Plug Power(NASDAQ: PLUG) shares jumped today, and investors see a path for more gains to come. That's not because of any news directly from the hydrogen power company. Rather, it's what investors see as a potentially very lucrative new market for Plug Power.
Shares were 19.9% higher as of 12:40 p.m. ET Monday after reports that the Federal Energy Regulatory Commission (FERC) rejected a request to increase the amount of power from a nuclear plant. That request came from the operators of the Susquehanna nuclear plant to supply energy to an Amazon data center campus.
Data center power demand
The Pennsylvania nuclear plant owned by independent energy producer Talen Energy sold the data center campus to Amazon Web Services (AWS) earlier this year and was hoping to strike a deal to supply the power needed to run its artificial intelligence (AI) servers. It was thought to be an arrangement that would be duplicated at other data centers as energy needs grow globally.
Talen wanted regulatory approval to increase the load capacity from 300 megawatts (MW) to 480 MW for the interconnection between its nuclear power plant and the AWS data center. Plug Power is working to build a hydrogen ecosystem to utilize its electrolyzers to provide clean power for industrial power needs.
Plug Power uses electrolyzers and electricity made from renewable sources to split water molecules into hydrogen and oxygen. That creates green hydrogen that could power data centers. It most recently announced a framework agreement with an Australian company to supply 3,000 MW of electrolyzer capacity for its ammonia production needs.
Data center operators have been looking at using nuclear power, including modular reactors, to supply their energy needs. Using Plug's electrolyzers wouldn't be an automatic substitute. The hydrogen ecosystem can be costly, and Plug hasn't produced a profit yet.
It's too soon for investors to jump into the stock with the hope that data centers can be a catalyst for new business. But that's the knee-jerk reaction from some after the Talen Energy news today.
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