On Thursday, May 22, the tax reform and spending bill proposed by US President Trump was passed in the House of Representatives, triggering a strong market reaction. The bill includes the early termination of various clean energy subsidies, leading to a significant drop in the stock prices of many renewable energy companies in the United States.
This budget bill, spearheaded by the Republican Party, includes the cancellation of several funding sources and tax incentives established under the Biden administration’s “Inflation Reduction Act.”
Trump described the proposal as a “big and beautiful bill.” Specifically, the impacts on the green energy industry include the elimination of the 30% federal tax credit for individual rooftop solar installations, the revocation of subsidies aimed at reducing air pollution, greenhouse gas emissions, or purchasing heavy-duty electric vehicles, and the early reduction of the phased-out business investment tax credit (48E).
According to the draft of the bill, solar or wind energy projects seeking tax credits must commence within 60 days of the bill coming into effect and be completed by the end of 2028; otherwise, they will lose eligibility. This accelerated timeline caused market turbulence, with several renewable energy companies experiencing significant stock price declines on Thursday.
Among them, Sunrun, a residential solar company heavily reliant on 48E, saw its stock plummet by around 40%, marking the steepest decline. SolarEdge fell by 26%, Enphase Energy by nearly 18%, and Complete Solaria by over 15%.
Other companies such as Maxeon Solar, Emeren Group, JinkoSolar, First Solar, and Canadian Solar also saw declines ranging from 4% to 9%. The Invesco Solar ETF, tracking the US solar industry, also recorded a one-day decline of 10%.
Currently, the bill is being sent to the Senate for deliberation. Given the substantial reduction in clean energy subsidies in the House version, some industry groups and companies are intensifying lobbying efforts, hoping for adjustments in the Senate version.
The Financial Times noted that at least four moderate Republican senators have expressed support for retaining some incentive provisions.
According to observations from J.P. Morgan, even if the bill undergoes modifications, the market’s cautious attitude towards the green energy industry may persist. On the other hand, the fossil fuel industry has expressed support for the bill, with the American Petroleum Institute stating that it will help “restore America’s energy dominance.”
It is worth noting that tax subsidies related to nuclear energy and advanced manufacturing were not affected by this amendment. Oklo, a small modular reactor company supported by OpenAI CEO Sam Altman, saw a 6% increase in stock prices.