US green hydrogen equipment maker and developer Plug Power says it has “boosted its liquidity by approximately $30m” by transferring federal investment tax credits for hydrogen storage and liquefaction equipment at its 40MW green H2 plant in Woodbine, Georgia, to a “major investor”.
The investment tax credit (ITC) was included in Section 48 of the 2022 Inflation Reduction Act (IRA), which states that developers can reduce their tax burden to the tune of 30% of the cost of investments in energy storage equipment — explicitly including hydrogen storage facilities — constructed before 1 January 2025.
The act also allows companies to transfer their investment tax credits to a third party, which then becomes the eligible taxpayer. This enables the developer to monetise the credits far in advance of their tax returns, while the purchaser of the credits can make a guaranteed profit by buying them for less than their true value.
Both Plug and the unnamed “major investor” clearly believe that the Trump administration will not prevent the ITC from being claimed, despite the president signing an executive order on his first day in office to “immediately pause disbursement of funds” appropriated through the IRA.
As tax credits are not technically a “disbursement of funds”, and are merely a reduction in the payment of taxes to the government, lawyers believe that the pause of at least 90 days does not apply to them.
On the campaign trail, Donald Trump promised to “rescind all unspent funds under misnamed Inflation Reduction Act”, and his administration could yet try to amend the IRA in Congress, where his Republican Party has majorities in both houses.
Plug Power announced last June that it was claiming the clean hydrogen production tax credit (PTC) of up to $3/kg — under Section 45V of the IRA — for the same Georgia project, even though the rules for claiming the PTC were not finalised by the Biden administration until earlier this month. The Trump administration will be able to reverse or amend these rules if it so desires.
While the IRA explicitly states that hydrogen storage projects are eligible for the ITC, it makes no mention of H2 liquefaction, suggesting that Plug sees the liquefaction equipment as an integral part of its storage facilities.
“Plug is leveraging tax credit transferability to offset a portion of our investment in our hydrogen plants, which will provide liquidity and reduce future fuel costs,” said Plug chief financial officer Paul Middleton. “This transaction represents a key non-dilutive balance sheet leverage opportunity and sets the stage for future ITC monetization opportunities as we continue build out our green hydrogen ecosystem.”
CEO Andy Marsh added: “We’re excited to have launched the largest liquid green hydrogen facility in the U.S. and to start leveraging these benefits put in place to advance the industry.
“Tax credits like these propel us towards green hydrogen expansion, energy independence, and significant job growth — shared goals with Plug, the industry, and the U.S. government. We look forward to continuing our collaboration with policymakers to drive innovation and progress in the energy transition."
