A literal power struggle at STAMP

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Gov. Kathy Hochul, center, flings dirt into the air at Plug Power’s groundbreaking. Photo via governor’s office.

The financial strife of Plug Power is causing headaches for a Western New York industrial park, leading economic development officials in Genesee County to seek state assistance and even court data centers in an effort to “save the day.”

As it’s run dangerously low on cash, Plug Power has stopped construction of its hydrogen production plant at Genesee County’s Science Technology and Advanced Manufacturing Park, located halfway between Buffalo and Rochester. The company’s building has been paused since January.

That has meant construction of the park’s electric substation has also been on pause. Under the original terms of its deal, Plug Power was supposed to pay for it.

For the Genesee County Economic Development Center, the local industrial development agency, that’s become a major problem as Edwards Vacuum, a parts maker in the semiconductor industry, rapidly completes a factory at STAMP — a plant that will soon need a lot of power.

As a result, IDA officials have turned to Empire State Development for assistance. The industrial development agency is also entertaining bids from two firms seeking to build large data centers at STAMP. 

Under one proposed deal, one of the firms, PRP Real Estate Investment Management, would pay to complete the electric substation rather than Plug Power or the IDA. The other firm the IDA is entertaining is the real estate firm JLL.

“[Plug Power] started building our substation, and they put things on hold, and now we’re coming in to pick up the pieces, so to speak, of the substation,” Chris Suozzi, the IDA’s vice president, said during a September call taped by PRP Real Estate, which shared the recording with Investigative Post.

The agency, Suozzi said, is now looking to data centers to “come in and save the day a little bit.”

In the meantime, however, Empire State Development gave the IDA permission to use part of a $56 million grant to complete the substation. The grant money was originally intended to pay for water and sewer infrastructure — other projects STAMP has struggled to complete. 

That cost to complete the substation could be as much as $25 million. 

According to a spokesperson for the IDA, companies like Edwards Vacuum would then pay the agency for use of the substation, rather than paying Plug Power. At a Sept. 4 meeting, the agency’s board of directors voted on an agreement to buy substation assets from Plug Power.

Suozzi, on the call, explained the situation this way:

“The state has stepped in to stop the bleeding and get it going again,” he told PRP. “We’re just playing this game of, you know, trying to get that accomplished at the same time trying to talk to people like you guys that could potentially access the power for cost.”

Complicating matters further, however, is the fact that the Genesee County officials want only one data center at STAMP. That’s because, Suozzi explained on the call, data centers take up a lot of resources, like land, water and electricity, while returning relatively few jobs. Empire State Development, he said, isn’t a big fan for those reasons.

But PRP is now protesting that the IDA isn’t giving its proposal a fair shake. That firm has proposed a $3.3 billion data center project for a single company like Amazon or Microsoft to use. The proposal includes PRP taking over Plug Power’s role in constructing the substation, paying up to $25 million to finish the job. 

JLL, the other data center firm, has proposed a $3.8 billion project for multiple end-users, including those using large-scale AI. That project would result in 60 jobs.

Between its offer to purchase 100 acres of STAMP for $30 million and a pledge of 105 jobs, PRP officials argue the IDA is turning its back on a good deal for local taxpayers. The IDA, however, says it evaluates completed applications in order and that JLL’s was completed and submitted ahead of PRP’s. 

Tom Wasko, PRP’s director of acquisitions, has subsequently shared internal documents with several Buffalo journalists in an effort to garner public support for his firm’s proposal. He shared with Investigative Post a recording of a call his team had with the IDA.

“We were never given a fair shot,” Wasko told Investigative Post. “So we have to go public to show the citizens of the county what they’re missing out on because their economic development representatives aren’t acting in the best interests of these citizens.”

Though no figures were available, Wasko said PRP would seek property tax breaks for its land and building, valued at $1.4 billion; sales tax breaks on $1.9 billion in equipment; and mortgage tax breaks as well.

Earl Wells III, a spokesperson for the IDA, said PRP’s initial application was incomplete, but that the agency was evaluating its offer.

“Every application submitted to our agency is given serious consideration which we are doing in this instance,” he said.

Plug Power, for its part, said the firm is waiting on federal regulations for hydrogen to be finalized before moving forward with its project at STAMP.

“After construction commenced, the project encountered delays due to permitting and construction issues with the required substation buildout that continued into 2024,” Plug Power spokesperson Marcel Goldstein said. “The path forward for the project depends upon favorable resolution of several key items.”

A representative for Empire State Development did not respond to a request for comment for this story.

Plug Power’s financial troubles

When Plug Power broke ground at STAMP three years ago, Gov. Kathy Hochul and Sen. Chuck Schumer pitched the $290 million project as a boon for Western New York and the environment.

Not only would it anchor STAMP as its first tenant, the company would be “instrumental in establishing Genesee County as the next global hub for the clean energy industry,” Schumer said at the time.

But since that announcement, Plug Power has faltered.

The company has seen its stock price fall from a 2021 high near $70 per share to around $2 per share in recent months. At the end of 2023, the company informed shareholders that it had a “going concern” — a sign it was running out of cash. Plug Power then obtained a $1.66 billion bailout loan from the Department of Energy. Most recently, the firm announced it would sell some of its assets and lease them back — another strategy to generate short-term cash.

All of that has left its hydrogen production facility at STAMP — hailed as “North America’s largest green hydrogen production facility” — in limbo for nearly a year. The same has been true for STAMP’s substation.

Plug Power, buoyed by nearly $270 million in subsidies, was supposed to front the $110 to $125 million to construct the substation under the original terms of its deal with the IDA. STAMP’s other tenants would then reimburse Plug Power for building the substation.

Information provided by Wasko suggests Plug Power would use 44 percent of the substation’s power. His firm would seek to use 33 percent of the power, leaving the rest for Edwards Vacuum and future STAMP tenants.

A data center to save the day?

Wasko estimated that it would cost $25 million to complete substation construction. His firm, which builds data centers for companies including Amazon, Microsoft, Meta and Oracle, has offered to do so as part of a proposed deal with the IDA.

According to PRP’s proposal, the firm would purchase 100 acres at STAMP for a price of $30 million, or $300,000 per acre. It would then construct three data centers, at 250,000 square feet each, covering a little more than 17 of the acres. The rest of the land would be used for deliveries, parking, stormwater management and possibly a solar farm, PRP told the IDA.

PRP’s data center would use up to 800,000 gallons of water per day, or “significantly less” if the computer servers are cooled using a closed-loop cooling system.

JLL has proposed a 43-acre project with two 450,000 square foot buildings with a closed-loop cooling system. That project would similarly use about one-third of the STAMP substation’s power. Like PRP’s project, JLL would seek significant tax breaks though a dollar amount is not yet available.

In the event the IDA acquires the substation assets, uses the state grant money to complete the project and is reimbursed by other STAMP tenants, PRP’s proposal to build the substation would be moot.

“Any tenant of STAMP who seeks to utilize the substation, including any data centers, will be required to pay their pro rata share of substation construction costs,” said Wells, the IDA’s spokesperson.

Still, Wasko’s PRP is not going away quietly. The firm retained Hodgson Russ and sent the IDA a strongly-worded letter last week urging the agency to strike a deal with PRP.

In response, the IDA’s lawyer wrote that the agency “remains very interested in working with [PRP] to finalize a complete application in the event that the other project does not proceed.”

J. Dale Shoemaker