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What happens when America’s biggest source of clean energy pivots to hydrogen?
After the Inflation Reduction Act was signed into law, and initial excitement about its historic investment in tackling climate change turned to deeper analysis, researchers made an alarming discovery. One of the IRA’s big ticket items, a tax credit for clean hydrogen, risks underwriting a major increase in emissions if not implemented carefully. That finding has erupted into a high-stakes debate over how the Treasury Department should define “clean hydrogen.”
Treasury’s decision, which is expected in the coming weeks, will have many implications, but one that deserves more scrutiny is what it could mean for nuclear power, still the largest and most reliable source of carbon-free energy in the U.S.
Nuclear reactors are uniquely well-suited to power hydrogen production, which in turn holds great promise to clean up some of the hardest parts of the economy to decarbonize.
But there's a trade-off: If any of the existing nuclear fleet pivots to making hydrogen, coal and natural gas plants are likely to fill in for that lost power on the grid. That would drive up emissions in the near term and make it harder for states to achieve their clean energy goals.
The debate boils down to whether it’s more advantageous to use our existing nuclear fleet to kickstart a hydrogen economy — likely sacrificing near-term emission reductions in the process — or to shore up a carbon-free grid.
This is what the Treasury Department must grapple with as it writes the rules for the new tax credit. In an exclusive interview with Heatmap, officials from the Department of Energy, which is advising the Treasury, said they want to see existing nuclear plants qualify. But as Daniel Esposito, a senior policy analyst at the nonprofit Energy Innovation, told me, “There's just a lot of layers to how bad this can get.”
Hydrogen already plays an essential, yet small role in the global economy as an ingredient in the production of fertilizer and oil refining. But as the world looks for alternatives to fossil fuels, hydrogen, which burns without releasing carbon, could play a much bigger role by powering industries that are proving difficult to decarbonize with renewable electricity, like shipping, aviation, and steelmaking. The challenge is that it takes energy to make hydrogen in the first place. Today the vast majority is made in a carbon-intensive process involving natural gas or coal.
There is an alternative method, called electrolysis, which extracts hydrogen from water using electricity and doesn’t directly release emissions. But it’s too expensive to be competitive with the fossil fuel version right now. The tax credit in the Inflation Reduction Act could change that, but to qualify, hydrogen producers would have to prove their electricity is carbon-free, too.
That’s where nuclear power comes in.
There are many reasons nuclear plants are considered a good fit for this process. Electrolyzers, the enabling technology for electrolysis, are still relatively new and expensive. Nuclear reactors could power them 24/7, maximizing production.
Nuclear plants are also well-located. They sit near bodies of water, which is necessary for electrolysis. They’re often adjacent to rail lines that could transport the resulting hydrogen. And many are close to heavy industrial sites that could become customers.
There’s potential for efficiency gains — a lot of nuclear reactors already require a bit of hydrogen for their operations, so they could produce their own instead of shipping it in.
And perhaps most thrillingly, nuclear reactors produce a lot of heat. With a more nascent version of the technology called high temperature electrolysis, that heat could be harnessed to boil water into steam, reducing the amount of energy required to extract hydrogen from it.
Unfortunately, there’s one big drawback. The nation’s existing nuclear plants already run at more than 90% capacity. They supply nearly 20% of total annual electricity generation. They don’t exactly have more energy to give.
Esposito and others warn that the hydrogen tax credit is so lucrative that if the Treasury’s upcoming rules allow existing reactors to qualify as a zero-emissions source of electricity, it would create a perverse incentive for nuclear companies to start diverting their power to hydrogen production. Nuclear plants currently earn about $30 per megawatt-hour from energy markets, but Esposito estimates they could earn $60 to $70 per megawatt-hour by producing hydrogen. Though indirectly, this would almost certainly increase U.S. emissions in the near term.
“You could see a world where all of the U.S. nukes pivot to supplying electrolyzers and just print money that way,” said Esposito. “Then you're pulling off 20% of U.S. power, and fossil fuels would be what fill in for that, because we just can't build clean energy fast enough to replace it.”
But Constellation Energy, the country’s largest owner of nuclear plants, with big plans to produce hydrogen, argues that letting its reactors qualify under the tax credit rules isn’t about printing money, but about making clean hydrogen cheap enough that customers actually buy it.
“By lowering the cost of the hydrogen, the tax credit is going to increase the ability of manufacturers and other hydrogen users to decarbonize their operations,” Mason Emnett, senior vice president of public policy at Constellation, told me. “Without that support, there's just not going to be a market for clean hydrogen.”
