Plug Pulled on Hydrogen Plant Leaves OHH With $6M Budget Hole

The board of Olney Hamilton Hospital (OHH) is working to reassess its long-term financing plan after Plug Power abruptly announced last month that it will cancel construction of its $850-million hydrogen plant in Young County—a decision that eliminates one of the central revenue sources the board told voters would help repay the bonds for Olney’s new hospital.

The new $33-million hospital, now under construction on Hamilton Street and Avenue M, is expected to be completed by next summer. The OHH board issued $27 million in general-obligation bonds continued from page 1

to begin construction after local voters approved sales of up to $33 million in bonds to fund the new hospital.

At the time, OHH board members stated that two major industrial projects in the hospital’s taxing district—the Young Wind Farm and Plug Power’s Project Limestone hydrogen facility— would supply the revenue to comfortably repay the construction debt.

However, the board raised the hospital district’s tax rate to compensate for a court-ordered reappraisal of the Young Wind Farm, which slashed a portion of the hospital’s anticipated tax revenue last year.

Now the second pillar has vanished.

Plug Power’s retreat came as a shock to Young County officials and local taxing entities. The company announced Nov. 10 that it was suspending all projects tied to a massive U.S. Department of Energy loan program that was intended to help build up to six hydrogen production plants nationwide— including one in Young County.

The company said it would “reallocate capital toward higher-return opportunities” and rely instead on new long-term hydrogen supply agreements rather than self-developed plants.

For Young County, the canceled plant represented a major economic development loss. Project Limestone was to be located on a 40-acre site along FM 209 and produce 45 tons per day of hydrogen using renewable energy. The county approved a reinvestment zone and tax abatement for the plant in 2022, and Plug Power was expected to make nearly $3 million in PILOT payments over the life of the agreement.

Plug Power had also committed to purchasing 345 MW of power from the newly constructed wind farm north of Olney, tying the hydrogen plant’s fortunes closely to the region’s renewable energy sector.

As recently as February, County officials were attempting to link the hydrogen developer with Stream Data Centers— another major industrial prospect in the county— to explore a potential partnership.

OHH board member Lyndsey Miller, who voted against the tax increase and has pursued federal grants and waivers of state and federal regulations to bridge the funding gap, said the board will discuss Plug Power’s pull out at the board’s next meeting. She said the loss of the hydrogen plant revenue will “definitely” affect the hospital’s repayment plan for the bonds.

Board President Dale Lovett acknowledged the seriousness of the setback but said the board has been preparing for the possibility and will proceed with its financing plan.

“Olney Hamilton Hospital, in anticipation of the Plug Power closure, has previously met with bond counsel and will continue moving forward with the sale of the second tranche of bonds, leveraging assets such as New Market Tax Credits to meet our obligations,” Mr. Lovett said. “Construction remains unaffected, as we continue to stay on schedule and under budget. While the evolving financial landscape presents challenges, it also brings new opportunities.”

Even before Plug Power’s withdrawal, hospital leaders had warned that the district’s finances were tightening. The court-ordered reappraisal of the Young Wind Farm wiped out a substantial portion of the revenue originally forecast to support the hospital, and played a part in the OHH board’s decision to end obstetrics services in June.