Clean energy stocks witnessed a notable upswing on Tuesday following the Senate’s decision to remove a controversial tax on solar and wind projects from the One Big Beautiful Bill Act legislation backed by former President Donald Trump. The bill narrowly passed the Senate and will now head to the House of Representatives for further debate and voting.
Investors responded positively, with shares of major renewable companies climbing. NextEra Energy, the largest developer of renewables in the United States, jumped approximately 5%. AES, another major player in the sector, rose by 2%. The Invesco Solar ETF (TAN) saw a 2.9% gain, while the iShares Global Clean Energy ETF (ICLN) edged up by 0.8%.
The tax in question, which would have penalized solar and wind projects sourcing components from so-called “foreign entities of concern,” a term widely interpreted to refer to Chinese manufacturers, was initially added over the weekend, sparking outrage across the Clean energy stocks. Industry groups such as the American Clean Power Association (ACP) and the Solar Energy Industries Association (SEIA) confirmed the tax’s removal, calling it a relief for an industry already under pressure.
Industry Warns of Long-Term Impact Despite Short-Term Boost
Although the tax was removed, industry leaders have expressed concern over other aspects of the bill. John Hensley, Senior Vice President for Market Analysis at ACP, noted that the now-removed tax could have cost the sector up to $7 billion. However, he and other experts are still critical of the bill, especially its changes to existing clean energy tax credits.
While the Senate’s version of the bill retains Clean energy stocks electricity investment and production tax credits, it sets new deadlines that could hinder future development. According to ACP, only projects that begin construction within 12 months of the bill’s enactment will receive full credit benefits. Those starting later must be completed by the end of 2027 to qualify.
This shift may create challenges for long-term planning and investment in renewable infrastructure. Although the immediate market reaction has been positive, experts caution that these new credit rules could slow momentum in the coming years.
Mixed Market Reaction Reflects Unease in the Sector
Stock movements across the sector reflected mixed investor sentiment. While First Solar, the largest U.S. solar panel producer, fell by over 1%, companies like Nextracker and Array Technologies surged by more than 5% and 12%, respectively. Residential solar installer Sunrun also saw a significant 10% spike, and inverter manufacturers SolarEdge and Enphase rose by 7% and 3%.
Despite the day’s gains, SEIA CEO Abigail Ross Hopper issued a stark warning about the bill’s broader implications. “This legislation undermines the very foundation of America’s manufacturing comeback and global energy leadership,” Hopper stated. She further cautioned that if the bill becomes law, it could lead to higher electricity costs, factory closures, job losses, and a weakened power grid.
In summary, while the removal of the proposed tax has provided a temporary boost to clean energy stocks, the overall tone from the industry remains cautious as they brace for potential long-term setbacks.
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