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Mechanical Engineering Degree-Investing experience 20 years. I may buy or sell shares in any company mentioned, at any time, without notice.
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  • Why Plug Power Is A Disruptive Technology -Misunderstood, Underestimated And Undervalued.

    In this short review, I state the reasons why Plug Power is a disruptive innovation as applied to fuel cells used in forklifts. We have all witnessed disruptive technologies appear in front of us. The digital camera versus film. Email versus snail mail as it is called. Internet retailing versus brick and mortar stores. Think Amazon versus Barnes and Noble.

    Clayton Christensen in his book entitled The Innovator's dilemma published in 1997 states "Historically, disruptive technologies involve no new technologies; rather, they consist of components built around proven technologies and put together in a novel product architecture that offers the customer a set of attributes never before available."
    Authors (Hardman, Steinberger-Wilckens, Dan van der Horst) wrote an article on the examination of Disruptive innovations:The case for hydrogen fuel cells and battery electric vehicles. The article, was published in 2013 in the International Journal of Hydrogen Energy, and provides us with their analysis of disruptive innovations as well as a review of seven successful cases of disruptive innovations.
    The authors suggest also seven common characteristics of successful technologies, namely: (1) The threat of the new technology is not recognized by incumbents; (2) disruptive technologies are initially more costly than the incumbent technologies; (3) the quality of the disruptive technology initially is often worse than the quality of the technologies they seek to replace; (4) the technologies have some form of 'added value' to the consumer; (5) the disruptive technologies will fill niches markets first, here they spread to other niches, the meso level and eventually reach the macro level of the market; (6) the incumbent technology is never wiped out all together; it in turn becomes the technology for niche market applications; and (7) socio-technical systems are ever evolving.

    In this context, the authors suggest three criteria, based on the seven common characteristics identified above, for a technology or innovation to be considered as disruptive: First, it should be disruptive to market leaders, which implies that its manufacturers should be different than those producing the incumbent technology. Second, it should be disruptive to end users, which means that it should provide greater equivalence of service over incumbent technologies often leading to change the way technologies are used. And third, it should require different infrastructure than the incumbent technology and/or effect negatively existing infrastructure.

    First , Plug Power is disruptive to the battery manufacturers. (Fuel cell systems are designed to be interchangeable with battery packs).
    Second, Plug Power is disruptive to the end user.(Fuel Cells provide greater efficiency of service when used in forklifts as compared to batteries) ie.

    ◦Increased productivity
    ◦No degradation of power over time
    ◦Constant efficiency even at partial loads
    ◦Reduced downtime
    ◦Fuel cells are more efficient at converting fuels to energy
    than diesel engines

    ◦One person can be trained in a matter of hours to refuel the truck reducing the need for an additional operator
    ◦Refueling is considerably quicker than the battery charging process
    ◦Using renewable hydrogen there are no direct harmful emissions - CO2, NOx, SOx or particulates
    ◦Only emits water vapor
    ◦Very quiet operation quick refuel, full use.

    Third, Plug Power fuel cells require a different infrastructure than batteries. (Gone are the battery chargers to be replaced with hydrogen tanks and piping). The required infrastructure requires significantly less footprint . Additional refueling points can be installed to reduce the distance traveled to refuel as well as reducing the associated travel downtime).

    The forklift market is 6 million forklifts. The International Truck Association predicts that 90 % of all forklifts will be fuel cell powered in 11 years. Plug Power has penetrated less than .1 % of the forklift market. The battery manufactures see it as filling a need in a niche market and have not recognized the threat it poses. As you can see Plug Power fits the main three requirements to be a disruptive technology. In many cases disruptive technologies are misunderstood and not recognized by the industries they upstage and eventually dominate. Plug Power, under estimated by it's competitor's and undervalued by the investment community.

    Disclosure: I am long PLUG, FCEL.

    Additional disclosure: I have a long term time horizon. I have no association with Plug Power other than owning common share.

    Apr 02 2:09 PM | Link | 3 Comments
  • 30 Reasons To Own Plug Power


    1)Advanced Electric Forklift Technologies Will Surpass $500 Million in Annual Revenue in North America by 2020.(1)

    2)Hydrogen consumption will grow from $1.3 billion annually in 2013 to $49.8 billion in 2030.(1) Forklift Fuel cells are estimated to consume 35 percent of the hydrogen.

    3)Annual Fuel Cell Systems sales world wide will surpass 600,000 by 2017.(1)

    4)300000 TRU Transport Refrigeration Units can be powered by fuel cells. Being tested with Sysco and just recently announced with Walmart.

    5)More Than 35 Million Electric Vehicles Will be On Roads Worldwide by 2022. Fuel Cells range extenders to play a big part.(1)

    6)Global Fuel Cell Industry to surpass 15 Billion market value by 2017.(1)

    7) US continues to be one of the world's largest and fastest growing markets for fuel cell and hydrogen technologies.(1)

    8)350,000 Hybrid and Electric Trucks Will be Sold Worldwide from 2013 to 2020.(1)

    9)Air Liquide and Hypulsion partnership provides access to European Market.

    10) Susquehanna Capital 30 million dollar investment provides a vote of confidence and indicates the business is growing.

    11) 90 percent of forklifts to be fuel cell powered in 11 years predict Industrial Truck Association.

    12) There are 300,000 airport ground support vehicles can be powered by forklifts, being tested with FedEx.

    13) Gen Key provides hydrogen infrastructure sales servicing and hydrogen sales.

    14) Asia partner Hyundai Hysco to provide access to Asia.

    15) FedEx Electric trucks being tested with Fuel Cell range extenders. This will extend range from 80 to 160 miles. Fuel Cell range extenders to go commercial in Q4 2014

    16)Recent 1723 forklift Walmart Deal provides 100 million in recurring revenue over 6 years in hydrogen sales and validates the concept.

    17) Plug has only penetrated less than.1% of forklift market of 6 million.

    18) 1st Quarter 2014 revenue projected to meet 2014 year goal.

    19)In 2014 Plug Power is projecting to be profitable.

    20) Fuel cell sales are predicted to increase 100% YoY in the next 5-8 years.

    21) Walmart has started conversion of it 40,000 fleet of forklifts. Walmart estimates 2 to 7 million dollars savings over 7 years per distribution center. Extrapolate out with 150 distribution centers and the savings for Walmart will range from 300 million to 1 billion over 7 years.

    22) Walmart does not even consider battery forklifts in any of its new distribution centers

    23) Kroger with 10000 forklifts has started its forklift fleet conversion.

    24) 4,000 Plug GenDrives that have been shipped to customers over the years are consuming 90 percent of all of the hydrogen used in fuel cells located in North America.(2)

    25) Plug is estimated to ship more fuel cells in 2014 than in the previous 16 years.

    26)Plug has installed 45 of 55 Hydrogen fuel stations of in US .

    27)The NASDAQ OMX Group, Inc. (NASDAQ:NDAQ) added Plug Power to the NASDAQ Clean Edge Green Energy IndexSM (Nasdaq:CELS), effective prior to market open on Monday, March 24, 2014

    28) Relion purchase brings fuel cell manufacturing in house and provides Plug with access to stationary fuel cell market.

    29)Stationary Fuel cell market is predicted to grow from 1.3 billion to 49 billion by 2022.(1)

    30) Plug has customers in 34 countries with Relion Purchase.

    (1) Navigant Research

    Disclosure: The author is long PLUG, FCEL.

    Additional disclosure: I have no connection to Plug Power, other than owning common shares.

    Mar 16 9:47 PM | Link | 5 Comments
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