Solar stocks clobbered as Senate targets early end to wind and solar credits in Trump tax bill
Solar stocks got hit hard on Tuesday after the Senate proposed to put an end to wind and solar incentives years earlier than scheduled.
Shares of Sunrun (RUN), the largest US rooftop panel installer, tumbled more than 40%. SolarEdge Technologies (SEDG) also dropped more than 40%, while Enphase Energy (ENPH) tanked more than 20%.
The Senate version of the bill, which is still in draft form, would phase out Biden-era tax credits in 2028, rather than starting in 2032 under current law. Tax breaks for other sources of power, such as hydropower, geothermal and nuclear, would remain in place until 2036.
The Senate proposal appears to have surprised investors, who expected lobbying efforts in recent weeks to have convinced legislators to roll back similar provisions passed in the House at the end of May.
"The Senate version of the tax bill contained mostly disappointing news for solar and wind," Raymond James investment strategy analyst Pavel Molchanov wrote in a note on Tuesday morning. Molchanov noted that the Senate proposal would begin cutting the amount of credits sharply starting in 2026, and reach zero by 2028.
The Senate proposal does allow for residential solar credit to expire 180 days after the bill’s enactment — rather than at year-end 2025.
"Although it is a minor tweak in timing, it could translate into some demand pull-in during the early months of 2026," said the strategist.
Prior to the Senate's proposal, the analyst said if the bill were "finalized and signed into law in its current form — that would create a lot of disruption and layoffs, project cancellations, potentially bankruptcies."
That forecast has start to play out after financial lender Solar Mosaic filed for Chapter 11 bankruptcy protection earlier this month, followed by residential solar provider Sunnova Energy (NOVA).
The clean energy industry has had a volatile year as elevated interest rates have kept borrowing costs high. President Trump's return to the White House has added pressure to the sector, with his administration talking down green energy initiatives in favor of fossil fuels.
On the manufacturing side, companies involved with batteries and panels have leaned into plans to onshore operations in response to Trump's tariff policies.
In a move welcomed by the solar sector, the US Department of Commerce announced plans to impose tariffs as high as 3,521% on panel imports from four Southeast Asian countries.
Despite a recent rally fueled by hopes that clean energy tax credits might be preserved, the Invesco Solar ETF (TAN) is down more than 4% year to date.
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