Watchman: Renewable Energy Is Not Desired by Anyone—Wind Projects Fail—You’ll Die of Freezing Before Green Is Effective


Shares of Plug Power, a company specializing in hydrogen and fuel-cell energy, plummeted by 30% in premarket trading in New York. This steep decline followed the company's third-quarter earnings report on Thursday evening, which cited "unprecedented supply challenges in the hydrogen network in North America."

Plug Power reported third-quarter losses of $283.5 million, equivalent to 47 cents per share, widening from a loss of $170.8 million, or 30 cents per share, in the same quarter one year ago. The company's revenue increased to $199 million from $189 million a year earlier and slightly missed the Bloomberg Consensus estimate of $200.2 million.

Here's a snapshot of the quarter:

  • Net revenue $198.7 million, +5.3% y/y, estimate $200.2 million (Bloomberg Consensus)
  • Sales of fuel cell systems, related infrastructure and equipment $145.1 million, -8.1% y/y, estimate $172.6 million
  • Sales from services performed on fuel cell systems and related infrastructure $9.29 million, +11% y/y, estimate $10.2 million
  • Sales from power purchase agreements $20.1 million vs. $9.52 million y/y, estimate $14.7 million
  • Sales from fuel delivered to customers and related equipment $19.4 million, +56% y/y, estimate $19 million
  •  Other revenue $4.85 million vs. $0.32 million y/y, estimate $0.56 million
  • Loss per share 47c vs. loss/shr 30c y/y, estimate loss/shr 30c
  • Gross margin -69%, estimate -15.1%
  • Cash and cash equivalents $110.8 million, -94% y/y, estimate $523.1 million

In a shock, Plug Power said this year's performance "has been negatively impacted by unprecedented supply challenges in the hydrogen network in North America." It blamed a "severe hydrogen shortage" that has "negatively affected direct cost of service as well as the timing for implementation of fleet upgrades into customer operated equipment." And said the negative impacts were compounded by "inflation."

"We believe this hydrogen supply challenge is a transitory issue, especially as we expect our Georgia and Tennessee facilities to produce at full capacity by year-end," it added.

While supply chain snarls are one thing for Plug Power, the company warned existing cash and available-for-securities and equity securities will not be sufficient to fund operations over the next 12 months. It added, "These conditions and events raise substantial doubt about the company's ability to continue as a going concern."

RBC Capital Markets analyst Chris Dendrinos estimates Plug Power would need more than $750 million to boost liquidity over the next 12 months.

"[Plug] management expressed confidence in executing a liquidity transaction near-term and continues to see a path for margin improvement through next year. However, at this time we think it prudent to move to the sidelines and await execution of these events," Dendrinos wrote in a note.

KeyBanc analyst Sangita Jain warned a potential $1.5 billion loan from the Department of Energy to relieve short-term liquidity concerns might need to be approved more quickly.

Besides a meltdown in the hydrogen space, we have provided readers with the understanding that President Biden's renewable space is in a full-blown crash. Inflation, high-interest rates, and waning demand have sent wind and solar stocks tumbling in recent weeks.

Perhaps it's time for the Biden administration to issue 'green' bailouts.

This month has seen a disastrous number of canceled and abandoned offshore wind deals which “erased billions of US dollars in planned spending” in the final week of July alone, according to Fortune. Spanish utility Iberdrola SA agreed to pay $48.9m in fines to cancel a wind power contract off the coast of Massachusetts. In Rhode Island, Danish developer Orsted A/S’s bid to produce offshore wind power was rejected due to rising operational and development costs. And a plan for a wind farm off the shore of the United Kingdom has also been culled by Swedish state-owned utility Vattenfall AB, who – you guessed it – blamed inflation. “Together, the three affected projects would have provided 3.5 gigawatts of power — more than 11% of the total offshore wind fleet currently deployed in the waters of the US and Europe,” reports Fortune. And at least 9.7 additional gigawatts of offshore wind projects are at risk of cancellation in the United States alone.

The current trend in offshore wind power marks a shocking turnaround from what has been a sharp and virtually unceasing decline in renewable energy costs. Since 2008, wind and solar prices have dropped by nearly 70%, and new onshore wind power is the cheapest form of clean energy production in the United States today. “Offshore wind is an outlier though because, unlike onshore wind and solar power, it was still at the high end of the cost curve before this financial shock,” reports Bloomberg. This means that investing in offshore wind must be the project of governments, rather than the private sector. In the long term, offshore wind is an essential investment for meeting climate goals, but in the short term it’s an economic failure.

The Biden administration is pushing ahead with its ambitious goal of achieving 30 GW of offshore wind energy capacity by 2030. Just last month, the United States Bureau of Ocean Energy Management’s (BOEM) announced three new Wind Energy Areas (WEAs) off the coasts of Delaware, Maryland, and Virginia. Together, the areas could potentially host 4 to 8 gigawatts (GW) of clean energy production. But there’s still the big question of financing.

Indeed, the 30 GW by 2030 plan is looking more far-fetched by the minute. So far, the country has installed about 0.1% of that goal, and as much as one-third of the planned projects are currently in dispute according to energy analytics firm ClearView.




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