If you listened to this week’s EPA statements, you will have heard about one of the least talked about subsidies in our country. The Fuel Cell Tax Credit is designed to be enjoyed for many years, so much so that you can apply for it now and receive it until 2035. We tell you everything you need to know and how you can apply for it.
Fuel cells, an innovation to revolutionise transportation across US
Fuel cells are an emerging clean energy technology that generate electricity through an electrochemical reaction, rather than combustion. Unlike fossil fuel power plants, fuel cells produce electricity silently and emission-free.
Fuel cells work by passing hydrogen through the anode of the fuel cell and oxygen through the cathode. At the anode site, the hydrogen molecules are split into protons and electrons.
The protons pass through a membrane to the cathode side, while the electrons travel in an external circuit, generating electricity. At the cathode, the protons, electrons, and oxygen combine to form water as the only byproduct.
The hydrogen fuel can be pure hydrogen gas or reformed from hydrocarbon fuels like natural gas. The oxygen is typically supplied from ambient air. As long as fuel is supplied, the fuel cell will continue to generate electricity.
The modular and scalable nature of fuel cells allow them to power anything from small portable electronics up to entire buildings. Fuel cells provide highly efficient on-site power generation with minimal pollutants.
New Fuel Cell Tax Credit: the subsidy you can receive until 2035
A new fuel cell tax credit was recently passed by Congress as part of the Inflation Reduction Act of 2022. The credit provides an incentive for businesses and homeowners to install fuel cell power generators, which convert hydrogen and oxygen into electricity through an electrochemical reaction.
Unlike previous fuel cell tax credits that were only available for a few years, this new credit will be available through December 31, 2035. This 14-year extension makes the tax credit more attractive for long-term investments in fuel cell installations. The new law went into effect on January 1, 2023.
The fuel cell tax credit aims to accelerate the adoption of clean energy technologies and reduce greenhouse gas emissions. Fuel cells can help transition away from fossil fuels and provide resilient backup power generation.
How much is worth this credit? That´s why you should apply for it
The fuel cell tax credit allows you to claim up to 30% of the cost of purchasing and installing a qualified fuel cell system. This includes the cost of the fuel cell stack modules and associated equipment such as inverters, batteries, and installation costs.
The credit has a maximum amount per kWh of fuel cell capacity. For 2023, the maximum credit amount is $3,000 per 0.5 kW. So for a 5 kW fuel cell system, the maximum credit would be $30,000 (5 kW / 0.5 kW x $3,000).
Keep in mind the credit is nonrefundable, so your tax liability needs to be high enough to use the full amount. If your tax liability is less than the credit amount, you can carry forward the unused portion to future tax years.
The 30% credit applies to fuel cell systems placed in service from the beginning of 2023 through the end of 2035. So there is ample time to take advantage of this incentive for installing an onsite fuel cell.
As you have seen, one of the most unknown subsidies is also among the most ecological and, of course, necessary. The ecological transition on our roads is accelerating, and net zero is a goal that is getting even closer. The Fuel Cell Tax Credit is available as of this year, and you can receive it
