PLUG Stock Alert: Plug Power plans to use tax credits for hydrogen

Plug-in power supply (NASDAQ:PLUG) shares fell about 4% today despite promising news that the fuel cell company will seek to take advantage of some Inflation Reduction Act (IRA) tax benefits. In fact, Plug will seek to obtain tax benefits related to Section 45V of the IRA for clean hydrogen production (PTC) in its upcoming quarterly financial reports.

For this reason, Plug is likely to be among the first clean hydrogen producers in the US to benefit from the Biden administration’s new tax incentives.

Section 45V offers producers a credit of up to $3 per kilogram of clean hydrogen produced in the country. This would provide Plug with a significant financial incentive to use cleaner energy technologies such as electrolytic hydrogen, as it is a more cost-effective method compared to fossil fuels.

“Government support for clean hydrogen is critical to achieving global decarbonization goals by mid-century,” said Plug CEO Andy Marsh.

“By leveraging these incentives, we can scale our hydrogen production capabilities and drive industry-wide technological advances. Leveraging the PTC will drive innovation and investment in clean hydrogen solutions that are essential for a sustainable future.”

Plug’s Georgia facility produces 15 tons of hydrogen per day, making it the largest liquid hydrogen electrolyzer facility and the largest PEM electrolyzer in the United States.

PLUG stock struggles to shake off bears

Despite today’s encouraging news, PLUG stock is unable to escape the bears. In fact, with today’s loss, PLUG is down nearly 50% year-to-date.

However, Plug hasn’t tried it. Plug is currently in the midst of a major expansion of its hydrogen plant in Tennessee, which can produce 10 tons per day, and a liquid hydrogen plant in Louisiana, which can produce 15 tons per day and is expected to be operational by year’s end.

As they expand, incentives like those included in Section 45V will provide companies like Plug with some financial flexibility to continue to build out clean energy systems.

At the time of publication, Shrey Dua did not hold (directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com Publishing guidelines.