What Happened?
Shares of fuel cell technology Plug Power (NASDAQ: PLUG) jumped 8.4% in the afternoon session after the Biden administration announced new rules clarifying that some nuclear power plants can secure tax credits for producing clean hydrogen if the credits help keep reactors running. This announcement means more funding opportunities for hydrogen producers despite some opposition from environmental groups regarding the use of nuclear to produce hydrogen. The update also provides more certainty for investors and related companies within the clean energy space.
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What The Market Is Telling Us
Plug Power’s shares are extremely volatile and have had 93 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about 2 months ago when the stock dropped 25% after renewable energy stocks declined as Republican party candidate Donald Trump was declared the winner of the 2024 US presidential election.
For clean or renewable energy stocks, President-elect Trump is considered a headwind to their businesses. Specifically, his administration could lead to an overhaul of recent industry progress, including a repeal of President Biden’s Inflation Reduction Act. The IRA, as it's known, offers long-term tax credits for solar, wind, geothermal, and other renewable energy projects, often extending them for a decade. These tax credits offer stability and predictability, enabling companies to make long-term investment plans. For example, solar and wind energy developers benefit from a 30% investment tax credit (ITC), which can increase further if certain labor and domestic content standards are met.
Plug Power is up 8.2% since the beginning of the year, but at $2.52 per share, it is still trading 46.4% below its 52-week high of $4.70 from January 2024. Investors who bought $1,000 worth of Plug Power’s shares 5 years ago would now be looking at an investment worth $780.19.
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