E-commerce giant Amazon on Thursday announced an agreement with Latham, New York-based Plug Power to supply 10,950 tons of green hydrogen annually for transportation and building operations starting in January 2025.
This contract includes enough green hydrogen to power 30,000 forklifts or 800 heavy-duty trucks for long-haul transportation annually, according to Amazon (NASDAQ: AMZN). The green hydrogen will replace gray hydrogen, diesel and other fossil fuels to reduce greenhouse gas emissions.
“Amazon is proud to be an early adopter of green hydrogen given its potential to decarbonize hard-to-abate sectors like long-haul trucking, steel manufacturing, aviation and ocean shipping,” Kara Hurst, vice president of worldwide sustainability at Amazon, said in a news release.
Gray hydrogen is produced using fossil fuels, and this type of hydrogen accounts for 95% of all hydrogen produced today, Amazon said. Green hydrogen is produced using renewable energy to power electrolyzers that separate water into hydrogen and oxygen. Oxygen is the only byproduct.
This agreement will help Amazon get closer to its 2040 net-zero carbon target. It will also help Plug Power (NASDAQ: PLUG) get closer to reaching its goal for $3 billion of revenue by 2025. Plug’s stocks saw a spike in Thursday morning trading after the deal was announced.
This isn’t the first of Amazon’s hydrogen investments or the first time Amazon and Plug Power have joined forces. Plug has helped Amazon deploy more than 15,000 fuel cells to replace batteries in forklifts since 2016. Amazon has 70 fulfillment centers outfitted with hydrogen storage and dispensing systems.
“Today, we use that system to power over 15,000 fuel-cell-propelled forklifts, with plans to grow that number to 20,000 across 100 fulfillment centers by 2025. That’s just the start,” Dean Fullerton, vice president of global engineering and security services at Amazon, said in the release.
“Across Amazon’s operations, we’re exploring and testing the use of other hydrogen applications, such as fuel-cell electric trucks and fuel-cell power-generation stations providing electricity to Amazon buildings.”
It’s more efficient to use renewable energy to generate electricity for buildings than it is to use renewable energy to produce green hydrogen to generate electricity. But renewable energy can be intermittent.
“Green hydrogen is unique as it serves as both a fuel and as energy storage, making it one of the keys to a clean energy future,” Andy Marsh, CEO of Plug, told FreightWaves. “Green hydrogen can store renewable electricity during times of peak or excess generation and then be used during periods of peak demand, increasing the reliability and resilience of the power grid.”
Amazon and Plug did not specify how much of the 10,950 annual tons of green hydrogen will go toward building operations versus transportation.
“Landing a green hydrogen supply deal with a customer like Amazon validates our multiyear investment and strategic expansion into green hydrogen,” Marsh said in a statement.
Amazon said to meet its 2040 net-zero carbon target, there needs to be more commercially available hydrogen-powered equipment and vehicles. This agreement may send demand signals for the green hydrogen production market and the hydrogen vehicle market to expand.
As part of the agreement, Plug granted Amazon a warrant to acquire up to 16 million shares of Plug’s common stock. Amazon would vest the full amount if it spends $2.1 billion on Plug products such as electrolyzers, fuel cell solutions and green hydrogen over the seven-year term of the warrant.
“We are 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, such as through this agreement with Plug Power, will play a key role in helping us achieve our goals,” Hurst said.
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