Walmart is dramatically increasing its investment in hydrogen fuel cells to get away from dirtier battery and fueling options, giving a boost to high-profile supplier
The world's biggest retailer has ordered another 1,738 of them, almost 40% of Plug Power's total existing installed base of about 4,500 units and representing the company's single biggest order ever. For additional perspective, the number of cells ordered is triple the number Walmart is already using in two refrigerated distribution centers (535).
This latest batch of GenDrive cells will be used in the electric lift trucks used to shuttle products around six North American distribution centers. The installations will begin during the second quarter of this year, and they will continue over the next two years, according to Plug Power and Walmart.
The significant deal was actually disclosed in early February, but it was only this week that Plug Power revealed the customer's name. Aside from the cells themselves, Walmart is buying the company's GenFuel infrastructure to keep them running, as well as a six-year service contract for each site.
“This turnkey deal represents a significant milestone for Plug Power," said Plug Power CEO Andy Marsh. "We’ve, without a doubt, clearly demonstrated our leadership position as the premier provider of industrial fuel cell solutions. In the coming year, we plan to grow not only in the material handling industry, but also expand into other fleet vehicle applications such as transport refrigeration units, ground support equipment and range extenders.”
The size of the transaction wasn't revealed, but one Cowen & Co. analyst estimated it at close to $50 million. During the fourth quarter of 2013, Plug Power's orders were approximately $32 million.
Hydrogen fuel cells work by converting hydrogen and oxygen into electricity; their adoption has been challenged by the lack of fueling infrastructure, but that obstacle is fading. Plug Power's cells are typically used for materials handling fleets in big warehouses or distribution centers, but the applications for its technology are expanding. In January, for example, Sprint announced it would start using them for backing up rooftop sites powering its wireless network instead of diesel generators.
The Walmart order disclosure sent Plug Power's stock up nearly 15% on Feb. 26, to settle at $4.47. Its Canadian supplier,
