OriginOil Inc. shares jumped nearly 26 percent Tuesday after the alternative energy developer announced a deal with the U.S. Department of Energy to develop algae-fuel standards.

The Los Angeles company, which has a proprietary method for extracting oil from algae, said it will work with the DOE’s Idaho National Laboratory as part of a larger plan by the government to develop standards for all biomass fuels, including those derived from grasses and other plants.

“We are very excited to help establish a uniform intermediate feedstock standard for algae, a critical step toward helping algae producers and energy refiners to collaborate for biofuels production,” said Paul Reep, OriginOil senior vice president of technology, in a statement.

The deal resonated with investors who believe that it may give OriginOil an advantage is securing federal energy deals.

Shares closed up 58 cents, or 25.8 percent, to $2.83 on the Over-the-Counter Bulletin Board.