Hydrogen Finally Gets A Price Tag: S&P 500 New Energy Plays Soar Along With This Amazon Vendor

A number of new energy stocks, including S&P 500 nuclear stocks Constellation Energy and Vistra, along with Amazon.com supplier Plug Power, moved higher following the Treasury Department and Internal Revenue Service revising its rules for hydrogen production tax credits.

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The U.S. Treasury on Friday published its final rules on clean hydrogen production, with guidelines producers must meet to qualify for the clean hydrogen production tax credit of up to $3 per kilogram. The move broadly gave companies clarification on whether they could take advantage of the tax credit, as many were unwilling to make investments in hydrogen production projects until the rules were clarified, according to industry observers.

The hydrogen tax credit, which ranges from $0.60-$3 per kilogram based on the level of carbon emissions from the project, is part of the Inflation Reduction Act, or the IRA, signed by President Biden in 2022.

The Treasury on Friday made it so nuclear power along with natural gas producers could qualify for billions of dollars worth of credits to make hydrogen. Clean hydrogen, produced through renewable energy sources, has been historically much more expensive to produce compared to conventional hydrogen production methods. The new tax credit attempts to bring down the price, incentivizing companies to scale up clean hydrogen infrastructure.

New Energy Hydrogen Bets Jump Higher

Plug Power soared nearly 20% to 3.15 during Monday afternoon trade after gaining around 13% on Friday. In January 2021, PLUG stock hit a high of 75.49 but has fallen about 100% since then. The stock on average trades more than 62 million shares per day.

The Latham, N.Y.-based clean energy play has increasingly focused its business on the green hydrogen supply chain, manufacturing fuel cells and electrolyzers, and offering storage and transportation solutions.

Plug Power, in May 2024, received commitment from the U.S. Department of Energy for $1.6 billion in loans for clean hydrogen development. Earlier last year, Plug announced its green hydrogen production factory had completed its first customer order, sending liquid hydrogen to Amazon, Walmart, and Home Depot. Plug Power has struggled to meet hydrogen supply despite signing customer contracts.

Plug Power's legacy business is in supplying hydrogen fuel cells mainly for forklifts in large warehouses. Its fuel cells replace conventional batteries in equipment and vehicles powered by electricity.

Meanwhile, Bloom Energy advanced 4.8% to 25.48 early Monday. The renewable energy and power supplier gained 4% to 24.32 on Friday, booking its first weekly gain after four straight declines. The stock is 15% below its high of 28.70, which it hit on Nov. 27.

The Nuclear Effect

The government's decision to allow nuclear power providers to qualify for the hydrogen tax credit sent numerous nuclear stocks higher.

S&P 500 nuclear stock Constellation Energy gained 4.7% to 264.28 on Monday after climbing 4% higher on Friday. Meanwhile, Vistra surged 8.5% to 162.36 to end last week. The S&P 500 stock advanced 1% Monday.

Companies focused on small modular reactors, or SMRs, also took off. No operating SMRs now exist, but a number of outfits are developing the technology.

Oklo — the nuclear power startup backed by OpenAI head Sam Altman — jumped nearly 25% to 27.25 on Friday. Nano Nuclear Energy and NuScale Power rallied around 13% and 18% higher, respectively.

All rallied on Monday.

"We are pleased to see that the U.S. Treasury Department has changed course and that the final rule allows a significant portion of the existing merchant nuclear fleet to earn credits for hydrogen production," Constellation Energy Chief Executive Joe Dominguez said in a press release on Friday.

The company added it is reviewing the impact of the final rules on its proposed clean hydrogen project at the LaSalle Clean Energy Center and its role in the Midwest Alliance For Clean Hydrogen hub.