Trump's Big Bill Rocks Clean Energy Stocks, Except Rooftop Solar

Clean energy stocks reacted on Monday after President Donald Trump's new spending bill introduced a tax on wind and solar projects that use components made in China and accelerated the phase-out of tax credits compared to earlier versions of the legislation.

The Details: Shares of major companies dropped, with NextEra Energy NEE—the largest U.S. energy developer—down 4%, and solar firms like Array Technologies, Inc. ARRY Enphase Energy, Inc. ENPH and Nextracker, Inc. NXT declining between 4% and 9%.

Read Next: Cathie Wood’s Alpha Surge: $250 Million Circle Windfall, Big AMD Buys

The Senate is preparing to vote on the bill, which would eliminate the two main tax incentives for solar and wind projects that begin operations after 2027, according to CNBC.

Elon Musk, CEO of Tesla, criticized the bill on X, calling it "utterly insane and destructive" and warning it would destroy American jobs and harm the country's strategic interests while favoring older industries over emerging ones.

Earlier versions of the bill were more favorable to clean energy, allowing projects started before 2027 to qualify for investment and production tax credits. The newest version of the bill also imposes a tax on solar and wind projects that begin after 2027 if they include Chinese-made components.

Despite the overall negative impact, some areas benefited: rooftop solar companies saw gains, with Sunrun, Inc. RUN shares rising over 7% and SolarEdge Technologies, Inc. SEDG up more than 3%.

The bill appears to preserve tax credits for leased rooftop systems through the end of 2027, a change from previous drafts. 

First Solar, Inc. FSLR stock also rose by more than 8%, as the legislation seems to maintain manufacturer credits for components and products.

Why It Matters: GLJ Research analyst Gordon L. Johnson II recently downgraded Sunrun’s stock from Hold to Sell, stating that the Senate’s spending bill poses a potential existential threat to Sunrun and other industry players.

The analyst said that the only thing keeping Sunrun afloat has been its ability to securitize loans or power purchase agreements (PPAs), bringing in new funds to cover gaps between actual and reported O&M expenses.

Should the Senate bill pass and Sunrun and its competitors lose the ability to securitize, Johnson warned the company would quickly become unable to service its systems, with sponsor equity investors likely to exit rapidly.

Read Next: 

• SoFi Stock Gets Supercharged With Return To Crypto

Image: Shutterstock