews.
3. Dickinson County, Kansas – This one county may be a bellwether for future problems in Kansas, a state with many existing wind farms — and even more potential — but also a lot of opposition.
4. Washoe County, Nevada – The company behind the Burning Man festival will be acquiring nearby geothermal energy leases, in a settlement resolving litigation that had the high-profile naturalist escape challenging access to a renewable energy resource.
Here’s what else we’re watching right now…
In North Carolina, the Kerr Lake Solar project proposed by Cypress Creek Renewables is facing its own apparent local onslaught at community meetings.
In California, Capstone and Eurowind Energy are seeking permission to build a long-duration battery storage facility in Alameda County.
In New Jersey, a coalition of shore towns and opposition groups fighting the EDF-Shell Atlantic Shores offshore wind farm have issued a new missive criticizing state financial benefits to the project.
In New York, the town of Oyster Bay looks like it’ll be extending its moratorium on BESS for at least another six months.
In Pennsylvania, a Pivot Energy solar farm also has some local organizing in the way.
Why alarm bells are ringing in the renewable energy ecosystem, plus more policy news
IRA on the mind – The renewable energy ecosystem is starting to really sound alarm bells about the November election and the risks of what they’re calling a “clean energy plan repeal” – e.g. scrapping IRA credits and carbon pollution rules.
No Golden climate bill – However, if Kamala Harris and the Democrats do win in November, I’m bearish on the odds of another big piece of renewables stimulus passing through Congress next term.
Data center moratoriums – Energy demand for tech may be a driver of renewables development across the country, but data centers are starting to face moratoria fights of their own.
Here’s what else we’re watching…
In Illinois, the Solar Energy Industries Association and American Clean Power are rallying behind comprehensive decarb stimulus legislation.
In Louisiana, voters going to the polls will decide whether to increase revenues from offshore energy – including wind – that go to coastal restoration.
And more from my conversation with Ray Long, president and CEO of the American Council on Renewable Energy
This week’s conversation is with Ray Long, president and CEO of the American Council on Renewable Energy, or ACORE. A representative of one of Washington’s most influential climate tech policy trade groups, Long is also a seasoned veteran of the energy sector across fossil and carbon-free power and now an industry thought leader based in Washington. I caught up with him at ACORE’s Grid Forum last week and asked him how companies are doing against NIMBYs.
Developers of gas infrastructure – are they spending more, less, or the same as renewable energy developers on community engagement? Who spends more on community engagement?
I just don’t know. I have no idea. It’s hard to gauge. And let’s talk about why – each company doesn’t disclose how much they spend on community engagement. You know, it’s not like you can go see who is registered to lobby in different areas, it’s not clear. I suppose you could go back after the fact and look at community benefit funds and those sorts of things that get put together but I’m just not sure if that’ll give you the snapshot that you’re looking for.
I’m curious if you feel if developers in renewable energy are spending enough of their capital on getting the consent of host communities.
Having worked for a renewable developer I can only speak from the perspective of the experience I had there. My sense is, across the industry, you’ve got different levels of companies that have different levels of sophistication and different levels of capabilities to do those things. And I’ll say this: even the sophisticated companies that are going in early, having the conversations and doing all the things that I would say would be a strategic way to getting it done… even they’re running into opposition. I don’t think it’s really any different than some of the fossil plants in my experience where there has been politicization.
Given the various degrees of sophistication and the various degrees of capacity, how would you score the renewable energy industry’s success rate at dealing with project opposition?
One of the places you can look at data is NEPA – the environmental impact statements. You know that NEPA impacts wind, solar, transmission, and fossil. Stanford [University] did this really interesting study where they looked back 10 years and they pulled all the environmental impact statements that had been submitted and then they graphed it, and they looked at it from the standpoint of which projects had been delayed, litigated, and ultimately canceled. Going in, if you go into Democratic offices and you talk to them in Washington, the impression a lot of us had was, I’d guess fossil projects would be the first. They’d be delayed the most, litigated the most, canceled the most. But it wasn’t. It was solar, wind… fossil’s fourth. That study was fascinating. That’s one of those things making the rounds now on the Hill as Democratic offices are considering the permitting and transmission bill.
But so many of these projects don’t require a NEPA review. How is the industry doing when it comes to dealing with the local county clerks?
I think it really depends on which technology, which company is going in. What’s their approach to it. It’s really hard to give a grade to the industry as a whole.
What would you say to a developer on best practices for community engagement in your view?
Number one, go into a community as soon as you think you have a project you’re going into. Start to talk to local people there about what their interests are and understand why. You’ve got to have a sense of curiosity, and develop an understanding of what people’s motivators are.
The second thing is hire local. Get some local people that you’re going to work with, who understand the community and can best advise you on it.
The third thing is, as you look to pull your project together and you think about your permitting structure, start to build in those things that the community cares about. Only then, when you have a line of sight on doing that, start the permitting process.
I certainly hope companies heed your advice.
Well if you look at the success record, companies that do that have a higher success record than those who don’t.