Top Department of Energy officials seem to agree. “We're very hopeful that [the tax credit] will be applicable to existing reactors,” Dr. Kathryn Huff, assistant secretary of the Office of Nuclear Energy, told me in an interview.
The Department of Energy has long been excited by the synergies between nuclear plants and hydrogen production. In fact, just a few years ago, the agency saw hydrogen as a new market that could save the nation’s nuclear plants, which were shutting down left and right as they struggled to compete with the cheap natural gas of the fracking boom.
But today, natural gas prices are up. There’s a bevy of new government grants and subsidies from the Bipartisan Infrastructure Law and the Inflation Reduction Act to keep nuclear plants open. Now hydrogen looks more like a great business opportunity than a savior for the industry.
Last September, not long after the Inflation Reduction Act was signed, Morgan Stanley issued a report noting that Constellation was poised to unlock new opportunities for its nuclear plants and “attractive returns for hydrogen facilities,” according to S&PGlobal. If the company dedicated just 5% of its capacity to hydrogen production, the report said, it could increase its annual earnings before taxes by $300 to $350 million.
Constellation made its first big move in February, announcing plans to build a $900 million hydrogen production facility in the Midwest that will use 250 MW of its existing capacity. That’s only about 1% of the company’s total nuclear fleet. But to Esposito, it’s a worrisome sign.
“It’s very likely we’d see many other similar announcements,” he told me. “And crucially, as these clean energy resources switch from powering the grid to producing hydrogen, we’d be losing our cheapest existing sources of clean electricity.”
It’s also concerning to climate advocates in Illinois, where Constellation owns six nuclear plants. The state has an ambitious clean energy goal, and is counting on those reactors to be a source of always-available, carbon-free electricity as it shuts down coal plants and builds more renewables.
“Even if it's small, that's still headed in the wrong direction in a world where we are fighting as hard as we can to quickly decarbonize the power sector,” said JC Kibbey, a clean energy advocate with the Natural Resources Defense Council in Illinois.
Constellation doesn’t see that as the company’s problem. Emnett said that much of its nuclear generation is already contracted out to local utilities for the benefit of customers for the next several years, meaning it can’t be “diverted” to hydrogen, at least until those contracts are up. The rest is theirs to sell to whomever wants to buy it. “There's no diversion of electricity,” he said. “There's electricity that is available for use, and we can sell electricity to power a shopping center or we can sell electricity to power an electrolyzer for hydrogen production.”
Constellation also makes the case that if one of its reactors are powering a hydrogen plant on-site, without using the grid at all, there should be no question that the process is carbon-free.
But Rachel Fakhry, a senior climate and clean energy advocate at the Natural Resources Defense Council, said it doesn’t matter whether a hydrogen facility is connected directly to a clean power source or whether it gets power through the grid. The issue is when no new, clean resources have been built to support this big new source of demand. In either case, less nuclear power will be flowing to other customers, and more coal or gas-fired generation will ramp up to fill in the gap. Electrolysis is so energy-intensive that those indirect emissions would be higher than emissions from current hydrogen production using natural gas. “Treasury must account for those induced emissions,” Fakhry said.
Many climate and energy policy experts agree that the resulting hydrogen should not be subsidized, or considered “clean.”
The law itself sends mixed messages to the Treasury about what Congress intended. It says the Department must account for “lifecycle” greenhouse gas emissions from hydrogen production, but it also includes a clause that explicitly permits existing nuclear plant operators to claim the tax credit.
Fakhry argued this should not be interpreted to mean nuclear companies are entitled to the credit. She said one way existing plants could qualify is if they are modified to increase their power output.
Some experts see a middle ground. Adam Stein, director of the Nuclear Energy Innovation program at the Breakthrough Institute, said those induced emissions are not the full picture.
He cited a number of other factors to consider, like the fact that one of the main obstacles to building new sources of clean energy right now is a clogged electric grid. If diverting some nuclear power to hydrogen frees up some room on the grid, that could be a good thing. “The question does not become, in my view, whether nuclear power plants should be eligible for this,” he said. “It’s at what point in the sliding scale of percentage of the tax credit they should be eligible for.” The tax credit is tiered, such that companies can earn different amounts depending on the carbon intensity of their production process.
In a sense, the debate is also about short-term and long-term priorities.
