Plug Power’s announcement that it plans a $232.7 million investment into a manufacturing plant at the Western New York Science and Technology Advanced Manufacturing Park in the town of Alabama drew attention last week. But it may be the company’s investment into a $55 million electrical substation for the campus that opens the door for future development of the 1,250-acre property.
The substation investment alone doubles the investments made in STAMP, said Genesee County Economic Development Center President and CEO Steve Hyde.
To some extent, the cost of the substation was slowing the agency’s ability to secure commitments for the site.
“One of the challenges of developing a megasite of 1,000 or more acres is that it requires huge amounts of infrastructure,” Hyde said in an interview with The Daily News. “If you’re going to build on that scale, you’re going against some of the biggest economic development projects in the world. It’s like big game hunting.”
STAMP has been in development for the last dozen or more years, with millions of dollars invested into water, sewer and roads. But the substation was proving to be a costly endeavor.
“You don’t have dump truck loads of money to build it and then they come,” Hyde said. “It’s bits of money to get it ready so you are able to build within the timeline of the companies looking to locate there.”
And that, Hyde said, is where GCEDC finds itself with the announcement from Plug Power, a leading producer of hydrogen fuel cells and related infrastructure that wants to run a 24-hour-a-day operation in Genesee County and, according to one of its executives, wants to be in the community “for a long, long time.”
The substation is a big part of that.
“I’m very happy that we were able to come to agreement to build a substation, not just for ourselves, but a substation that will serve the entire site,” said Brenor Brophy, vice president for project development for Plug Power. “Hopefully that will aid the GCEDC in attracting more customers, more companies in there.”
Hyde said the substation will “absolutely open the door for other development.”
“We’ve spent the last two years working hard to get the substation,” he said. “We felt that was the key to get the site’s readiness to a point where it could secure commitments.”
Plug Power, which formed in Albany County in 1997, has proposed a 50,000-square-foot manufacturing facility at STAMP.
“The plant that we are proposing to build in Western New York at the STAMP site is the largest green hydrogen plant in North America,” said Brophy. “It’s the largest electrolyzer plant of its type — that’s the technology we use to make hydrogen.
“It really is a marquee project and it’s one that everybody who is involved in renewable energy and hydrogen in the country perked up and took notice when we announced it last week,” said Brophy, who has been with Plug Power for about three months.
On Thursday, Plug Power presented an application to GCEDC for incentives, including $118.2 million in sales and property tax exemptions. The company has also proposed a 20-year Payment in Lieu of Taxes agreement that would pay about $2.3 million annually to support local municipalities and infrastructure, including Genesee County, the town of Alabama, and the Oakfield-Alabama Central School District, the GCEDC said.
Brophy said Plug Power has had 20 years of innovation. It’s been granted 180 patents and has 60,000 fuel cell systems in service.
“We’ve sold many tens of thousands of systems, many, many millions of hours of operation and we sell a lot of hydrogen to our customers,” he told the GCEDC board Thursday. “Plug has sold more fuel cell systems, really, than anybody else.”
Brophy compared a fuel cell system to a battery, “except that instead of putting electricity in and taking electricity out, you put hydrogen gas in, you take electricity out — a completely clean process.”
“I’m really a renewable energy guy and I’ve transitioned over to working on hydrogen because that’s really the next step in renewable energy development for the country. It’s what enables us to take all the wonderful things that have happened with cheap, renewable energy and move them over, couple that with transportation and industrial uses and help to eliminate fossil fuel use in those businesses as well.”
The company’s customers include: Amazon, Walmart, Wegmans, GM, Home Depot, Lowe’s, IKEA and Ace Hardware.
“We are a big, big part of the logistics market. And we’re a public company, with a lot of money on our balance sheet,” Brophy said. “We’re not a startup. We’re not a technology idea that’s trying to build something with venture capital money.”
He said Plug Power is “always cognizant of the fact that we’re going to come in and our facility’s going to live in this community for a long, long time.”
“It’s not a … ‘We build it, we shut the gates and walk away like a solar farm. It’s going to have people in it, employees that are going to be part of the community on an ongoing basis and part of Genesee County for many decades to come,” he said.
Brophy said Plug Power is as close as you’ll get to a fuel supplier today.
“We buy the fuel from industrial gas companies … then we ship it to our customers and deliver it. We basically act as the middleman in those transactions and insulate our customers from the gas companies …”
“We also manufacture the equipment to make the hydrogen, so we purchased a company … Now that we’ve purchased them, it’s really an opportunity for them to really scale the manufacturing of the electrolyzers or the hydrogen production equipment,” Brophy said. “We’re the logistics people. We run trucks on the roads, transporting hydrogen to customers.”
