BP plc’s BP Castellon refinery in Valencia, Spain, is set to receive 25 megawatts (MW) of proton exchange membrane (PEM) electrolyzer systems from Plug Power Inc PLUG.

The move comes from a strategic initiative spearheaded by Castellon Green Hydrogen S.L., a joint venture between two energy giants — BP and Iberdrola IBDRY. The ambitious project aims to significantly cut carbon emissions by integrating green hydrogen into the refinery’s processes.

Plug Power, a leading provider of hydrogen solutions, will supply five of its 5 MW containerized PEM electrolyzers. These systems are designed to replace a portion of the gray hydrogen currently used in the refinery, which is derived from natural gas, with green hydrogen.

Green hydrogen, produced using renewable energy sources, is seen as a crucial technology in reducing carbon footprints across industries. In this case, it is expected to slash 23,000 tons of CO2 emissions annually, marking a significant step in BP’s decarbonization efforts.

The Castellon project is a testament to the growing momentum behind green hydrogen technology, which promises to revolutionize industrial energy consumption. With an annual production target of 2,800 tons of green hydrogen, the electrolyzers will reduce the refinery's reliance on gray hydrogen, enhancing sustainability and cutting emissions in line with global climate goals.

Plug Power’s role in this venture underscores its growing influence in the green hydrogen sector. The company, which operates one of the largest PEM manufacturing facilities in the United States at its Gigafactory in Rochester, NY, will play a central role in delivering the technology needed for this transformative project. The initial order of 25 MW could pave the way for expansion, with the potential for up to 2 gigawatts of electrolysis capacity in the future.

The project is not only a pivotal move for BP and Iberdrola in their journey toward cleaner energy, but it also highlights Plug Power’s capabilities as a key player in the global green hydrogen ecosystem. The company has already deployed more than 69,000 fuel cell systems and 250 fueling stations worldwide, positioning itself as a major force in the push for clean energy solutions.

With this bold step, BP, Iberdrola and Plug Power are shaping the future of energy, setting a precedent for how traditional industrial processes can be transformed through the power of green hydrogen. The project represents a technological leap and a crucial stride toward a sustainable energy future.

Price Performance

Shares of BP have underperformed the industry in the past six months. The stock has declined 12.1% compared with the industry’s 1.1% fall.

Image Source: Zacks Investment Research

Zacks Rank & Stock to Consider

Currently, BP carries a Zack Rank #5 (Strong Sell).

A better-ranked stock in the same industry is Delek Logistics Partners DKL, which presently flaunts a Zacks Rank#1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Delek Logistics Partners is a provider of gathering, pipeline, transportation and other services for the energy market. DKL’s expected earnings growth rate for the current year is 5.6%.

The Zacks Consensus Estimate for DKL’s 2024 EPS is pegged at $3.41. The company has a Value Score of B. It has witnessed upward earnings estimate revisions for 2024 and 2025 in the past 60 days.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

BP p.l.c. (BP) : Free Stock Analysis Report

Plug Power, Inc. (PLUG) : Free Stock Analysis Report

Delek Logistics Partners, L.P. (DKL) : Free Stock Analysis Report

Iberdrola S.A. (IBDRY) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research