The bill gives hydrogen producers a production tax credit worth $3 per kilogram of green hydrogen. It also provides an investment tax credit worth 30% of the cost of new electrolyzers, which produce hydrogen from water. The credits can help hydrogen projects gain financing.
The credits are also authorized for up to 10 years, giving producers and investors certainty.
Who Gets Help?
While each of the aforementioned companies has its own approach to hydrogen power, they are all set to benefit from the bill. FuelCell Energy produces utility-sized fuel cells to offer back-up power. These SureSource cells can use natural gas or biogas as a fuel source, and may be near water treatment plants to produce hydrogen for transportation.
Bloom Energy makes solid oxide fuel cells. Like FuelCell’s products, they also run on biogas. Bloom also makes electrolyzers that convert water into hydrogen and oxygen. On the demand side, Bloom has a partnership with a Korean company to produce power.
Plug Power calls itself a leader in “green hydrogen,” using renewable power and chlor-alkali as a feedstock. It uses sources other than natural gas, and is focused on transportation and warehouse markets. The company is also selling electrolyzers to New Fortress Energy (NASDAQ:NFE), a natural gas distributor and exporter.
Gevo has bought land to produce sustainable aviation fuel in South Dakota. Net-Zero 1 will use corn as a feedstock. The company had $475 million of cash in February to fund construction. The company already has a long-term deal to supply the fuel to Aer Lingus.
What Happens Next for Hydrogen Stocks
All hydrogen stocks can expect a short-term gain from the Senate passage of the bill. While the House is expected to pass it as well, there could still be a bumpy ride before it’s signed.
Once the Inflation Reduction Act is signed, expect bigger sales but also growing competition in the space. Each of these companies has their own target market and approach to producing fuel, so their performances will differ.
On the date of publication, Dana Blankenhorn held no positions in any companies mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.