What happened

Shares of rising hydrogen fuel cell stock Plug Power (NASDAQ:PLUG) is rocking Friday afternoon, up 3.5% as of 12:50 p.m. EDT. And Plug peers FuelCell Energy (NASDAQ:FCEL) and Ballard Power Systems (NASDAQ:BLDP) are coming along for the ride, rising 4.6% and 5.7%, respectively.

If you own any of the big fuel cell names, you can send your thank-you notes to Investor's Business Daily

Cartoon fuel cell car on palm of hand putting out H2 bubbles as exhaust

Image source: Getty Images.

So what

In a report this morning, momentum stock-trader guide IBD declared that hydrogen fuel cells "may be near a big breakthrough," citing an announcement from Chevron and Toyota on Wednesday that the companies have formed a "strategic alliance" to "build out hydrogen fuel cell infrastructure."

In addition, IBD noted that governments appear to be "getting behind [hydrogen fuel cells] at a national level," a trend that would obviously be good news for Plug, which produces hydrogen gas for fuel and manufactures the fuel cells that convert that fuel into electricity. In a perfect scenario in which everything goes right, and hydrogen costs fall below $2 per kilogram, IBD says hydrogen could supply as much as "25% of the world's energy by 2050."  

Now what

IBD notes that "gray hydrogen," produced from natural gas (and thus a greenhouse gas contributor) already costs about $2 per kilogram. The real key to Plug (and its peers) running away with the energy market, however, is getting the cost of green hydrogen (produced by using electricity from wind and solar power to split off hydrogen atoms from water via electrolysis) down below $2 a kilogram.

Currently, green hydrogen costs about $5 or $6 per kilogram to produce, says IBD, but it's already halved from where it once was, and IHS Market predicts that the current price will continue to fall, hitting perhaps $4 by 2025. Thus, the real question for determining Plug's long-term success may be: Can the price of green hydrogen drop another 50% from there? (And if so, how long will that take?)

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