Investing.com -- Shares in Constellation Energy (NASDAQ:CEG) and other nuclear power-focused companies experienced a rise following the Biden administration's decision to ease tax-credit rules for hydrogen production.
The Treasury Department and the Internal Revenue Service unveiled the final rules for sections of the Inflation Reduction Act, making a tax credit to encourage renewable energy more accessible than before.
The final rule for clean-hydrogen production will permit some nuclear power plants, which are at risk of retirement, to produce the gas used in fuel cells. John Podesta, senior climate advisor to President Biden, stated that the extensive revisions in the final rule provide the certainty that hydrogen producers need to continue their projects and position the United States as a global leader in green hydrogen.
This development comes as nuclear power has seen a resurgence due to the demand for electricity by tech companies for artificial-intelligence development. Following the announcement, Constellation shares increased by 3.8%, Vistra's stock rose by 7%, and NextEra Energy (NYSE:NEE) saw a 1.2% rise. Additionally, NextEra Energy Partners, a publicly traded renewable energy unit, rose by 3%, and shares of Plug Power (NASDAQ:PLUG) were up by 2.6%.
The Inflation Reduction Act had previously broadened tax credits for wind, solar, and hydrogen projects. However, some criteria, like specifying which energy sources companies can use to produce clean hydrogen and still be eligible for credits, were not immediately finalized.
Joe Dominguez, Constellation Chief Executive, expressed satisfaction with the U.S. Treasury Department's decision to change course, allowing a significant portion of the existing merchant nuclear fleet to earn credits for hydrogen production.
Analysts at Evercore ISI noted that the new rules are likely to facilitate investment in clean hydrogen, which had been on hold during a period of uncertainty. They added that this should benefit Constellation, Public Service Enterprise Group (NYSE:PEG), and Vistra in the long term.
The gains on Friday followed an 8% rise for Constellation on Thursday after the company announced securing a contract worth approximately $840 million to supply 13 government agencies with nuclear energy.
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