In some cases, only 10% when you factor in the PTC credit. So those are the most two massive effects that are going to have on margin in the near term. And we expect that to start to see that in Q4 and start to really ramp as we move through 2024. Andy, you have other comments you want to share?
Andrew Marsh: No. I think you’re right, Paul. I mean, I think the equation is really right. We have to deploy more equipment and we’ll be deploying more in the fourth quarter. We have to get the plants up and operating, that helps a great deal. And look, we have a clear plan on service margins. And I think the best plan we’ve ever had. And I think all those factors will come into play.
Manav Gupta: My quick follow-up here is we are waiting clarity on the PTC. When do you think we can get something? And what do you think would be reasonable at this point to assume some level of — I mean, what do you think would be reasonably good outcome for you in the PTC guidance that does come out?
Andrew Marsh: So the administration has shared this week has been that they will have the PTC announcement after four years end. I suspect that that’s probably about right. When I think about the PTC, we think that really the key item is how regionalities defined. And if regionalities defined to be the balancing authorities where there are 69 in the U.S., probably most of our future activities would go on in Texas. If the balance — if the regionality comes out to be the ISO regions, we’ve looked at that and have concluded that it’s — that would be — that would work for Plug almost regardless of where they come out with additionality, we think you probably need three years. We also think that if you think about time matching, it’s pretty clear that treasury has realized that hourly time matching doesn’t work because of direct market for that really doesn’t exist.
I think that’s actually something that looks like that will be the final outcome. It won’t be the perfect outcome. A broader regionality East West and ERCOT would be the, I think, best solution for the growth of the hydrogen industry. And we coincide – and I think this is where I think a lot of people would miss. It really needs to be broad for the hydrogen hubs to work. And certainly, I can tell you, I’ve spoken with high-level leadership at the DOE and they understand that. So I think Plug is going to be fine when the guidance comes out. I think the industry will be fine. I hope that it’s done in a way that all regions of the United States are winners.
Manav Gupta: Thank you so much.
Andrew Marsh: You’re welcome.
Operator: Thank you. Our next question comes from the line of Bill Peterson with JPMorgan. Please proceed with your question.
William Peterson: Yeah. Hi. Good afternoon, everyone.
Andrew Marsh: Good afternoon, Bill.
William Peterson: So I’d like to dig a little bit deeper into Colin’s questions on the cash raise and short up the balance sheet. So you talked about corporate debt solutions. Can you provide more color on what kind of options, what kind of facilities you’re talking about here? On the DOE loan, you’re hoping to announce something later this year, but you talked about conditional. What is the conditional on? And then what — when could the dollars actually flow? I guess, can you confirm that this is milestone-based? And then finally, I think for these project finance, I guess, of course, when could — I guess when could these be solidified in order to show the position? Really just overall, how should we think about your ability to shore up your kind of cash position in the near term?
Andrew Marsh: Paul, do you want to take that?
Paul Middleton: Sure. There’s a lot of questions in there, Bill, I’ll do my best. First, on the DOE, one, it’s a good news, bad news. The fact that they require very detailed long-form term sheet is actually — although it takes time to work through is extremely helpful because the way the process works is, they effectively put the package together and all of their diligence reports have been submitted for the final approval, which once it gets approved, you then have to go and actually put the agreements in place. But because it’s 100-pages of long-form term sheets, and in fact, they’ve already kind of worked through all those key things. So that should be a much faster process. The framework that we’re working on with them is a $1.5 billion platform that would fund our green plants and would fund from construction phase onwards.
So — and it could be as upwards as 80% — $0.80 on the dollar. That’s the framework that we’re working on, and we’re working very diligently to get that in place. In addition to that, we’ve had some expressions of offers for ABL like facilities. We’ve had some expressions of offers for restricted cash advanced facilities like we used to have with Generate. So there are — and there’s been some — a number of parties that have expressed interest for project equity on some of our initial plans. So we have a range — and there’s been a number of other ones in different forms. And so we have a range of solutions that we continue to work through, and we just are wrestling through what we think is the best choices and the best options, given the dynamics and what we’re trying to accomplish here.
So I think the DOE could be even as early as late as end of Q1 potentially. More likely early Q2, it starts funding and it could actually go back and back lever some of the existing plants like Texas and maybe even New York. And I think some of these other facilities is what we probably levered into is to complement that structure for general working capital and other project capital that we would be advancing on. So hopefully, that helps, Bill.
