Plug Power boosts liquidity with $30 million tax credit deal

SLINGERLANDS, N.Y. - Plug Power Inc. (NASDAQ: NASDAQ:PLUG), a provider of hydrogen solutions currently valued at $1.9 billion, has increased its liquidity by $30 million through a transaction involving the Federal Investment Tax Credit ( ITC (NSE:ITC)), which took place on Monday. According to InvestingPro data, this liquidity boost comes at a crucial time as the company has been quickly burning through cash, with negative EBITDA of $988 million in the last twelve months. This marks the company's initial utilization of the transferability option under the Inflation Reduction Act (IRA) of 2022, positioning it as one of the pioneers in hydrogen storage and liquefaction asset deals.

The ITC transfer stems from Plug Power's investment in its Woodbine, Georgia plant, which began producing green hydrogen early in 2024. The facility is eligible for the Section 45V Production Tax Credit ( PTC (NASDAQ:PTC)) for green hydrogen production and the ITC for its hydrogen storage and liquefaction assets. While the company maintains a healthy current ratio of 2.08, InvestingPro analysis reveals several challenges, including a significant revenue decline of 25.89% over the last twelve months. For deeper insights into Plug Power's financial health and future prospects, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro. This move follows the company's June 2024 announcement of leveraging the PTC at the same location, allowing it to benefit from both tax credits.

The IRA has introduced new tax credits for hydrogen storage and liquefaction assets and has made provisions for transferring certain tax credits that were previously non-transferable. This shift is intended to help businesses monetize their tax credits more effectively and streamline financing processes. According to Plug CFO Paul Middleton, the ITC transfer is a significant non-dilutive balance sheet leverage opportunity and paves the way for future ITC monetization as the company expands its green hydrogen ecosystem.

Plug CEO Andy Marsh expressed enthusiasm about the company's launch of the largest liquid green hydrogen facility in the U.S. and the strategic advantage provided by the IRA's tax credit transferability. He emphasized the alignment of these tax credits with national goals of green hydrogen expansion, energy independence, and job creation.

Plug Power is actively building an end-to-end green hydrogen ecosystem, encompassing production, storage, delivery, and energy generation, to aid its customers in achieving their business objectives and contributing to the decarbonization of the economy. With a beta of 1.79, the stock exhibits higher volatility than the broader market, making it crucial for investors to conduct thorough due diligence. InvestingPro subscribers can access over 13 additional ProTips and extensive financial metrics to make more informed investment decisions.

This press release statement highlights the strategic use of new tax credit transferability provisions under the IRA by Plug Power and underscores the IRA's role in promoting clean energy investments.

In other recent news, Plug Power has made significant strides in its financial and strategic endeavors. The company has recently completed a $1.66 billion financing arrangement, a process that took three years. This funding will support up to six projects, including the restart of a project in Texas that was previously put on hold. Analysts from Oppenheimer expect the first draw of funds for the Texas project to occur within the next three months.

Further financial insights reveal that Plug Power has also secured a $1.66 billion loan guarantee from the Department of Energy's Loan Programs Office. This loan guarantee is anticipated to support the construction and operation of up to six green hydrogen production facilities. However, Citi analysts maintain a Sell rating on the company's shares due to concerns regarding the financial implications for Plug Power until the Texas facility becomes operational.

Plug Power has also been the recipient of various analyst ratings. H.C. Wainwright maintained a Buy rating, citing the company's strategic moves and its position to capitalize on the evolving regulatory landscape favoring clean energy production. Susquehanna reaffirmed its Neutral rating but increased its price target to $2.50, reflecting the company's progress in the international electrolyzer market.

In addition, Plug Power has announced a significant purchase agreement with Allied Green Ammonia (AGA). Under this agreement, Plug Power will supply three gigawatts of electrolyzer capacity to AGA's green hydrogen-to-ammonia plant in Australia. These recent developments underscore Plug Power's commitment to advancing the hydrogen economy and supporting the transition to a net-zero emissions future.

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