Nikola Corp., an electric-truck startup, plans to enter into an settlement with an Arizona utility to produce low-cost electrical energy it wants to provide hydrogen for a deliberate fueling community.

The proposed contract between Nikola and Arizona Public Service Co., a unit of Pinnacle West Capital Corp., was disclosed in a Dec. 11 submitting requesting approval from Arizona utility regulators.

The deal would mark a major step for a startup that’s confronted a collection of setbacks since going public in June and whose marketing strategy rests on with the ability to produce hydrogen gas cheaply. Nikola shares have been up 3 p.c to $16.99 in afternoon buying and selling Wednesday.

In an April submitting, Nikola outlined an estimated price of manufacturing hydrogen at round $2.50 per kilogram, which it based mostly on securing wholesale electrical energy at a charge of three.5 cents per kilowatt hour. The speed APS proposes is round 2.7 cents per kilowatt hour.

“This charge schedule permits Nikola’s deliberate deployment of fueling services in Arizona in assist of zero-emission hydrogen fuel-cell electrical vehicles,” Nikola mentioned Wednesday in a press release. A consultant for Arizona Public Service had no quick remark.

Nikola plans to bundle the price of hydrogen gas and upkeep with its personal fuel-cell semi vehicles as a part of a seven-year or 700,000-mile lease. To realize this, the Phoenix-based firm goals to construct a community of 700 fueling stations throughout North America within the subsequent eight to 10 years.

However Nikola has mentioned it wants a associate. The startup was in superior talks with oil main BP Plc earlier than they fell aside following a short-seller report that raised questions in September about Nikola’s transparency. In November, Mark Russell, Nikola’s CEO, reaffirmed a objective of naming a hydrogen-infrastructure associate by year-end however warned it might slip in to early 2021.