COLONIE - The massive investment by two Russian firms in Plug Power Inc. is a shot in the arm for one company and a boost to the credibility of the fuel-cell industry, say analysts and hydrogen economy watchers.
Latham-based Plug announced Tuesday that Smart Hydrogen - a joint venture of investment firm Inerros and mining giant Norilsk Nickel - will put $217 million into the 9-year-old fuel-cell company.
«The bottom line is it's truly an extraordinary deal,» said J. Michael Horwitz, senior research analyst with Pacific Growth Equities in San Francisco. «It's a hell of a lot of money. For alternative energy, and fuel cells specifically, I can't remember a bigger deal.»
Horwitz said the deal will make investors look again at fuel cells, an industry high on promise that has delivered few products - and large losses.
Plug, founded in 1997, has yet to make a profit and has been burning through almost $50 million a year.
Horwitz, who doesn't own any Plug shares, kept his «neutral» rating on the stock. Plug will give Smart Hydrogen Class B shares convertible into 39.5 million common shares. Smart Hydrogen bought 2.7 million Plug shares from General Electric Co. in December and now plans to buy another 1.825 million from DTE Energy Co., a Plug co-founder.
That would give the joint venture a 35 percent piece of the Latham company and make its total investment more than $240 million.
If the deal falls through, Plug must pay Smart Hydrogen a $5.43 million termination fee and up to $2.6 million more to cover the joint venture's expenses. Hydrogen-powered fuel cells release energy through a chemical reaction, with water as the only byproduct. But so far, Plug's units have mostly been sold as backup power systems for remote and critical telecommunications facilities.
And the industry still faces huge hurdles. Though hydrogen is the most abundant element on the planet, it still takes more energy to produce it in a usable form than comes out of the process.
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