Plug Power Boosts Liquidity with $30 Million Federal Investment Tax Credit Transfer

Rhea-AI Summary

Plug Power (NASDAQ: PLUG) has enhanced its liquidity by approximately $30 million through the transfer of Federal Investment Tax Credit (ITC) on January 24, 2025. This marks Plug's first use of transferability rules under the Inflation Reduction Act (IRA) of 2022 and represents one of the first transfer deals for hydrogen storage and liquefaction assets.

The company secured the ITC through investments in liquefaction and storage technologies at its Woodbine, Georgia plant, which began production in early 2024. Under the IRA, facilities like Woodbine can claim both the Section 45V Production Tax Credit (PTC) for green hydrogen production and the ITC on storage and liquefaction assets. This follows Plug's June 2024 announcement of utilizing the PTC at the same facility.

The transaction represents a non-dilutive balance sheet opportunity and sets the stage for future ITC monetization as Plug continues to expand its green hydrogen ecosystem.

Positive

• Secured $30 million in immediate liquidity through ITC transfer
• Non-dilutive financing maintaining shareholder value
• Successfully monetized tax credits from Woodbine facility
• Qualified for both PTC and ITC benefits under IRA

Negative

• Reliance on government tax credits for liquidity improvement
• Need for immediate cash injection suggests potential liquidity concerns

Insights

Financial Analyst

The $30 million ITC transfer marks a pivotal moment for Plug Power, representing more than just a liquidity injection. This transaction demonstrates three critical developments: First, it validates the practical implementation of the IRA's tax credit transfer mechanisms, particularly significant as one of the first such deals for hydrogen infrastructure. Second, it establishes a precedent for future transactions, potentially creating a blueprint for the broader hydrogen industry.

The deal's timing is particularly strategic, occurring when Plug faces heightened scrutiny over its cash position. By securing non-dilutive financing through tax credit transfers, the company addresses immediate liquidity needs without impacting shareholder equity - a important consideration given its current market capitalization of $1.93 billion.

Most significantly, this transaction creates a repeatable model for future monetization. With Plug's extensive hydrogen infrastructure development pipeline, the company could potentially execute similar transfers for other facilities, creating a sustainable financing channel. The successful monetization of both PTC and ITC at the Woodbine facility suggests a potential multiplier effect for future projects, where each facility could generate multiple streams of monetizable tax credits.

However, investors should note that while this mechanism provides immediate liquidity, it also means forfeiting future tax benefits that could have offset profits once the company becomes profitable. This trade-off reflects management's prioritization of near-term cash needs over long-term tax planning, suggesting continued focus on growth over profitability.

Energy Policy Expert

This landmark transaction represents a important proof-of-concept for the IRA's tax credit transfer provisions, particularly in the hydrogen sector. The successful monetization of both PTC and ITC credits at Plug's Woodbine facility demonstrates the practical viability of the IRA's layered incentive structure, potentially accelerating industry-wide adoption of similar mechanisms.

The transaction's structure - involving both production credits (PTC) and investment credits (ITC) - showcases the sophisticated interplay of different policy tools designed to support the hydrogen economy. This dual-benefit approach could become a template for future projects across the industry, potentially accelerating the deployment of green hydrogen infrastructure.

The broader implications extend beyond Plug Power. This successful transaction likely provides valuable precedent for both regulators and industry participants, potentially streamlining future deals and reducing friction in the tax credit transfer market. The deal's completion might also influence upcoming Treasury guidance on hydrogen tax credits, as regulators now have a concrete example of successful implementation.

SLINGERLANDS, N.Y., Jan. 27, 2025 (GLOBE NEWSWIRE) -- Plug Power Inc. (NASDAQ: PLUG), a global leader in comprehensive hydrogen solutions for the green hydrogen economy, boosted its liquidity by approximately $30 million through the transfer of the Federal Investment Tax Credit (ITC) on January 24, 2025, to a major investor with a strong track record of purchasing comparable credits. The $30 million ITC transfer represents Plug's first use of the transferability rules under the Inflation Reduction Act (IRA) of 2022 and is among one of the first transfer deals for hydrogen storage and liquefaction assets.

