Plug Power Inc (NASDAQ:PLUG) has locked in its much-anticipated $1.66 billion Department of Energy loan. JPMorgan analyst Bill Peterson believes that the move “likely eases investor concerns” about a potential cancellation under a second Donald Trump administration.

While this milestone provides a “longer-term backstop” for Plug's green hydrogen ambitions, Peterson cautions that strong execution remains the key challenge over the next few years.

Read More: Plug Power Stock Charges Higher On $1.66B Department Of Energy Loan: The Details

Texas Takes The Lead

Plug's Texas plant is expected to be the first in line for construction, with an anticipated 45 tons per day production capacity.

Peterson highlights “Texas appears to be positioned well to produce lower-cost green hydrogen with limited capex burden.” He highlights looser 45V guidance, a favorable wind power purchase agreement, and Plug's own electrolyzers and liquefaction technology as key catalysts.

With some infrastructure already in place, construction is set to resume in the next couple of months. Plug is targeting its first drawdown from the loan within three months, which could serve as the next non-earnings catalyst for the stock. The company is also in talks with strategic investors, including international players, to bolster funding.

The Bigger Picture: Can Plug Deliver?

While the DOE loan is a positive development, Peterson notes “the broader green hydrogen ecosystem is still likely to ramp slowly.”

He acknowledges supply and demand being in their infancy and heavily reliant on subsidies as key factors. Investors will now turn their attention to Plug's ability to improve margins, grow its customer base, and achieve positive cash flow.

“Execution will be key,” Peterson emphasizes, as the company navigates the challenges of scaling up in an emerging industry.

Shares reacted positively to the news, climbing 5% in after-hours trading. However, Peterson warns that volatility may persist. Some investors could still harbor concerns about a potential clawback of the loan, even if the probability is minimal.

Beyond Texas, Plug is eyeing an expansion of its Georgia plant, doubling its output from 15 to 30 tons per day. Future projects in Arizona, Nevada and the Midwest are also under consideration. However, Peterson believes securing sufficient offtake and cost-competitive production will be critical hurdles.

For Plug Power, securing funding was just one hurdle — the real test begins now.

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