Supplier of hydrogen fuel cell technology Plug-in power supply (NASDAQ: PLUG) stock has been shot in the arm with the passing of the Inflation Reduction Act of 2022. The bill has brought renewable energy to life and electric vehicle (EV) shares. The mission of the hydrogen fuel cell (HFC) turnkey systems supplier is to build green hydrogen energy networks, fleets and cities. Plug Power expects to use more than 80 tons of hydrogen in 2024 and is committed to a 50% green content. Green hydrogen is made through electrolysis using electricity powered by renewable sources such as solar energy or wind energy. Plug Power has advanced its penetration further than competitors Fuel Cell Power (NASDAQ: FCEL) and Ballard Power (NASDAQ:BLDP). It has already surpassed its electrolysis business in Europe by 50% this year. They expect momentum in the US to accelerate, as evidenced by the 120 MW agreement with New Fortress Energy, which can be expanded to 500 MW.
Inflation Reduction Act Branches
The $700 Billion Bill Is To Reduce Inflation By Lowering energy costshealth care costs and reducing the deficit. It will promote the production of renewable energy and products to enhance supply and reduce costs. The bill allocates $430 billion in spending to reduce greenhouse gas emissions and investments in clean energy technologies and extend subsidies for the Affordable Care Act. It will also provide incentives through tax breaks for switching to cleaner energy sources, including energy-efficient electric heaters, electric vehicles and solar. Essentially, it will become cheaper to install solar systems by increasing the tax credits that would expire at the end of the year.
Consequences for electric vehicles
regarding EVs, the account offers a $7,500 credit to buy a new EV or up to $4,000 to buy a used EV for individuals making less than $150,000 or couples making less than $300,000 a year. However, the fine print dictates that the batteries must be made in the USA or purchased through its trading partners. This was intended to curb dependence on China. Sourcing requirements are gradually increasing every year. This is a challenge if China is the top producer of EV batteries with CATL power, accounting for nearly 35% market share.
How does Plug Power benefit?
According to CEO Andrew Marsh, the law has a direct impact on Plug Power’s electrolysis and green hydrogen business. The bill plays right into the wheelhouse of Plug Power products. Plug Power makes zero-emission hydrogen fuel cell products ranging from GenSure and ProGen fuel cell engines to GenSure backup power systems and services. GenDrive is a drop-in fuel cell system to replace existing batteries for electric vehicle fleets. ProGen fuel cell engines allow OEMs to design and install new EVs for fleets. GenFuel services include the hydrogen storage design and construction sites with its own rapid refueling dispensers. The company already claims some of the biggest brands as customers for its material handling products (forklifts), including NASA, Amazon (NASDAQ: AMZN), Boeing (NYSE: BA), FedEx (NYSE: FDX), Walmart (NYSE: WMT)and Home Depot (NYSE: HD).
CEO comment on the law
In his fiscal conference on earnings in the second quarter of 2022, Plug Power’s CEO Marsh noted, “The recently passed law would introduce a tax credit for clean hydrogen production, the PTC to boost clean hydrogen production. , which would be a major bend for the world to reach net zero by 2050 and for hydrogen, especially green hydrogen to supply 20% of the world’s energy… With the passing of the law, we expect a boom for our electrolysis and green hydrogen activities.” He continued: “All applications that use gray hydrogen today, such as fertilizer production, will now be able to purchase green hydrogen at a competitive price with gray. Applications that want to switch to hydrogen, such as steel and concrete production and heating natural gas , will be a way to drastically reduce the cost of their carbon footprint.”
Plug Power gave a preview. For the full year 2022, the company issued inline guidance for revenues between $900 million and $925 million versus $915.27 million consensus analyst estimates. A strong policy background sets a clear path to the 2025 targets. The electrolysis business is robust with a current backlog of 1.5 GW versus targeted bookings for 1 GW. The material handling activities are experiencing strong demand.
Is PLUG Stock ahead of itself?
They say a stock price is a forward value of how the company should perform. The markets are forward-looking and often precede events and news. PLUG stocks bounced in three weeks to erase seven weeks of losses. Investors looking to get their share of the action need to be patient. The passing of the law was an expected event and a sell reaction is likely to kick in after the initial euphoria as seen in the nearly doubling of the share price for First Solar Power (NASDAQ: FSLR).
Chart technical analysis
Using the gun cards on weekly and daily timeframes provides an accurate picture of the landscape for PLUG stock. Weekly Gun Chart Last Peaked Near $32.11 Fibonacci (fib) level. Shares advanced as low as $12.70 before stochastics formed a mini pup bounce around the weekly . to activate market structure layer (MSL) buy signal at the breakout to $19.06. The weekly breakout has a rising 5-period moving average (MA) support at $21.83 followed by the 15-period MA at $18.93. The 200-period weekly MA held the bottom on the breakdown, rising at $16.22. The weekly 50-period MA resistance broke at $25.27. The weekly upper Bollinger Bands (BBs) are $31.70. The daily rifle chart has been on a strong upward trend with the 5-period MA rising at $27.27 followed by the 15-period MA at $23.18. Stocks that broke threw the 200-period daily MA at $24.98. The 50-period daily MA support overlaps the weekly MSL trigger. The daily stochastics peaked and has stalled at the 90 band to either cross back to propel towards the daily upper BBs at $32.74 or fall through the 80 band for a downward oscillation. Cautious investors can watch for opportunistic pullback levels at the $22.76 fib, $20.99 fib, $19.06 weekly MSL trigger/50-period daily MA, $18.01 fib, $15.93 level fib and $14.03 fib. Upside targets range from the $35.72 fib to the $52.02 fib level.