On Thursday, Plug Power's share price experienced an uptick.
On the opening bell of the stock market in 2025, Plug Power (PLUG) shares are soaring, up an impressive 9.9% as of 10:15 a.m. ET. This bullish start could be attributed to some intriguing developments in the hydrogen production sector.
The U.S. Treasury Department is anticipated to release new guidelines this week regarding tax credits for hydrogen production, following the enactment of the 2022 Inflation Reduction Act (IRA). These guidelines will clarify how hydrogen producers, like Plug Power, which manufactures both hydrogen fuel cells and the hydrogen they require, can benefit from tax breaks when utilizing nuclear power to produce hydrogen gas.
The Importance for Plug Power
Currently, the IRA favors hydrogen producers by granting tax credits when they employ new renewable energy sources, such as wind and solar power, to power electrolysis systems that separate hydrogen atoms from water, producing 'green hydrogen' for fuel. The new guidelines will decide whether these credits extend to companies using nuclear power from existing plants for the same purpose and how much these credits would be worth.
Initial drafts suggest that companies like Plug Power might receive credits ranging from $0.60 to $3 per kilogram of liquid hydrogen produced using nuclear energy. However, the final amount remains to be determined. Reuters points out that this amount could determine whether investing in hydrogen production is commercially viable.
Plug Power's Fortune at Stake
Investors betting on Plug Power today are essentially wagering on the U.S. Treasury Department's decision favoring their company. Success depends on two factors:
First, the Treasury must approve tax credits for hydrogen production using nuclear power.
Second, these credits must be substantial enough to ensure profitability for Plug Power. While the decision could potentially work in Plug's favor, there are also two significant risks:
- Treasury might decline to grant credits for nuclear power.
- Even if credits are granted, they might not be sufficient to make the investments profitable.
Given these uncertainties, buying Plug Power stock carries an element of risk, but with promising rewards should the Treasury's decision turn out favorably.
- The new guidelines from the U.S. Treasury Department in 2025, based on the 2022 Inflation Reduction Act (IRA), could significantly impact the finance of hydrogen producers like Plug Power, influencing their investment in hydrogen production using nuclear power.
- Reuters reports that the costs of hydrogen production using nuclear energy might be lower with the proposed tax credits, making investing in hydrogen production a more attractive financial proposition for companies like Plug Power by 2025.
- The potential tax credits for hydrogen production using nuclear power, as outlined in the IRA and to be clarified by the upcoming guidelines, could potentially influence the long-term investment strategy of Plug Power in finance and investing.
- With the 2025 opening bell of the stock market approaching, the finance sector carefully watches the potential costs and benefits of hydrogen production using nuclear power for companies like Plug Power, considering its role in the energy transition and future investments.
