Hydrogen is a clean form of renewable energy that continues to draw significant interest from investors. According to Morgan Stanley (NYSE:MS), the hydrogen economy could be an $11 trillion market between now and 2030. However, by itself, that’s not a reason to look for high potential hydrogen stocks. 

A better reason to consider hydrogen stocks as an investment opportunity is the 2022 Inflation Reduction Act. This piece of legislation is offering $370 billion of incentives for clean energy. In fact, there is a $9.5 billion line item in the bill for green hydrogen development that includes offering a 10-year tax credit of up to $3 per kilogram for green hydrogen producers. 

The reason is as old as time. The hydrogen economy holds significant promise. But it takes the combination of money and political will to make the hydrogen economy a reality. As more nations pledge billions of dollars to address climate change, it’s creating a favorable environment for investing in hydrogen stocks.  

And the good news for investors is that many of these stocks are priced in such a way that you can build a position for a relatively nominal amount of money. If that sounds intriguing to you, here are three high potential hydrogen stocks to consider.  

Plug Power (PLUG) 

When considering high potential hydrogen stocks, investors will want to pay attention to companies that specialize in green hydrogen. And Plug Power (NASDAQ:PLUG) is one of the few pure play companies promoting green hydrogen.

Green hydrogen is different from grey or blue hydrogen because water is its only means of producing electricity. That’s why green hydrogen is receiving favorable treatment by the U.S. government.  

Plug Power is building “an end-to-end green hydrogen ecosystem that addresses every step of operations.” Investors frequently think about hydrogen in terms of its use in transportation (e.g. fleet trucking). But one of the key uses for hydrogen is in providing stationary power for applications such as data centers. 

To that end, in July 2022 Microsoft (NASDAQ:MSFT) partnered with Plug Power as it finished construction of a hydrogen fuel cell backup power plant. The plant will provide backup power for the company’s data centers and supports the tech giant’s goal to be carbon neutral by 2030.  

Plug Power is not yet profitable, but many analysts believe that could change next year and perhaps sooner. Once that happens, it will be unlikely that investors will be able to buy PLUG stock at its current price of just over $10 per share. 

Fusion Fuel Green (HTOO) 

The opportunity in high potential hydrogen stocks is international in scope. That’s why investors who are comfortable investing in countries not domiciled in the United States may want to consider Fusion Fuel Green (NASDAQ:HTOO).  

The European Union’s energy crisis is necessitating the continent’s need to shift to green energy. This is being done to promote energy independence and fight climate change.  

Fusion Fuel’s signature product is HEVO – which the company positions as “a radically different solution that opens the door to cost-competitive, grid-independent green hydrogen production.” The company’s plans include providing hydrogen generators to operate green hydrogen plants in Portugal, Spain, and Morocco.  

The company, which is headquartered in Ireland, is not only unprofitable, it’s still a pre-revenue company. That adds to the risk and the potential reward for HTOO stock. Nevertheless, Fusion Fuel continues to generate contracts across the continent including a 36 million euro grant from the Portuguese government in December 2022.  

Direxion Hydrogen ETF (HJEN) 

As promising as the opportunity in hydrogen stocks may be, it may not fit into the category of “invest in what you know” for many investors. One way around that is to invest in an exchange-traded fund (ETF) that specializes in hydrogen production. And Direxion Hydrogen ETF (NYSEARCA:HJEN) offers investors broad diversification. 

Investors get exposure to stocks like Plug Power and Bloom Energy. It also gives investors international exposure although 35% of the fund is made up of U.S.-based companies.  

As of July 2023, the fund had $32.68 billion under management and an attractive expense ratio of 0.45%. The fund also pays a modest dividend, with a yield as of writing at 1.26%. 

On the date of publication, Chris Markoch did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.