The House Republican tax bill’s passage sent shockwaves through the clean energy sector, triggering a significant plunge in solar stocks. Sunrun, a major residential solar installer, saw its stock plummet by over 35%, a dramatic fall attributed to the bill’s termination of key tax credits for companies leasing solar equipment to customers. This move effectively eliminates a crucial revenue stream for Sunrun and other similar businesses, impacting approximately 70% of the rooftop solar industry relying on lease arrangements.
Analysts at Jefferies described the legislation as a ‘worse than feared’ outcome for clean energy, characterizing it as a severe setback for the progress made under the Inflation Reduction Act. Guggenheim analyst Joseph Osha echoed this sentiment, calling the bill ‘disastrous’ for the rooftop solar industry.
The impact wasn’t limited to residential installers. Enphase and SolarEdge, manufacturers of solar inverters, experienced significant drops of around 18%, reflecting reduced demand anticipated from the diminished rooftop solar sector. The bill also targets utility-scale solar projects, ending investment and electricity production credits for projects starting construction after a 60-day grace period or entering service after December 31, 2028. This has led to a downturn for companies like Array and Nextracker, involved in utility-scale solar infrastructure, with shares falling 14% and 5% respectively.
However, not all solar companies were equally affected. First Solar, a major U.S. solar panel producer with a substantial domestic manufacturing presence, saw a relatively minor 1% decline. This resilience is attributed to the bill leaving the manufacturing tax credit largely untouched, a positive development highlighted by Osha. Despite the immediate negative impact, Jefferies anticipates potential changes to the legislation as it proceeds through the Senate.
The situation underscores the significant political and economic factors influencing the clean energy transition. While the future remains uncertain, the immediate fallout from this tax bill highlights the vulnerability of the solar industry to legislative shifts and the ongoing debate surrounding clean energy incentives.
