Nuclear Energy Stocks Rise as Biden Administration Eases Hydrogen Production Regulations

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Nuclear Energy Stocks Rise as Biden Administration Eases Hydrogen Production Regulations

Investing.com -- Shares of Constellation Energy and other nuclear energy-focused companies rose following the Biden administration's decision to relax tax credit rules for hydrogen production.

The Treasury Department and the Internal Revenue Service announced final rules for sections of the Inflation Reduction Act, making the tax credits designed to encourage renewable energy more accessible than before. The final rule for clean hydrogen production will allow certain nuclear power plants facing retirement risk to produce the gas used in fuel cells. John Podesta, senior climate advisor to President Biden, stated that the comprehensive revisions in the final rule provide hydrogen producers with the certainty they need to move forward with their projects and position the U.S. as a global leader in green hydrogen.

This development coincides with a period of revival for nuclear energy driven by the electricity demand from technology companies developing artificial intelligence. Following the announcement, Constellation's shares rose by 3.8%, Vistra's shares increased by 7%, and NextEra Energy saw a 1.2% rise. Additionally, publicly traded renewable energy unit NextEra Energy Partners climbed by 3%, while Plug Power's shares rose by 2.6%.

The Inflation Reduction Act had previously expanded tax credits for wind, solar, and hydrogen projects. However, some criteria, such as which energy sources companies can use to produce clean hydrogen and still qualify for the credits, had not been fully clarified immediately.

Constellation CEO Joe Dominguez expressed satisfaction with the Treasury Department's change of direction, which allows a significant portion of the existing commercial nuclear fleet to qualify for credits for hydrogen production.

Evercore ISI analysts indicated that the new rules would facilitate clean hydrogen investments that had been on hold during periods of uncertainty. They also noted that this should benefit Constellation, Public Service Enterprise Group, and Vistra in the long run.

Friday's gains followed an 8% increase on Thursday, after Constellation announced it had signed a contract to supply approximately $840 million worth of nuclear energy to 13 public agencies.