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Financial Incentives for Hydrogen and Fuel Cell Projects

Federal and state incentives help minimize the cost of hydrogen and fuel cell projects.

Federal Incentives

The Emergency Economic Stabilization Act of 2008 includes tax incentives to help minimize the cost of hydrogen and fuel cell projects. It offers an investment tax credit of 30% for qualified fuel cell property or $3,000/kW of the fuel cell nameplate capacity (i.e., expected system output), whichever is less. The equipment must be installed by Dec. 31, 2016. In addition, it features a credit of 10% for combined-heat-and-power-system property.

The American Recovery and Reinvestment Act of 2009 expands incentives to encourage the installation of fuel cells and hydrogen fueling infrastructure. Incentives include:

  • A fueling facility tax credit, which increases the dollar cap of the 30% hydrogen fueling infrastructure tax credit from $30,000 to $200,000.

  • Grants for energy property (in lieu of tax credits), which allow facilities with insufficient tax liabilities to apply for grants instead of claiming investment or production tax credits. Only entities that pay taxes are eligible.

  • A manufacturing credit, which creates a 30% credit for investment in property used for manufacturing fuel cells and other technologies.

  • A residential energy-efficiency credit, which raises the investment-tax-credit dollar cap for residential fuel cells in joint occupancy dwellings to $3,334/kW.

Learn More about Federal Incentives

These publications provide more information about federal incentives for hydrogen and fuel cell projects. Some of the following documents are available as Adobe Acrobat PDFs. Download Adobe Reader.

  • Federal Fuel Cell Tax Incentives (PDF 112 KB) — Produced by the U.S. Fuel Cell Council, this fact sheet provides information about the investment tax credit for fuel cell technologies.

  • Investment Tax Credit: An Overview (PDF 22 KB) — This fact sheet from the National Hydrogen Association (NHA) highlights the renewable energy tax-credit-extension legislation. The NHA also offers information about hydrogen legislation and policy.

  • Fuel Cell Financing for Tax-Exempt Entities: Facilitating deployments by structuring energy service contracts to include the Energy Investment Tax Credit (PDF 392 KB) — This fact sheet describes how tax-exempt entities can indirectly benefit from the energy investment tax credit for the installation of fuel cell systems.

  • Fuel Cell Tax Incentives: How Monetization Lowers the Government Outlay (PDF 782 KB) — This presentation by Lee Peterson of the Reznick Group was given at a meeting of the Hydrogen and Fuel Cell Technical Advisory Committee in February 2009.

  • Investment Tax Credit Role in U.S. Fuel Cell Projects: Case Study with a Department of Defense Facility (PDF 505 KB) — This presentation by Sam Logan of Logan Energy was given at a meeting of the Hydrogen and Fuel Cell Technical Advisory Committee in February 2009.

State Incentives

A number of states offer incentives for the installation of fuel cells and hydrogen energy systems.

To determine what's available in a given state, visit the Incentives and Laws section of the Alternative Fuels and Advanced Vehicles Data Center or the Database of State Incentives for Renewables and Efficiency.