On the first day of stock market trading for 2025, Plug Power (PLUG 12.88%) stock is starting out the year right, rising 9.9% as of 10:15 a.m. ET.
The U.S. Treasury Department is gearing up to give new guidance on tax credits for hydrogen production under the 2022 Inflation Reduction Act (IRA), as Reuters reports. The rules are expected out later this week, and will explain how hydrogen producers like Plug Power (the company not only produces hydrogen fuel cells, but also hydrogen to fuel them) can offset their costs when using nuclear power to produce hydrogen gas.
Why this is important for Plug Power
Current IRA rules focus on granting hydrogen producers tax credits when they use new renewable energy sources (such as wind and solar power) to power electrolysis systems that split off hydrogen atoms from water to produce "green hydrogen" for fuel. The new rules will govern whether companies can claim credits for using nuclear power from existing plants to accomplish the same purpose -- and how much those credits will be worth.
Draft guidance from the Treasury suggests companies like Plug might receive credits of anywhere from $0.60 to $3 per kilogram of liquid hydrogen produced using nuclear energy. But the final amount has yet to be determined. Reuters notes that the amount of the credit "will determine whether it's commercially viable to invest in hydrogen production."
That makes this decision kind of a life or death issue for Plug Power. Treasury's decision may arrive by Friday.
Is Plug Power stock a buy?
Investors buying Plug stock today, therefore, are making a risky bet that the Treasury Department's decision will be favorable to their company. Two elements must fall into place for this bet to pay off.
First, Treasury must confirm that credits are available at all for hydrogen produced with nuclear power. Second, the credits must be big enough to help Plug Power earn a profit. So while this decision could go Plug's way, there are at least two ways it could go very wrong for Plug investors.
