Dive Brief:

• Amazon and hydrogen supplier Plug Power Inc. signed an expanded partnership deal this week to provide more than 10,000 tons per year of hydrogen to the retailer beginning in 2025.
• The deal will provide the retailer with enough hydrogen to power up to 800 long-haul trucks or 30,000 forklifts annually, according to an Amazon release.
• Plug Power CEO Andy Marsh told Supply Chain Dive the agreement is "just the beginning." The company hopes to bring hydrogen to 100 Amazon distribution centers, up from its current deployment across 70 facilities.

Dive Insight:

Plug has been providing Amazon with hydrogen power since 2016, deploying more than 15,000 fuel cells to power forklifts at 70 distribution centers. Under the expanded deal, Plug is poised to up those efforts to power a wider segment of Amazon's supply network as the retailer leans on the alternative energy source to help meet its decarbonization goals.

"We are relentless in our pursuit to meet our Climate Pledge commitment to be net-zero carbon across our operations by 2040, and believe that scaling the supply and demand for green hydrogen, such as through this agreement with Plug Power, will play a key role in helping us achieve our goals," Kara Hurst, vice president of Worldwide Sustainability at Amazon, said in a statement. 

As part of the deal, Amazon will receive a warrant to acquire up to 16 million of Plug's shares. The retailer will vest the warrant if it spends at least $2.1 billion on Plug products over the seven-year terms of the contract, according to a Plug 8-K filing. 

It's been a busy few months for Plug. In April, the supplier expanded its agreement with Walmart to provide hydrogen for 9,500 lift trucks across the retailer's distribution and fulfillment centers. Like Amazon, Walmart is seeking to go carbon neutral by 2040.  

As more major brands turn to hydrogen to help meet sustainability goals, suppliers are expanding capacity to keep up with demand. 

Since the start of the pandemic, Plug has grown its workforce from less than 700 employees to more than 3,000, Marsh told Supply Chain Dive. The company opened a new production facility in Rochester, New York late last year.

The plant came online in time to support Plug's push to produce up to 70 tons of hydrogen per day by the end of the year. The company currently produces between 10 tons and 15 tons per day, according to Marsh, but will rapidly up its capacity to service new deals. 

"Plug has had a view of how the hydrogen ecosystem rolls out, and this is a validation of our approach and business model by Amazon," Marsh told Supply Chain Dive.

And with the passage of the Inflation Reduction Act, which creates new tax credits for hydrogen production, Marsh said more growth for the supplier is on the way.

The CEO told investors during Q2 earnings call that with passage of the legislation, “we expect a boom for our electrolyzer and green hydrogen business.”