When I asked Huff, the assistant secretary in the Office of Nuclear Energy, whether she felt there were any risks of pairing nuclear and hydrogen, she only noted the shortcomings of not doing so. “I think there are risks in terms of whether or not we can successfully scale up a hydrogen economy,” she said. “There is this risk that it never materializes.”
Her colleague Jason Tokey, the team lead for reactor optimization and modernization chimed in. “As a country, we're not seeking to just decarbonize the power grid, we're seeking to decarbonize the entire economy,” he said. “Clean hydrogen has a critical role to play in that economy-wide decarbonization, and using clean energy sources like nuclear to produce hydrogen really enables that.”
The agency is also excited about the prospect of innovations that could help decarbonize both the grid and the rest of the economy. There are already hours of the day in some places where nuclear plants aren’t needed because there’s so much solar power being produced, said Huff. She said the “operational vision” is to have nuclear operators learn how to switch back and forth between serving the grid and offloading their power into hydrogen when it’s not needed, which will enable more renewable resources to come online. “It is absolutely imperative that we make sure nuclear plants can flex with the grid.”
Emnett said Constellation is planning to test this out at Nine Mile Point, a nuclear plant in upstate New York that received $5.8 million from the DOE for a hydrogen production pilot project.
“We are excited about the possibility of creating flexibility for nuclear plants,” he said. “You can start to think about a system where nuclear with flexible hydrogen production is pairing with variable wind and solar and batteries in a decarbonized future world. And so we're at a point now where we're proving out those capabilities.”
But without the tax credit, he said, “there's just not any conversation, there's no ability to explore the innovation, because we never get out of the gate.”
Whether that gate should be swung open or shut is now in the hands of the U.S. Department of Treasury.
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Artificial intelligence wants the energy and has the money, and climate tech companies need buyers.
Their founders wanted to make transmission lines, powertrains, and electrical switches more efficient. Or maybe they wanted to unlock the potential of geothermal energy or low-carbon cement. Wherever they began, a bevy of deep tech climate startups, clean energy producers, and sustainable materials companies have found their way to the same destination: Building and powering data centers in the most energy efficient way possible.
“They might not have started out as data center companies, but they’ve been pulled — because of this huge market movement towards data centers — into being that,” Lee Larson, an investor at the venture firm Piva Capital, told me.
With power demand from artificial intelligence on track to grow as much as 30x from 2024 to 2035, and the Trump administration seeking to fast track data center buildout, there’s a wealth of opportunity — and literal cash — for startups that can help hyperscalers meet their clean energy targets while cramming as many high-powered computing chips into a data center as physically possible.
“I think the proportion of pitches that we see that reflects some kind of data center messaging has gone from maybe one out of 20 to one out of five,” Matthew Nordan, co-founder and general partner at Azolla Ventures told me. “It’s a lot.”
Perhaps the most obvious data center pitch is for companies offering clean, firm power or energy storage. In Azolla Ventures’ portfolio, that includes the geothermal exploration and development company Zanskar and the underground pumped hydro storage company Quidnet. While neither has announced any data center tie ups to date, both are having conversations with all the usual suspects — a group that includes Google, Microsoft, Amazon, and Meta. “Virtually any reasonably mature, ready to deploy clean, firm power technology company is talking to the same people,” Nordan told me.
Some big deals have already made headlines, especially in the nuclear and geothermal sectors. There’s Microsoft’s plan to reopen the Three Mile Island nuclear plant and Google’s deal with the small modular reactor startup Kairos, plus Fervo’s partnership with Google and Sage Geosystems’ partnership with Meta on the geothermal side. But fusion companies also see data centers as a viable option. Google already has an offtake agreement with Commonwealth Fusion Systems, while Microsoft has a deal with Helion Energy.
But it’s not just the big name cleantech companies that are turning into data center service providers. The AI boom also presents a major opportunity for deep tech startups working on electrical infrastructure. While companies in this sector might not scream “climate tech,” behind the curtain they’re driving significant gains in energy efficiency that data center operators are eager to tap into.
In Azolla’s portfolio, these include Scalvy, founded to build modular powertrain electronics for electric vehicles. The company’s small, distributed units connect directly to EV battery cells, converting DC power from the batteries into AC power for the motor. “The hyperscalers started coming to the company saying, can you do what you’ve done in reverse?” Nordan told me. “Can you take the AC coming in off the grid and then convert that to DC, and then interface with the load and energy storage systems?”
