The shares of The Plug Power After the announcement by Walmart (NYSE) that it had reached an agreement, (NASDAQ:), shares rose 4.5% today

Plug Power, a provider of turnkey hydrogen fuel cells solutions, agreed to supply up to 20 tonnes per day in liquid green hydrogen. Walmart plans to use hydrogen for powering its material handling lift trucks at fulfillment centers and distribution points in the U.S.

The move marks another Walmart’s effort to incorporate alternative zero-carbon energy sources in its supply chain. The deal also represents one of Plug’s first green hydrogen supply contracts.

“Walmart has been an early adopter of innovative hydrogen and fuel cell technology for over a decade, and our hydrogen-powered solutions offer a tool to enhance productivity improvements for Walmart’s operations,” said Andy Marsh, CEO of Plug.

Plug Power creates green hydrogen using electrolysis water. This process uses zero-carbon electricity. This process is cost-effective and simple to make green hydrogen. It will be shipped to Walmart using liquid transport solutions that Plug obtained from the acquisition of Applied Cryo Technologies.

Ameet Thakkar, analyst at BMO, weighed in positively on the announcement. It was described as an important first step.

“Walmart’s agreement is positive, but we are curious about what sort of pricing mechanics (index vs fixed) and other contractual terms that will allow investors to get more confidence around potential for PLUG to achieve its target 30% gross margins in fuel supply agreements such as this,” Thakkar said in a client note.

“We would expect to see additional agreements given remaining open supply implied by PLUG’s 70 tpd 2022 exit rate and plans to grow production to 500 tpd by 2025.”

PLUG at BMO is Market Perform Rated

By Senad Karaahmetovic