Solar stocks drop on U.S. Senate proposal to phase out tax credits by 2028
This June 15, 2021 photo shows a view of the Sugar Hill Solar Site in Clifton Park, N.Y. (AP Photo/Hans Pennink)
U.S. solar stocks slid in premarket trading on Tuesday after a U.S. Senate panel proposed phasing out solar and wind tax credits by 2028, part of changes to President Donald Trump's sweeping tax-and-spending bill.
Solar inverter maker Enphase Energy was among the biggest decliners on the S&P 500, sliding 20.9 per cent to US$36.35. Solar panel sellers Sunrun RUN.O and SolarEdge Technologies plunged more than 30 per cent each. First Solar was down 17.3 per cent.
The draft bill, circulated by a U.S. Senate committee, amends Trump's 'One Big, Beautiful Bill Act' that the House narrowly passed last month.
'On first glance, the Investment Tax Credit/Production Tax Credit provisions for solar and wind look worse than the industries had hoped, though not quite in the same way as the House bill,' said Raymond James analyst Pavel Molchanov.
The committee's draft bill proposes cutting solar and wind incentives to 60 per cent of their value in 2026 and ending them by 2028.
Under current law, the credits wouldn't begin phasing out until 2032.
Citi strategists said they 'remain a sell on residential solar,' calling the proposal 'a slight improvement' over the House version but 'far more restrictive than the original bill.'
Solar firms are already grappling with weak U.S. residential demand, pressured by high interest rates and metering reforms in California that have slashed credits for excess power sent to the grid.
Shares of Sunrun have shed 27 per cent in the past one year, while Enphase Energy is down 63 per cent in the same period.
The Invesco Solar ETF has dropped 22.8 per cent over the past year.
The U.S. Senate proposal will, however, extend tax credits for hydro, nuclear, and geothermal energy through 2036.
Shares of some nuclear energy-related companies rose, with Nano Nuclear Energy and Sam Altman-backed nuclear startup Oklo up 4.8 per cent and 5.1 per cent, respectively.
The diverging U.S. House and U.S. Senate versions may complicate efforts to pass the bill, Trump's top domestic priority, before a self-imposed July 4 deadline.
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Reporting by Shashwat Chauhan and Pooja Menon in Bengaluru; Editing by Devika Syamnath.
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