That proved easy, and now Scalvy’s small, building-block style approach allows data centers to control power flow on the server rack itself, as opposed to taking up valuable space with a separate power rack. While the details haven’t yet been announced, Nordan said the startup “has recently done their first agreement for data center power, and it’s with one of the large names that you would expect.”
Piva Capital has also invested in a number of under-the-radar companies in this arena — Veir, for instance, initially proposed to build “high-temperature superconducting transmission lines” that could carry electricity with near-zero resistance, and thus very low energy loss. But after seeing some early interest from data centers, the startup learned that hyperscalers were not only struggling to build transmission lines to their substations, but were also experiencing severe bottlenecks in their low-voltage distribution networks, responsible for getting power into and around data centers.
“We realized we can apply essentially the same superconducting technology that we’re targeting for transmission and distribution applications and build a low-voltage set of products for data centers, specifically, that can allow you to shrink the size and weight of conductors and bus bars [which distribute power within data centers] by 10 times,” Veir’s CEO Tim Heidel told me. With this newly refined focus, the company raised an oversubscribed $75 million Series B round in January, which included participation from Microsoft’s Climate Innovation Fund.
Piva is also an investor in Menlo Micro, a spinout from General Electric that uses a proprietary metal alloy to make high-performance electrical switches that are smaller, faster, and more energy efficient than the industry standard. The startup has already commercialized its tech for use in high-speed radio frequency devices, as well as for testing the performance of semiconductors.
Ultimately, the company is aiming to integrate its switches into a wide range of high-performance electrical equipment, data center power systems very much included. In this context, the startup’s switches could be embedded directly into semiconductor packages or circuit boards rather than installed on racks, leading to more compact and energy efficient data center power management. The switches’ small size and low resistance would also generate less heat than what’s used today, further increasing overall energy efficiency.
Menlo Micro’s CEO Russ Garcia told me that five years down the line, he expects a third of the company’s revenue to come from power applications such as data centers, growing to two-thirds in 10 years’ time.
Even sustainable materials companies are getting pulled in, Nordan told me. The primary example there is Sublime Systems, which inked a purchase agreement with Microsoft for up to 622,500 metric tons of low-carbon cement. The deal gives Microsoft the right to use the cement if and when it's useful, but more importantly, it entitles the tech giant to the cement's environmental attributes — that is, the carbon savings associated with producing it. The idea is that the tech giant can catalyze market demand without the emissions impact of shipping the cement to its data center sites.
Amazon has also invested in a number of companies in this sector, including Brimstone and CarbonCure, which are working to decarbonize cement and concrete, as well as Electra, which is working on green steel. The hyperscaler is also trialing products from Paebbl, which produces a carbon-negative mineral powder that can partially replace cement, on the construction of an Amazon Web Services data center in Europe.
While the current administration may not be exerting pressure on hyperscalers to reduce their emissions, Nordan told me that the tech giants are thinking about the long term. “If the tide turns and there will be real or effective costs to emissions in these data centers, they want to do everything they can to bankroll emissions reductions now. And that manifests itself in low-carbon cement, in green steel, in all sorts of technologies.”
At least some of the aforementioned investments — especially those that increase efficiency while decreasing the size of data center components — won’t necessarily lead to emissions reductions, however. Much as when the Chinese AI firm DeepSeek released its cheaper and more efficient AI model, the idea of Jevon’s Paradox looms large here. This is the theory that making products more efficient and cost-effective will lead to an overall increase in consumption that more than offsets the efficiency gains.
Heidel, for one, told me that Veir’s potential customers don’t see energy efficiency in itself as the startup’s main draw. “It’s actually the space savings, the real estate savings, the ability to lay out data centers and configure them in new ways,” he told me. Mainly what Heidel is focusing on with his customers-to-be is, “how much smaller can you make the building, or how many additional AI pods or servers could you fit into the same footprint, or how much higher of a server density could you achieve using our solution?”
Of course, one day Veir may fulfill its original dream of creating superior transmission infrastructure, just as Scalvy could circle back to its initial focus on EV drivetrains and Menlo Micro could wriggle its way into a whole host of electronic devices.
As Heidel told me, he sees this data center buildout as just the first push in what will be an ongoing effort to meet the world’s growing electricity demand. “If we can figure out how to serve all of this demand at the speed at which data centers are growing, and do so cost effectively, and do so in a low-carbon way, then we can take those learnings and apply them to all of the other industries that are coming in the future that'll also be facing enormous electricity demand,” he explained.
