Hydrogen Energy California
Hydrogen energy California was awarded the right to claim an investment tax credit of up to $103,564,000 by the IRS in January.
The credit is 30% of the eligible cost of a hydrogen-fueled power plant that the company plans to build in Kern County, California. The hydrogen will be produced from non-potable water using coal and petroleum as fuel. The plant will produce a low carbon fertilizer in addition to electricity. The carbon dioxide emissions will be captured and used for enhanced oil recovery. The project cost will be paid in part with the help of a $408 million grant from the US Department of Energy.
The investment tax credit is a special credit under section 48A of the US tax code for advanced coal projects. The project must be placed in service within five years after award of the tax credit.
The company will probably have to do a sale-leaseback to get value for the tax credit. Alternatively, if it can find a strategic investor, it should be able to claim it on progress payments to contractors during construction.
by Keith Martin