Brophy said Plug Power is in the early stages of site permitting for STAMP.
Several items must be approved before ground is broken.
The New York Power Authority Board of Trustees is scheduled to vote March 30 on incentives that include a 10-megawatt allocation of low-cost hydropower from the Niagara Power Project, $1.5 million from the Western New York Power Proceeds program and 143 megawatts of high-load factor power that NYPA will procure for Plug Power on the energy market.
Genesee County and the Town of Alabama will likely conduct a site plan review during April and May, and previously completed environmental reviews for the STAMP campus will be reviewed and updated for the current project.
“Come April 1, we’ll be bursting to get out and break ground this summer,” said Hyde, of the GCEDC.
Plug Power plans to start operations at STAMP by the end of 2022.
The working facility will have 60 to 70 full-time employees and be a 24-hour operation, with daily truck traffic. About half of the employees will be truck drivers, Brophy said.
There are three main components Plug Power would be working with at the site: energy through the new STAMP substation, water and hydrogen.
“Energy is the first one. Hydrogen is just energy in another form,” Brophy said. “Conceptually, what this plan does is it takes electricity, converts it into a form that can be loaded on a truck and driven somewhere and then used in another transport application.”
“Water is important. I’m happy to say that in this part of the country, water is not a huge concern. This facility, this site has certainly demonstrated that it can bring an ample water supply out,” Brophy said. “We don’t use as much water as people think, even though water and energy are the two main parts that go into making hydrogen, there’s an awful lot of hydrogen in water. There’s the hydrogen part as well. We take the energy in water and turn it into fuel.”
“We’re taking hydropower from the Niagara River … we take water and our electrolysis machines basically split that into oxygen and hydrogen. Our only waste product is pure oxygen. A facility like this is probably making the same amount of oxygen as a 15,000-acre forest,” he said.
“That hydrogen, we’ll take and liquefy, and that’s a process where we can cool it down a lot. That’s quite a high-tech process, but it’s one that we already have a facility working in Charleston, Tenn. … It’s a very efficient way to compressing the hydrogen down into a volume where we can move it around the country,” he said. “The truck trailers that we use, they’ll carry about 10,000 pounds or so of hydrogen, or 4,500 kilos. That’s how we transport it between the plant and the customers in the northeast region.
“We believe that zero-emission, heavy-duty transportation is coming. Really, hydrogen is the only fuel that can service that,” Brophy said. “That’s what’s driving building really large facilities like we’re building at STAMP.”
The combination of capacity and quantity of available energy – particularly green energy –and the ability to deliver it at low cost was key to Plug Power’s decision, said Hyde.
“The New York Power Authority brought everything it had,” said Hyde. “It allowed Plug Power to get so far ahead of its plans, and expand.”
The STAMP announcement came about a month after Plug Power announced plans for a “gigafactory” in Henrietta. That project brings an estimated 377 jobs to the region.
The Henrietta facility will build fuel cells that will go into trucks and forklifts, replacing fossil fuels as the energy source. The hydrogen fuel for those cells will be manufactured at the STAMP facility.
It was STAMP’s proximity to Henrietta that helped bring Plug Power to the property for what could be its first tenant.
There were no locations in Rochester to accommodate the manufacturing facility, and a location in Ohio was seeking to woe Plug Power’s project, Hyde said.
But the cost of trucking the hydrogen fuel from Rochester made the Genesee County site more appealing to both projects, Hyde said.
“So STAMP did play a role in landing the gigafactory,” he said.
Helping to coordinate the regional effect was the Greater Rochester Enterprise, an economic development agency formed in 2002 to support business attractions and expansion by connecting potential partners or suppliers in the nine-county Rochester/Finger Lakes region. GRE has been involved in a number of projects in Genesee County through the years, including the Muller Quaker dairy project and Alpina Foods, according to GRE President and CEO Matt Hurlbutt.
“Plug Power was one that fits very well with the plans for the STAMP site,” said Hurlbutt.
“The hydrogen generation facility that they will be building at STAMP, the hydrogen that they’re generating there … is really key to their business plan,” he said. “We’re pretty pleased about that.”
GRE, said Hurlbutt, has worked with Plug Power for a long time. GRE was engaged with Plug Power earlier in 2020 as Plug Power talked about expanding with the facility at STAMP and the $125 million gigafactory it’s opening in an existing factory in Henrietta.
Hurlbutt, in response to those who contend that development has been to slow at STAMP and in the county. shared Hyde’s view that the process is gradual, not a sprint.
“I do believe it’s starting to pay off,” Hurlbutt said. “The investments that are made to prepare a site especially a site that large are very important. I can understand … it’s hard to have patience in this game, but it does take some investment and some work.”