The US Treasury published its final rules on the 45V hydrogen tax credit on Friday (3 January), prompting a notable increase in nuclear energy stocks.
The final rules provided clarity for producers seeking to qualify for the clean hydrogen production tax credit of up to $3 per kilogram (kg). The credit ranges from $0.60 to $3/kg based on the carbon emissions levels involved in production.
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The new regulations allow nuclear power and natural gas producers to qualify for the full credit of $3/kg, potentially unlocking billions of dollars in funding for the respective industries.
The inclusion of nuclear power in the hydrogen tax credit’s final rules has positively impacted various nuclear stocks.
S&P 500 nuclear stock of Constellation Energy rose 4.7% to $264.28 on Monday after a 4% increase on Friday.
Vistra also saw an 8.5% increase to $162.36 by the end of last week, with a further 1% rise on Monday.
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By GlobalDataCompanies focused on small modular reactors also experienced significant gains.
Oklo, the nuclear power start-up backed by OpenAI founder Sam Altman, jumped nearly 25% to $27.25 on Friday.
Similarly, Nano Nuclear Energy and NuScale Power rallied approximately 13% and 18% higher, respectively.
Historically, clean hydrogen produced via renewable energy sources has been more costly than traditional hydrogen production methods.
The hydrogen tax credit, developed as part of the Inflation Reduction Act signed by President Joe Biden in 2022, aims to reduce production costs and encourage companies to enhance clean hydrogen infrastructure, the Treasury said.
The final rules include major changes and flexibilities that address various important issues to help grow the industry and move projects forward, while adhering to the law’s emissions requirements for qualifying clean hydrogen.
The rules offer clarity, investment certainty and flexibility, including for participants in projects planned as part of the Department of Energy’s (DOE) Regional Clean Hydrogen Hubs programme.
Following the announcement, shares of hydrogen companies also experienced a spike.
Hydrogen fuel cell systems developer Plug Power experienced a nearly 20% surge to $3.15 during Monday afternoon trading, following a 13% increase on Friday.
The stock, which peaked at $75.49 in January 2021, has since seen a decline of approximately 100%. Currently, it trades more than 62m shares daily on average.
Based in Latham, New York, Plug Power has shifted its focus towards the green hydrogen supply chain, producing fuel cells and electrolysers while providing storage and transportation solutions.
In May 2024, the company secured a commitment of $1.6bn in loans from the US DOE for clean hydrogen development.
Last year, Plug Power’s green hydrogen production facility fulfilled its first customer order, delivering liquid hydrogen to Amazon, Walmart and Home Depot.
However, the company has faced challenges in meeting hydrogen supply despite securing customer contracts.
In addition, Bloom Energy advanced 4.8% to $25.48 early on Monday, following a 4% gain to $24.32 on Friday, marking its first weekly increase after four consecutive declines.