Under the IRA, facilities like Plug’s plant in Woodbine, Georgia that produce, liquify, and store green hydrogen can claim the Section 45V Production Tax Credit (PTC) for green hydrogen produced as well as the ITC on the hydrogen storage and liquefaction assets at the facility. Plug secured the ITC through its investment in liquefaction and storage technologies at its green hydrogen plant in Woodbine, Georgia, which began production in early 2024. This development builds on Plug’s announcement in June 2024 of utilizing the PTC at its Woodbine, Georgia facility — allowing the company to benefit from both the PTC and ITC.

The IRA introduced new tax credits for hydrogen storage and liquefaction assets, as well as provisions for transferring certain previously non-transferable tax credits. These changes enable businesses to better monetize their tax credits and simplify financing processes.

“Plug is leveraging tax credit transferability to offset a portion of our investment in our hydrogen plants, which will provide liquidity and reduce future fuel costs,” explained Plug CFO Paul Middleton. “This transaction represents a key non-dilutive balance sheet leverage opportunity and sets the stage for future ITC monetization opportunities as we continue build out our green hydrogen ecosystem.”

"We’re excited to have launched the largest liquid green hydrogen facility in the U.S. and to start leveraging these benefits put in place to advance the industry,” said Plug CEO Andy Marsh. “Tax credits like these propel us towards green hydrogen expansion, energy independence, and significant job growth — shared goals with Plug, the industry, and the U.S. government. We look forward to continuing our collaboration with policymakers to drive innovation and progress in the energy transition."

This transaction highlights Plug's strategic use of the new tax credit transferability provisions under the IRA and highlights the IRA’s role in fostering clean energy investments.

About Plug

Plug is building an end-to-end green hydrogen ecosystem, from production, storage, and delivery to energy generation, to help its customers meet their business goals and decarbonize the economy. In creating the first commercially viable market for hydrogen fuel cell technology, the Company has deployed more than 69,000 fuel cell systems and over 250 fueling stations, more than anyone else in the world, and is the largest buyer of liquid hydrogen.

With plans to operate a green hydrogen highway across North America and Europe, Plug built a state-of-the-art Gigafactory to produce electrolyzers and fuel cells and is developing multiple green hydrogen production plants for commercial operation. Plug delivers its green hydrogen solutions directly to its customers and through joint venture partners into multiple environments, including material handling, e-mobility, power generation, and industrial applications.

For more information, visit www.plugpower.com.

Plug Power Safe Harbor Statement

This communication contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 that involve significant risks and uncertainties about Plug Power Inc. (“Plug”), including but not limited to statements about Plug’s belief that changes to the Inflation Reduction Act (IRA) of 2022 will enable businesses to better monetize their tax credits and simplify financing processes and Plug’s expectations regarding tax credit transferability, including ability to reduce future fuel costs and future Federal Investment Tax Credit (ITC) monetization opportunities. Such statements are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in these statements. For a further description of the risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the business of Plug in general, see Plug’s public filings with the Securities and Exchange Commission (the “SEC”), including the “Risk Factors” section of Plug’s Annual Report on Form 10-K for the year ended December 31, 2023, Plug’s Quarterly Reports on Form 10-Q for the quarters ended March 31, 2024, June 30, 2024 and September 31, 2024 and any subsequent filings with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements. The forward-looking statements are made as of the date hereof, and Plug undertakes no obligation to update such statements as a result of new information.

MEDIA CONTACT

Fatimah Nouilati
Allison
plugPR@allisonpr.com

FAQ

How much liquidity did PLUG gain from the Federal Investment Tax Credit transfer in January 2025?

Plug Power gained approximately $30 million in liquidity through the Federal Investment Tax Credit transfer completed on January 24, 2025.

When did PLUG's Woodbine, Georgia green hydrogen plant begin production?

Plug Power's Woodbine, Georgia green hydrogen plant began production in early 2024.

What tax benefits is PLUG receiving for its Woodbine facility under the Inflation Reduction Act?

Under the IRA, PLUG receives both the Section 45V Production Tax Credit (PTC) for green hydrogen production and the Investment Tax Credit (ITC) for hydrogen storage and liquefaction assets.

How will the $30 million ITC transfer impact PLUG's financial position?

The ITC transfer provides immediate non-dilutive liquidity to PLUG's balance sheet and reduces future fuel costs, while setting the stage for future ITC monetization opportunities.