What happened

Shares of hydrogen fuel specialist Plug Power (PLUG -4.93%) jumped as much as 5.8% early Monday on the heels of the Senate's passage of the Inflation Reduction Act. As of 12:35 p.m. ET, the stock had settled back to a gain of 1.6%. 

So what

The legislation now appears to have a clear path to becoming law, and it includes subsidies for hydrogen that could significantly benefit companies like Plug Power. The provision for alternative energy would give subsidies to the cleanest form of hydrogen production, so-called green hydrogen. The process to generate green hydrogen uses only renewable energy as its power source. Plug Power has been investing heavily to grow a network of green hydrogen production facilities throughout the U.S. 

Now what

Green hydrogen would get the largest subsidies of all the production methods. The subsidy would equate to more than half the cost of producing green hydrogen, according to estimates cited by Barron's. The outlet quoted Dimitry Dayen, a renewables analyst from ClearBridge Investments, saying that "[i]t would change the cost structure for green hydrogen."

Dayen also predicted the bill would help Plug Power become profitable much more quickly. Plug Power has been working on a multiyear plan to build a national network of green hydrogen production facilities in the U.S. It has projects ongoing in Georgia, Tennessee, and New York, and plans for the largest such facility on the West Coast in California.

Investors that want to bet the new legislation will spur more growth and better returns from hydrogen investments believe Plug Power stock is a good place to be today.