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Investing.com -- EDP stock surged 6.5% following the release of favorable guidance for the U.S. renewables sector, which removed uncertainty regarding tax credit qualifications for renewable energy projects.
JPMorgan’s U.S. Renewables team described the guidance as positive, noting it contains no retroactive application and no firm threshold on percentage of completion. Instead, the new rules are based on "work of significant nature." This outcome is better than market expectations, which had anticipated retroactive changes to construction start definitions and increases in spending thresholds from 5% to 10-25%.
The guidance effectively eliminates concerns that previously safe-harbored projects might lose their qualification for tax credits. This clarity provides a boost for companies with U.S. onshore renewable assets, particularly EDP Renewables (EDPR), which has at least 1.5 gigawatts of safe-harbored projects in its portfolio.
Investors responded positively to the news as it provides greater certainty for EDP’s growth trajectory in the renewable energy space. The removal of regulatory uncertainty allows the company to proceed with greater confidence in its U.S. renewable energy investments.
The guidance is especially significant for companies like EDP that have made substantial commitments to the U.S. renewable energy market, as it preserves the economic assumptions underlying their existing project pipelines.
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