Mar 17


The mother of all subsidy deals

Tax breaks and discounted power proposed to lure a clean energy company to a vacant industrial park in Genesee County amount to a record $4 million per job

At a cost of $4 million per job, the subsidy deal designed to bring the first tenant to a vacant industrial park in rural Genesee County would be the richest in Western New York history. 

Plug Power is in line for an estimated $269.5 million in tax breaks and power discounts in exchange for building a plant that would create 68 jobs. 

The cost per job dwarfs other local subsidy deals. Subsidies for a data center built nearly a decade ago in Lockport worked out to more than $2 million a job. Government money invested in the Tesla solar plant in South Buffalo cost a little more than $500,000 per job. 

Tom Speaker, a policy analyst for Reinvent Albany, a good government group, termed the Plug Power subsidy per job “completely unjustifiable.”

“We have never seen a number that high, not in recent memory anyway,” he said. 

Proposed subsidy package

Subsidy Cost Period
Discounted market rate electricity $140 million 10 years
Discounted hydropower $7.9 million 10 years
Property tax abatements $118 million 20 years
Sales tax abatements $1.1 million 20 years
State tax credit $2 million One time
Power Authority grant $1.5 million One time
Infrastructure improvements TBD
Source: New York Power Authority, Genesee County Economic Development Center.

Economic development officials in Genesee County have spent years trying to land a tenant for the Science and Technology Advanced Manufacturing Park in the Town of Alabama, located 10 miles north of Batavia. The Genesee County Economic Development Center has spent $26 million to develop the industrial park, but so far have only vacant fields to show for its efforts.

The Plug Power project represents a breakthrough. The Albany-based company produces hydrogen fuel and would spend $232 million to build a plant that would pull hydrogen out of water to power forklift batteries.

What do officials with the county Economic Development Center have to say? 

They’re not talking, at least not to Investigative Post. 

The agency’s executive director, Steve Hyde — whose salary was $240,193 in 2019 — refused repeated requests for an interview. All members of the public agency’s board of directors either refused to comment or failed to return telephone messages. 

In an email, spokesperson Jim Krencik said agency officials are too busy with “other responsibilities.” (They have granted interviews to at least three news outlets that produced favorable stories, however.)

Plug Power officials also failed to respond to interview requests.

Gil Quiniones, president and CEO of the New York Power Authority, defended the project as being consistent with statewide goals to reduce carbon emissions while promoting economic growth and job creation. 

“The power authority’s Niagara hydropower will directly support the production of green hydrogen at the new plant, which will be one of the largest of its kind in the United States,” Quiniones said in a statement.

Plug Power’s plan

Plug Power employs about 1,000 workers at its main facility in Latham, a small community near Albany. Through a process called electrolysis, the company uses electricity to drive a chemical reaction in water that produces hydrogen for fuel cells. Plug Power’s fuel cell systems power forklifts for companies including Amazon, Walmart and Home Depot. Long-term plans call for expansion into a larger and potentially more lucrative market — hydrogen-powered tractor trailers. 

The company would be the first tenant at STAMP, a 1,250-acre industrial park that  remains a field despite the investment of $26 million in public funds, including $13 million from Gov. Andrew Cuomo’s Buffalo Billion program. 

Plans call for the hydrogen production facility to be built on 29.8 acres that Plug Power has agreed to purchase for $2.1 million from the county Economic Development Center. 

Scheer discusses his story on WBEN

The company is preparing to submit a site plan for review by the Town of Alabama Planning Board this spring. Construction is slated to begin this summer, with completion expected by the end of next year. 

The plant would employ 37 hydrogen operators and technicians, 30 truck drivers and a plant manager. Wages would average $70,529. 

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The company has agreed to underwrite a key component of STAMP’s development — a $55 million electric substation. During a Town of Alabama planning board meeting earlier this month, Plug Power representative Brenor Brophy said the company expects to use half the electricity from the substation while retaining the ability to sell leftover power to future tenants at the industrial park. 

“In theory, we will pay for what we use and get reimbursed for what we don’t use,” Brophy said.

Quiniones, of the Power Authority, said construction of the electrical substation “will act as a catalyst to attract future tenants, providing an economic boost to the region on top of the creation of dozens of immediate manufacturing jobs with attractive salaries and benefits.”

In explaining NYPA’s support of the project, Quiniones said the promotion of hydrogen power will help the state meet its goals to reduce its reliance on fossil fuels.

“As we strive to decarbonize New York State’s economy by transitioning to low and zero carbon emission energy resources, we need pioneers like Plug Power to develop these potential solutions to decarbonize the manufacturing and process industries,” he said in a statement.

Jim Heaney discusses the story on The Capitol Pressroom

The plant would produce hydrogen fuel for round-the-clock delivery by truck to warehouses and other customers. The company’s fleet currently consists of diesel-powered haulers, but Brophy said the goal is to employ hydrogen-fuel semis by 2024 or 2025. 

“We will be amongst the very first adopters of fuel cell trucks,” Brophy said. “I guarantee it.”

He described the hydrogen fuel plant’s design as “fossil-fuel free.” Because its main by-product is oxygen, Brophy said, the plant’s impact on the environment would equal a “forest of about 15,000 acres.” 

Mega-subsidies requested

The board of directors for the county Economic Development Center has received an application for sales and property tax abatements providing Plug Power $118.2 million in savings over 20 years. Under the deal, which is still subject to final approval by the agency’s board, Plug Power would pay about $2.3 million in tax payments annually — roughly $46 million over the full term — to the county, the Town of Alabama and the Oakfield-Alabama Central School District. 

Plug Power would enjoy even larger savings through discounted electricity. The Power Authority, pending the approval of its board of trustees, has agreed to sell Plug Power 10 megawatts of discounted hydropower generated in Lewiston. It has also agreed to facilitate the purchase of discounted market rate electricity, as well. 

The total estimated savings over 10 years: $148 million.

Plug Power would enjoy further savings if the Power Authority continues to provide discounted electricity after 10 years.

In addition, the Western New York Power Proceeds Board has recommended that the Power Authority’s board approve a $1.5 million grant for the project. Plug Power would also be eligible for up to $2 million in tax credits through Excelsior, a state program that allows companies to claim a credit for each net new job created.  

One public cost not yet calculated is the expense of providing infrastructure to the plant site. Those could include water, sanitation and telecommunications.

Difficulty landing tenants

To date, officials have spent $26 million to establish STAMP’s footprint, which is larger than Central Park in New York City and equal to 945 football fields. 

There’s no water service, sewer lines or electricity on the site. Infrastructure is limited to a six-tenths-of-a-mile entrance road and a welcome sign that was installed under a contract valued at just under $50,000. 

Part of the money spent to date covered land acquisition and costs for design, engineering and legal services. A portion was also used to finance off-site water system upgrades, including the installation of 15 miles of transmission lines connecting 1,500 residences in Alabama and neighboring Pembroke. 

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The development agency still has $28.3 million to continue building out the site, which is projected to eventually employ up to 4,000 people. Krencik, spokesperson for the Economic Development Center, said those funds will pay for marketing and  infrastructure .

STAMP is reportedly still in the running to land a $17 billion Samsung microchip manufacturing plant, but an analysis conducted last month by Investigative Post determined that the project is likely headed to Austin, Texas.

Investigative Post

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