GOP Seeks Probe of Plug Power’s $1.7 Billion in US Backing

(Bloomberg) -- A top Senate Republican is asking a government watchdog to investigate nearly $1.7 billion in financing offered last month to hydrogen company Plug Power Inc., alleging potential conflicts of interest and risks to US taxpayers. 

The company’s stock dropped more than 9% on the news. Plug shares were trading at $2.99 at 1:15 p.m. in New York. 

The Biden administration offered Plug Power a conditional commitment for $1.66 billion in loan guarantees to build up to six facilities. Shares of the company, which has said the financing is critical to its growth plans, surged as much as 70% immediately following the announcement, although they have since given up much of those gains.

The request by Senator John Barrasso, the top Republican on the Senate energy committee and a critic of the Energy Department loan program, asks the agency’s inspector general to investigate “any potential impropriety” by the program and its director, Jigar Shah, a veteran clean-tech entrepreneur. 

“Given the significant financial implications and the need to maintain public trust, a thorough investigation into the LPO’s conditional commitment to Plug Power is essential to ensure transparency and accountability within the LPO,” Barrasso wrote in the letter to Energy Department Inspector General Teri Donaldson made public Wednesday.

Among the concerns Barrasso laid out is that clean energy financing firm Generate Capital, of which Shah was president at the time, provided a $100 million loan to Plug Power in 2019, which it repaid in December 2022 without early termination fees as it was pursuing an Energy Department loan guarantee. 

Barrasso said he was concerned about the relationship between Shah and a Plug Power lobbyist who allegedly has described himself as Shah’s “longtime friend.” Barrasso also raised concerns about Plug Power’s financial viability after the company lost more than $1.3 billion in 2023. The company, based in Latham, New York, sells hydrogen-powered fuel cells and is building a series of plants to produce the fuel.

In response, the Energy Department said Wednesday that Shah fully divested of his shares of Generate Capital in 2021, as noted in his public financial disclosure reports. And Plug Power, the department said, had received financial assistance from the past five presidential administrations. 

“While some in Congress would rather see our competitors succeed in the race to capture the clean energy future, DOE continues to move diligently as good stewards of taxpayer dollars, holding borrowers to a due diligence standard comparable to, if not more stringent than, what is done in the private sector,” the department said in a statement. 

Shah has also previously assured Barrasso that he does not decide which companies receive loans.   

Plug Power declined to comment on Barrasso’s letter Wednesday. But the company pointed to previous statements that it had taken steps to improve its financial footing and had been transparent about its application to the loan office. 

The letter comes as Republicans have set their sights on the Energy Department’s loan program, vowing to find a Solyndra-like failure in an election year. President Joe Biden’s signature climate law gave the program hundreds of billions of dollars in new loan authority.

Shares of Sunnova Energy International Inc. plunged 16% in December after Barrasso requested documents related to a $3 billion partial loan guarantee awarded to the Texas-based company for its efforts to expand rooftop solar to moderate- and lower-income customers in Puerto Rico and elsewhere. Sunnova rejected any allegations of wrongdoing, and shares of the company’s stock price recovered their losses within days. 

(Updates share price in second paragraph and adds Energy Department response in eighth paragraph, company response in paragraph eleven.)

©2024 Bloomberg L.P.