Plug to Receive Federal Clean Hydrogen Production Tax Credit at Georgia Hydrogen Facility

Rhea-AI Summary

Plug Power (NASDAQ: PLUG) announced its intent to recognize the benefits of the Inflation Reduction Act’s (IRA) Section 45V Credit for the Production of Clean Hydrogen (PTC) in its upcoming financial reports. The PTC offers up to $3.00 per kilogram for clean hydrogen produced in the U.S., significantly reducing production costs. This will help Plug achieve a break-even fuel margin by year-end, with positive margins expected in 2025 and beyond. This makes Plug one of the first to leverage this incentive, aiming to scale hydrogen production and enhance its green hydrogen network with facilities in Georgia, Tennessee, and Louisiana, and more in development.

Positive

• PTC offers up to $3.00/kg for clean hydrogen, cutting production costs.
• Plug expects to achieve break-even fuel margin by year-end.
• Positive fuel margins anticipated in 2025 and beyond.
• Largest electrolytic liquid hydrogen production plant and PEM electrolyzer in the U.S. at Georgia facility.
• Expansion includes facilities in Tennessee and Louisiana, with more in development.

Negative

• None.

Insights

Financial Analyst

From a financial perspective, the availability of the Section 45V Credit under the Inflation Reduction Act (IRA) is a significant positive for Plug Power Inc. This credit offers up to $3.00 per kilogram for clean hydrogen produced in the U.S., which can substantially lower Plug’s production costs. Lower production costs can directly impact the company's gross margins, pushing them towards profitability. As outlined, Plug Power aims to achieve a break-even run rate by the end of the year and anticipates positive fuel margins starting in 2025. This timeline suggests a fairly rapid financial turnaround, assuming the uptake and efficiency of the credit are optimized.

However, investors should monitor how quickly and effectively Plug Power can scale up their operations to fully leverage this incentive. Any delays in project execution or operational inefficiencies could impair expected financial improvements. Moreover, it’s essential to keep an eye on regulatory risks or changes in policy that could affect future credits.

Energy Market Analyst

The introduction of the Section 45V Credit is a game-changer for the hydrogen market, especially for companies like Plug Power that are betting heavily on green hydrogen. This credit significantly lowers the cost differential between hydrogen and traditional fossil fuels, making green hydrogen a more viable option for industrial applications. This shift not only advances Plug Power's business prospects but also encourages broader market adoption of hydrogen technologies. As demand for clean hydrogen increases, Plug's strategic expansions in Georgia, Tennessee and Louisiana position it to become a leading supplier.

For retail investors, the key takeaway is the potential for rapid market growth driven by policy support. However, the competitive landscape is evolving, with other players likely to enter the market due to similar incentives, which could exert pressure on market prices and margins over time.

LATHAM, N.Y., June 28, 2024 (GLOBE NEWSWIRE) -- Plug Power Inc. (NASDAQ: PLUG), a global leader in comprehensive hydrogen solutions for the green hydrogen economy, which began commercial operation of its electrolytic hydrogen facility in Woodbine, Ga. earlier this year, intends to recognize the benefits of the Inflation Reduction Act’s (IRA) Section 45V Credit for the Production of Clean Hydrogen (PTC) in its forthcoming quarterly financial reports. Plug will be one of the first producers of clean hydrogen in the United States that anticipates utilizing this new incentive enacted by an Act of Congress and signed by President Biden.

The PTC offers a production credit of up to $3.00 per kilogram for clean hydrogen (H2) produced in the U.S., providing a substantial financial incentive for hydrogen production in the U.S, substantially lowering the cost of hydrogen production in the U.S. market. This incentive allows newer, cleaner technologies, such as electrolytic hydrogen, which is produced from water, to be more cost competitive with incumbent fossil fuel technologies.

With the passage of the IRA, the U.S. government has made it clear that clean hydrogen is essential to decarbonizing hard-to-abate industries, combat global climate change, improve U.S. energy security, and build a domestic clean energy manufacturing economy.

In the case of Plug’s fuel operations and sales of fuel to its customers, this benefit will provide a meaningful reduction in the Company’s fuel costs. This benefit is one of the key factors that will enable Plug to drive overall fuel margin to a break even run rate by end of the year and positions Plug for growing positive fuel margins in 2025 and beyond.

"Government support for clean hydrogen is critical to achieving global mid-century decarbonization goals,” stated Plug CEO Andy Marsh. “By leveraging these incentives, we can scale our hydrogen production capabilities and catalyze industry-wide technological advancements. The use of the PTC will drive innovation and investment in clean hydrogen solutions, which are essential for a sustainable future.”

Plug’s 15 ton-per-day (TPD) Georgia facility is the largest electrolytic liquid hydrogen production plant and largest PEM electrolyzer in the U.S. representing a landmark achievement in Plug’s build-out of a vertically integrated hydrogen ecosystem.

In addition to its hydrogen plant in Georgia, Plug is expanding its presence with an already existing 10 TPD plant in Tennessee, and a 15 TPD liquid hydrogen facility in Louisiana scheduled to be operational by the end of 2024. Plug also has a pipeline of future plant developments across the United States and is actively engaged with key strategic suppliers to facilitate the expansion of its green hydrogen network and to achieve cost-effectiveness in green hydrogen production at scale.

Plug intends to fully pursue and utilize the transformative Section 45V framework as it continues to develop, construct, and operate hydrogen generation facilities across the U.S.

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 targeting commercial operation by year-end 2028. 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 intention to recognize the benefits of the Inflation Reduction Act’s (IRA) Section 45V Credit for the Production of Clean Hydrogen (PTC) in its forthcoming quarterly financial reports; Plug’s expectation that it will be one of the first producers of clean hydrogen in the United States that anticipates utilizing this new incentive; Plug’s expectations with respect to leveraging these incentives, including its expectation that this benefit will provide a meaningful reduction in its fuel costs, its expectation that this benefit will enable Plug to drive overall fuel margin to a break even run rate by end of the year and positions Plug for growing positive fuel margins in 2025 and beyond, and its expectation that Plug can scale its hydrogen production capabilities and catalyze industry-wide technological advancements; the timing of Plug’s facility in Louisiana becoming operational; and the pipeline of Plug’s future plant developments across the United States. 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 Report on Form 10-Q for the quarter ended March 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

What is the significance of the Inflation Reduction Act’s Section 45V Credit for PLUG?

The Section 45V Credit offers up to $3.00 per kilogram for clean hydrogen produced in the U.S., significantly lowering production costs and aiding in achieving a break-even fuel margin for Plug Power by the end of the year.

How will the Section 45V Credit impact PLUG’s financial reports?

Plug Power intends to recognize the benefits of the Section 45V Credit in its upcoming quarterly financial reports, which will help reduce the company’s fuel costs.

What facilities is PLUG expanding to enhance its hydrogen production capabilities?

Plug Power is expanding its hydrogen production with facilities in Georgia, Tennessee, and a new 15 TPD liquid hydrogen facility in Louisiana, set to be operational by the end of 2024.

What is the expected impact of the PTC on PLUG's fuel margin?

The Production Tax Credit is expected to help Plug Power achieve a break-even fuel margin by the end of the year, with positive margins projected for 2025 and beyond.

How will PLUG utilize the Section 45V framework in its operations?

Plug Power plans to fully pursue and utilize the Section 45V framework to develop, construct, and operate hydrogen generation facilities across the U.S., enhancing its green hydrogen production and network.