Amazon has acquired the right to buy 23% of Plug Power, a Latham, N.Y. based company. Amazon will spend about $70 million on fuel cells and hydrogen technology for use in its e-commerce fulfillment network.
Amazon plans to power forklifts and other industrial equipment at 11 fulfillment centers with Plug Power’s GenKey technology, which will enable faster charging times, reduced costs and support energy-efficiency in Amazon’s fulfillment operations.
The market seems to like the deal as shares of Plug Power increased 50% after the announcement.
The supply agreement with Amazon could be worth up to $600 million and includes a potentially large equity investment, as reported by MarketWatch.
That’s a nice contract for Plug Power which has never made a profit, and was until recently a penny stock, according to Bloomberg. The Amazon purchase of cells for forklifts will create $70 million of extra revenue for the company this year. That compares to total revenue in 2016 of $56 million.
Currently Amazon uses battery-powered forklifts. Battery technology has developed faster than hydrogen. As a result, batteries are in demand and commanding greater investment. If they become dominant in the next decade or two, the promise of fuel cells may never be realized on a grand scale, only in some niche applications such as the one for which Amazon likes Plug Power technology, according to Leonid Bershidsky of Bloomberg.
“That would be a shame: Once the internal combustion engine is forced out by ever more stringent environmental regulation, consumers should, at the very least, have a choice of different alternative technologies with their distinct advantages and disadvantages,” writes Bershidsky