Constellation Statement on Clean Hydrogen Guidelines

Rhea-AI Summary

Constellation (Nasdaq: CEG), America's largest carbon-free energy producer, responded to the U.S. Treasury Department's final decision regarding clean hydrogen production tax credits under Section 45V of the Inflation Reduction Act. The Treasury reversed its previous stance, now allowing existing nuclear plants powering clean hydrogen production to qualify for federal tax credits.

CEO Joe Dominguez welcomed the decision, highlighting its importance for customers transitioning to clean hydrogen and sustainable technologies. He referenced a recent 10-year agreement with the U.S. General Services Administration for clean nuclear power as evidence of increasing demand for nuclear energy solutions.

While viewing the final rule as progress, Constellation noted concerns about incrementality limits. The company is currently evaluating how the final rules and new electric transmission charges might affect its proposed clean hydrogen project at the LaSalle Clean Energy Center and its role in the MachH2 Hub.

Positive

• Treasury Department's decision allows existing nuclear plants to qualify for hydrogen production tax credits
• Recently secured 10-year agreement with U.S. General Services Administration for nuclear power

Negative

• Incrementality limits could impact clean hydrogen production potential
• Uncertainty regarding project feasibility due to new electric transmission charges

Insights

Energy Policy Analyst

The Treasury Department's policy reversal marks a pivotal shift for nuclear-powered hydrogen production. The inclusion of existing nuclear plants in Section 45V tax credits significantly enhances the economic viability of clean hydrogen projects. The decision particularly benefits Constellation's merchant nuclear fleet, potentially unlocking substantial tax advantages for their hydrogen initiatives.

The policy adjustment aligns with broader federal clean energy objectives, evidenced by the recent GSA-Constellation 10-year nuclear power agreement. However, the implementation of incrementality limits could still pose operational constraints. The pending review of transmission charges adds another layer of economic complexity to projects like the LaSalle Clean Energy Center and MachH2 Hub.

For investors, this regulatory shift strengthens Constellation's position in the emerging clean hydrogen market, potentially creating new revenue streams while leveraging existing nuclear assets. The company's established infrastructure and market leadership in carbon-free energy production provide a competitive advantage in capitalizing on these tax incentives.

Clean Technology Specialist

This regulatory update represents a significant advancement for clean hydrogen infrastructure development. Nuclear power's inclusion as a qualifying energy source for hydrogen production tax credits is important for scaling up clean hydrogen production, given nuclear's unique capability to provide consistent, carbon-free baseload power.

The policy's impact extends beyond immediate tax benefits - it validates nuclear-powered hydrogen as a viable pathway for industrial decarbonization. For Constellation's hydrogen projects, particularly at LaSalle and the MachH2 Hub, the ruling provides essential economic support for project development, though transmission charge considerations could affect final project economics.

The integration of nuclear power with hydrogen production creates a powerful synergy for grid stability and industrial decarbonization efforts. This positions Constellation to potentially capture a significant share of the growing clean hydrogen market while maintaining its leadership in carbon-free energy production.

BALTIMORE--(BUSINESS WIRE)-- Constellation (Nasdaq: CEG), the largest producer of carbon-free energy in the U.S., provides the following statement about the U.S. Treasury Department’s reversal of its prior decision to prohibit existing nuclear plants powering clean hydrogen production from qualifying for federal tax credits under Section 45V of the Inflation Reduction Act.

“We are pleased to see that the U.S. Treasury Department has changed course and that the final rule allows a significant portion of the existing merchant nuclear fleet to earn credits for hydrogen production. Our customers need access to reliable nuclear energy in order to transition to clean hydrogen and other sustainable technologies as they reliably power their businesses and drive economic growth for our nation,” said Joe Dominguez, president and CEO of Constellation. “As illustrated by yesterday’s announcement of the landmark 10-year agreement between the U.S. General Services Administration and Constellation for clean, 24/7, always-on nuclear power, the government, utilities and American families and businesses are turning to nuclear energy as a resource to meet their power and sustainability needs. While any incrementality limit is incompatible with the conclusion that clean hydrogen customers should be able to use reliable nuclear energy from America’s fleet of plants, the final rule is an important step in the right direction.”

Constellation is carefully reviewing the impact of the final rules as well as newly proposed electric transmission charges on the feasibility of its proposed clean hydrogen project at the LaSalle Clean Energy Center and Constellation’s role in the MachH2 Hub.

About Constellation

A Fortune 200 company headquartered in Baltimore, Constellation Energy Corporation (Nasdaq: CEG) is the nation’s largest producer of clean, emissions-free energy and a leading supplier of energy products and services to businesses, homes, community aggregations and public sector customers across the continental United States, including three fourths of Fortune 100 companies. With annual output that is nearly 90% carbon-free, our hydro, wind and solar facilities paired with the nation’s largest nuclear fleet have the generating capacity to power the equivalent of 16 million homes, providing about 10% of the nation’s clean energy. We are further accelerating the nation’s transition to a carbon-free future by helping our customers reach their sustainability goals, setting our own ambitious goal of achieving 100% carbon-free generation by 2040, and by investing in promising emerging technologies to eliminate carbon emissions across all sectors of the economy. Follow Constellation on LinkedIn and X.

View source version on businesswire.com: https://www.businesswire.com/news/home/20250103571512/en/

Paul Adams

Constellation Communications

667-218-7700

paul.adams@constellation.com

Source: Constellation

FAQ

How does the Treasury Department's decision affect Constellation's (CEG) hydrogen production plans?

The decision allows Constellation's existing nuclear plants to qualify for federal tax credits under Section 45V when producing clean hydrogen, potentially making such projects more economically viable.

What is the status of Constellation's (CEG) LaSalle Clean Energy Center hydrogen project?

Constellation is currently reviewing the impact of final rules and new electric transmission charges on the feasibility of its proposed clean hydrogen project at the LaSalle Clean Energy Center.

What major contract did Constellation (CEG) recently secure with the U.S. government?

Constellation recently secured a landmark 10-year agreement with the U.S. General Services Administration for clean, 24/7 nuclear power.

What concerns does Constellation (CEG) have about the Treasury's final hydrogen rules?

Constellation expressed concerns about incrementality limits in the final rule, stating they are incompatible with clean hydrogen customers' ability to use reliable nuclear energy from America's fleet of plants.