Connect power (NASDAQ:) shares rose Tuesday on news that the company received a contingent loan guarantee commitment of up to $1.66 billion from the Department of Energy’s (DOE) Office of Loan Programs.
The loan guarantee is intended to finance the development, construction and ownership of up to six green hydrogen production facilities.
“We value our partnership with the Department of Energy’s Office of Loan Programs and are pleased that we were able to complete our intensive due diligence process,” said Plug Power CEO Andy Marsh. “The loan guarantee will prove beneficial to the growth and scaling of not only Plug’s network of green hydrogen production plants, but also the clean hydrogen industry in the United States.”
Reacting to the news, analysts at RBC Capital said the receipt of the conditional commitment “marks a major step forward in the loan approval process.”
“PLUG is currently working to satisfy the conditional obligation and undergo the NEPA permitting process to assess the environmental impact of the first project (Texas),” the bank explained.
The analysts added: “Assuming the environmental assessment is deemed negligible, we estimate funding could begin towards the end of 2024. After final acceptance of the first project, PLUG will have 8 years to apply for the remaining 5 projects that will be shortlisted for the loan.”
Analysts said: “We expect the company to eventually close these transactions, starting with existing properties that provide the company with additional liquidity, and soften one of the key short thesis on the company.
“While the timing of the closing of the loan guarantee has not yet been determined, this announcement is a significant step forward in that process.”
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With the announcement, analysts said they “expect the company’s previously discussed Texas plant to be the first plant
submitted for final guarantee under the federal NEPA process, with funds potentially beginning to arrive by the end of the year and potentially reimbursing capital costs already incurred, provided the guarantee documentation is completed.”