By Sam Boughedda
Shares of Plug Power (NASDAQ:PLUG) rallied Thursday after the hydrogen firm announced Thursday that it has signed a hydrogen supply deal with Amazon (NASDAQ:AMZN) to provide liquid green hydrogen to the tech giant.
Plug will start providing the liquid green hydrogen in 2025 to help "decarbonize Amazon's operations," part of its commitment to be net-zero carbon by 2040.
The supply deal is a continuation of existing efforts between the two companies to expand the use of green hydrogen beyond material handling.
Since 2016, Plug has worked with Amazon to deploy over 15,000 fuel cells to replace batteries in forklifts in 70 of its distribution centers.
The new supply deal will see Plug supply 10,950 tons per year of liquid green hydrogen to fuel Amazon operations. As part of the agreement, Plug has granted Amazon a warrant to acquire up to 16 million shares of Plug's common stock. Amazon will vest the warrant if it spends $2.1 billion over the seven-year term across Plug products.
"Landing a green hydrogen supply deal with a customer like Amazon validates our multi-year investment and strategic expansion into green hydrogen. We are excited to expand our relationship with Amazon in exploring the use of other hydrogen applications, such as fuel-cell electric trucks and fuel-cell power generation stations that could provide electricity to Amazon buildings and the deployment of electrolyzers in fulfillment centers," said Andy Marsh, CEO of Plug.