But for the time being, as Larson of Piva Capital told me, investors are simply trying to get their portfolio companies “to skate where the puck is going.” And that’s more than okay for Heidel. As he put it, there’s “so much enthusiasm for data centers today that we are having trouble just keeping up with all the interest in that market.”
On FERC’s ‘disastrous misstep,’ the World Court’s climate ruling, and 127 SMRs
Current conditions: West African countries including Guinea-Bissau, Guinea-Conakry, Senegal and The Gambia are facing flash flooding from heavy rainfall • The southwestern corner of New Mexico is suffering “exceptional” drought, the highest possible level in the U.S. Drought Monitor. • Already roasting in excessive heat, Des Moines, Iowa, is bracing for thunderstorms.
The Department of Energy canceled a nearly $5 billion loan guarantee for the Grain Belt Express, a transmission project designed to move wind power from Kansas to the industrial upper Midwest. After more than a decade of development, the power line won bipartisan support and secured $4.9 billion in federal financing late last year to fund the first phase of the project, running from Ford County in Kansas to Callaway County in Missouri.
As Heatmap’s Matthew Zeitlin explained, the project eventually drew the ire of Missouri Senator Josh Hawley, who recently stepped up his attacks in the hopes that a more friendly administration could help scrap the project. The transmission line’s developer, Invenergy, told Heatmap in a statement that “a privately financed Grain Belt Express transmission superhighway will advance President Trump’s agenda of American energy and technology dominance.”
The microreactor startup Oklo inked a deal with Liberty Energy, the fracking giant where Secretary of Energy Chris Wright served as chief executive before entering government. Liberty was already an early investor in Oklo, and Wright served on the nuclear company’s board. But the new deal is a strategic partnership with a plan to deploy Liberty’s gas equipment alongside Oklo’s reactors, mirroring similar pairings that other small modular reactor developers have promoted.
Oklo is among 127 small modular reactor designs currently under development worldwide, according to a new tally from the Nuclear Energy Agency at the Organisation for Economic Co-operation and Development, the 38-member club of rich countries. Of those designs, 51 are in pre-licensing or licensing processes, and 85 are in active discussion between SMR developers and site owners. Just seven are either operating or under construction.
The Federal Energy Regulatory Commission approved fast-track interconnection processes proposed by the Midcontinent Independent System Operator and the Southwest Power Pool. The new processes will allow power plants to sidestep the standard reviews for a grid hookup. Gas-fired power plants are “likely to be the main beneficiary of the fast-track processes, with standalone batteries also potentially being included,” Utility Dive reported. The American Clean Power Association, the biggest renewable energy lobby, called the decision “a dangerous misstep.”
Southern California’s landmark rule to spur the electrification of certain boilers and water heaters survived a major court challenge. A federal court last week upheld the first-in-the-nation regulation that applies to light-industrial and commercial boilers, steam generators, process heaters, residential pool heaters and tankless water heaters. The ruling, which only applies to the 17 million people in large parts of Los Angeles and its surrounding suburbs, could “help reenergize efforts around the country to replace fossil-fuel-burning equipment with electric heat pumps and other clean technologies,” Canary Media’s Maria Gallucci wrote.
Heatmap’s Emily Pontecorvo reported earlier this week on an effort in Newton, Massachusetts to beat back new gas pipelines block by block. But overall, the fight for electrification has recently faced repeated setbacks. In 2023, a federal court struck down the northern California city of Berkeley’s pioneering ban on new gas hookups, which was replicated in cities across the country. Last year, gas utilities staged something of a coup at the quasi-governmental organization that writes the building codes used in nearly every state.
Children stand outside a church destroyed in a cyclone in Vanuatu.Mario Tama/Getty Images
In a historic decision on Wednesday morning, the International Court of Justice ruled that countries must act on climate change. While non-binding, the verdict from the United Nations’ high court was dubbed “the biggest climate case in history,” as it established the first international legal precedent of a nation state’s responsibility to curb planet-heating emissions.
The tiny South Pacific island republic of Vanuatu called the ruling a “milestone in the fight for climate justice” and vowed to “take the ICJ ruling back to the United Nations General Assembly, and pursue a resolution that will support implementation of this decision,” said Vanuatuan climate minister Ralph Regenvanu. He anticipated opposition from Washington. “Even as fossil fuel expansion continues under the U.S.’s influence, along with the loss of climate finance and technology transfer, and the lack of climate ambition following the U.S.’s withdrawal from the Paris Agreement,” he said, “major polluters — past and present — cannot continue to act with impunity and treat developing countries as sacrifice zones to further feed corporate greed.”
