Hydrogen Stocks, Including Plug Power (PLUG), FuelCell (FCEL), Advance After Tax Credit Criteria Eased

Bloom Energy (BE), Plug Power (PLUG), FuelCell Energy (FCEL), and Nikola (NKLA) are among the hydrogen stocks rallying today. They are surging after the Biden administration unveiled rules that will make it significantly easier for companies to obtain tax credits for producing green hydrogen in the next several years.

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The Rule Changes

Under the new criteria, green hydrogen producers will be able to obtain the $3 per kilogram tax credit through 2029 by showing that their hydrogen production is powered by renewables on an annual basis. Starting in 2030, firms will have to show that they are using renewables hour by hour to produce their hydrogen to obtain the tax credit. Under the previous rule issued by the Biden administration, the latter requirement was slated to take effect in 2028.

Moreover, hydrogen producers can use up to 200 megawatts of power from nuclear plants that are in danger of shutting down and still qualify for the tax credit. Under the prior rule, only power from new nuclear plants could be utilized.

Finally, also qualifying for the tax credit will be hydrogen that's produced using power from some fossil fuel plants that recently added carbon capture systems.

"The administration made significant improvements and considered industry feedback in several instances when crafting this final rule compared to the initial proposal," said Frank Wolak, the President and CEO of the Fuel Cell and Hydrogen Energy Association (FCHEA) (FCHEA), in a statement. "However, this rule is still extremely complex and will require intense evaluation by project developers to understand all the nuances and how they will apply to their specific facilities," Wolak added.

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