Plunge in Solar Stocks as Senate Plans End to Renewable Incentives

On a turbulent Tuesday, solar stocks faced significant downward pressure after the U.S. Senate version of President Donald Trump's tax proposal maintained significant cuts to benefits for renewable energy sources.

Key solar stocks saw dramatic premarket declines, with some shares collapsing over 17%, others falling around 12%, and a few dropping by more than a quarter of their value.

The bill, as proposed in the Senate, includes a measure that would completely eliminate tax benefits for solar and wind energy by 2028. In contrast, incentives for nuclear, hydropower, and geothermal sources are sustained for an extended period. These renewable incentives were core components of former President Joe Biden's Inflation Reduction Act.

Senate vs. House: Comparing the Bills

Ed Mills, a policy analyst at Raymond James in Washington, remarked, "The version passed by the House was largely seen as the worst-case for most of the IRA's incentives; nevertheless, despite remaining unfavorable for renewable investments, the Senate's draft offers some improvement. However, the eligibility for solar and wind still faces restrictions in the Senate's version."

Driven by a pressing timeline, Republican Senators are eager to pass the bill before the Independence Day holiday. Additionally, the tax proposal aims to increase the debt ceiling to $5 trillion.

Political Challenges Ahead

Mills further noted, "Aiming for July 4 may be overly ambitious, given pending Byrd Rule decisions and possible amendments. With a slim 53-47 Republican majority, defections could necessitate compromises, especially about SALT and Medicaid clauses. If preliminary agreements are not reached, the Senate must reconcile its version with the House’s through a conference, likely delaying until late July."