UPDATE 1-US offers conditional $1.66 billion loan to hydrogen producer Plug Power

(Adds comment from Plug Power, paragraph 7)

By Timothy Gardner

WASHINGTON, May 14 (Reuters) - The U.S. Department of Energy said on Tuesday it has offered a conditional loan guarantee of up to $1.66 billion to Plug Power to help it build up to six plants to produce clean hydrogen.

The hydrogen fuel from the plants would power fuel cell-electric vehicles used in material handling, transportation, and heavy industry, the department's office of loan programs said.

Clean or green hydrogen is expected to result in an 84% reduction in greenhouse gas emissions compared with conventional hydrogen production, which derives hydrogen from natural gas, releasing large amounts of the main greenhouse gas carbon dioxide, unless captured and stored underground.

President Joe Biden's administration believes that low-carbon hydrogen can fight climate change by fueling heavy industry such as aluminum, cement and steel and long-haul transportation.

"Today’s announcement will help unlock the full potential of this versatile fuel and support the growth of strong, American-led industry," the Energy Department's Loan Programs Office said in a release.

The clean hydrogen plants will use Plug Power's technology - called electrolyzer stacks - manufactured at the company’s factory in Rochester, New York. Plug Power is one of the top U.S. commercial-scale manufacturers of electrolyzers.

"Green hydrogen is an essential driver of industrial decarbonization in the United States," Plug Power CEO Andy Marsh said in a statement.

This year, Plug launched the first U.S. commercial-scale green hydrogen plant in Woodbine, Georgia.

"This loan guarantee will help us build on that success with additional green hydrogen plants," Marsh said.

Clean hydrogen can be produced with electrolyzers powered by wind and solar power, nuclear, or natural gas with carbon capture, that split water into hydrogen and oxygen.

Today the vast majority of hydrogen is produced with fossil fuels with unabated emissions, at a fraction of the cost of clean hydrogen. (Reporting by Timothy Gardner; Editing by Michael Erman and Marguerita Choy)