Researchers at Japan’s Shinshu University have demonstrated for the first time that a new eco-friendly plastic made from microbes safely decomposes in deep ocean conditions
“This research addresses one of the most critical limitations of current bioplastics—their lack of biodegradability in marine environments,” said Professor Seiichi Taguchi at the Shinshu’s Institute for Aqua Regeneration. “The study provides a pathway for safer alternatives to conventional plastics and supports the transition to a circular bioeconomy.”
NextEra CEO John Ketchum projected serenity during the company’s earnings call Wednesday.
The business of renewable energy development in the United States is the business of NextEra. The company’s renewable division is one of the country’s largest and most sophisticated, with almost 30 gigawatts in its project backlog — including 3.2 gigawatts added in the past three months.
NextEra’s financial results and outlook for the future can be a guide to how the sector is thinking — or wants people to think it’s thinking — about the state of the development landscape. Now especially, that landscape looks confusing and contradictory, with power demand increasing sharply alongside hostility to wind and solar development.
The way NextEra sees it, NextEra will come through fine. But many other — especially many other smaller — players may struggle.
“Bottom line, America needs more electricity, not less,” NextEra Chief Executive John Ketchum told analysts during the company’s earnings presentation Wednesday.
“America needs it now, not just in the future. We are firmly aligned with the administration’s goal to unleash American energy dominance. And to do so, we need all of the electrons we can get on the grid. There’s truly no time to wait.”
That alignment may be one way, however. From sunsetting tax credits to ordering enhanced reviews of wind and solar projects by federal regulators, the Trump administration has made it clear that it does not see wind and solar as part of its energy strategy.
The rhetoric coming from Washington hasn’t been particularly constructive, either, no matter how often renewable energy companies try to label their work as part and parcel of an “energy dominance” agenda. Just in the past few weeks, Trump has claimed that China has “very, very few” wind farms (in fact it has very, very many), and Secretary of Energy Chris Wright called wind and solar a “parasite on the grid.”
NextEra is not unaware of the tone and policy emanating from the administration. The company issued a new risk disclosure, first noticed by analysts at Jefferies, saying that its guidance on future performance assumes “no changes to governmental policies or incentives, including continued applicability of existing Internal Revenue Service tax credit safe harbor guidance,” i.e. that it can “commence construction” the way it always has, by following existing IRS guidance.
Although that would be awfully nice, it may not be the case for much longer. Soon after signing the One Big Beautiful Bill Act, President Trump issued an executive order calling for “new and revised” tax guidance “to ensure that policies concerning the ‘beginning of construction’ are not circumvented, including by preventing the artificial acceleration or manipulation of eligibility and by restricting the use of broad safe harbors unless a substantial portion of a subject facility has been built.”
It doesn’t take a terribly close reading to intuit that Trump wants to narrow the window for renewables developers to claim tax credits even beyond what Congress has already done. According to conservative members of Congress who wanted the tax credits to phase out even sooner, the president was merely fulfilling a promise he’d made to win their vote.
Ketchum at least projected serenity about the safe harbor situation, telling analysts that the definition of construction has been understood “for well over a decade,” that it “is informed by longstanding Treasury Department guidance,” and that the OBBBA’s language “definition is consistent with the settled meeting.”
He also noted that NextEra had “made significant financial commitments over the last few years, including in the first half of 2025, to begin construction under these rules that were in effect at the time those commitments were made,” i.e. before the bill was signed.
“We believe that we’ve begun construction on a sufficient number of projects to cover our development expectations through 2029,” Ketchum continued, adding that the company has determined it will be eligible for tax credits based on “our belief as to what the statute provides based on our experience in this industry over the last couple of decades.”
If anything, Ketchum suggested, NextEra might be advantaged by the harsh deadlines for commencing construction (July 4, 2026) or being placed in service (the end of 2027) in the new law. “It comes down to who’s safe harbor, right?” Ketchum said. “We know we compete against a lot of really small developers who don’t have the balance sheet, the construction financing to do things around safe harbor.”
In this kind of environment, Ketchum said, size matters.
“If you’re in a market where you have folks drop out, right, because they didn’t plan ahead, they don’t have the ability to get construction financing, they don’t have the ability to safe harbor. It obviously creates bigger opportunities for us.”
NextEra could be left to pick up the pieces from smaller developers that don’t make it, Ketchum said. “If we do see some small developers kind of fall away, there’ll be more projects that could potentially hit the market and come up for sale.”