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Renewable energy stocks fall as Trump bill taxes Chinese components

by July 1, 2025
by July 1, 2025

Renewable energy shares fell on Monday as US President Donald Trump’s new bill cuts incentives and adds taxes for companies.

In the bill, the US government will add a tax on solar and wind projects that use Chinese materials.

Furthermore, the investment and electricity production credits these companies would get will also be phased out faster than what was stipulated in the previous version of the bill.

This legislative development has introduced a fresh layer of uncertainty for an industry that has seen considerable growth in recent years.

NextEra Energy, the largest renewable energy developer in the US, saw its shares fall by nearly 5%.

Solar stocks like Nextracker, Array Technologies, and Enphase also fell between 3% and 9% in the session.

Legislative changes and industry concerns

The Senate is currently engaged in a vote on the legislation, which, if passed, would terminate the two primary tax credits supporting solar and wind projects that are placed in service after 2027.

This timeline represents a notable shift from earlier iterations of the bill.

Previous versions, as highlighted in a Monday note from Goldman Sachs, offered greater flexibility by allowing projects that commenced construction before 2027 to qualify for the investment and electricity production tax credits.

This change in qualifying criteria is a central point of contention for many in the industry.

Operational impacts and project timelines

The proposed legislative changes are expected to have tangible effects on project development and execution.

Bank of America analyst Dimple Gosal noted on Monday that the revised timelines “compresses project timelines and adds significant execution risk.”

Gosal further elaborated that “Developers with large ’25 pipelines, may struggle to meet the new deadlines — potentially delaying or downsizing planned investments.”

This suggests that companies with projects in advanced planning stages may face significant challenges in adapting to the new rules.

Adding to the complexities, the Senate legislation also proposes a tax on solar and wind projects that become operational after 2027 if they incorporate components manufactured in China.

This provision aligns with broader efforts to reduce reliance on foreign supply chains, but it introduces an additional cost factor for developers.

Morgan Stanley analyst Andrew Percoco commented in a Sunday note that “The latest draft in the Senate has become more restrictive for most renewable players, moving toward a worst case outcome for solar and wind, with a few improvements for subsectors on the margin.”

This analysis suggests a generally less favorable outlook for the broader renewable energy landscape under the current draft.

Mixed outcomes for sub-sectors

Despite the overall negative sentiment affecting large-scale wind and solar developers, certain segments of the clean energy market appear to be experiencing more favorable outcomes from the proposed legislation.

The rooftop solar industry, in particular, is being viewed by Wall Street as a relative beneficiary.

Shares of Sunrun were up more than 14% on Monday, and SolarEdge also saw an increase of over 8%.

According to Goldman Sachs, the legislation seems to allow tax credits for leased rooftop systems to remain in place through the end of 2027, a provision not present in earlier versions of the bill.

Furthermore, First Solar, a manufacturer of solar modules, saw its shares rise by more than 9%.

Bank of America analysis suggests that the legislation might enable First Solar to claim credits for both components and final products, potentially offering a competitive advantage.

These varied market reactions indicate that while the new legislation poses challenges for some segments of the renewable energy industry, it may present opportunities or fewer adverse impacts for others, particularly those with a focus on domestic manufacturing or specific market niches like residential solar.

The post Renewable energy stocks fall as Trump bill taxes Chinese components appeared first on Invezz

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