First Solar Eyes Best 2-Day Rally Since 2013 After GOP Tax Plan Spares Key Clean Energy Credits

Clean energy stocks spiked on Tuesday, with First Solar Inc. FSLR jumping more than 20% during early trading.

The rally came after House Republicans delivered a better-than-feared tax proposal for renewable energy incentives.

The market had braced for a potential gutting of clean energy provisions under the Inflation Reduction Act (IRA), but the House GOP's proposed tax legislation, while imposing several phaseouts and rollbacks, kept many of the core credits intact.

This drove a sector-wide relief rally that sent major solar names and exchange-traded funds sharply higher.

First Solar has rallied 35% over the past two days, putting it on track for the strongest 2-day rally since 2013.

The Invesco Solar ETF TAN rose 6.5% Tuesday after a 4% rally on Monday, marking its best two-day performance in more than 12 months. The Invesco WilderHill Clean Energy ETF PBW followed suit, rising 3.4% Tuesday after a 5.1% surge on Monday.

Tuesday’s Top Performers Among Solar Stocks

What's Inside The GOP Tax Bill Proposal?

The legislation, up for a House Ways and Means Committee vote Tuesday afternoon, includes several revisions to clean energy tax credits but stops short of dismantling them.

Key changes include:

• 25D residential solar tax credit (30%) ends for projects not installed by end-2025.
• 48E investment credit, used by residential and utility-scale solar, begins phasing out in 2029.
• 45X manufacturing credit ends after 2031, instead of phasing down in 2032.
• 45Y clean energy production credit changes qualification from "start of construction" to "placed in service" and phases
  down from 80% if placed in service during calendar year 2029, and then declines by 20% per year until reaching 0% in 2031.
• Credit transferability was repealed, eliminating the ability to monetize credits by selling to large taxpayers
• Additional cuts to funding, including $27 billion from the Greenhouse Gas Reduction Fund

A crucial clause excludes 45X credit eligibility for firms receiving significant support from foreign entities of concern, defined by national security laws.

Manufacturers Seen As Primary Winners

Analysts at Goldman Sachs said the proposal is "not as negative as initially feared," particularly for domestic clean energy manufacturers.

“We believe the initial reaction to the proposed tax plan is relatively bullish […] as we believe investors had been pricing in a severely bearish possible outcome – such as the immediate repeal of IRA – and the phase out looks rather measured,” the firm’s analyst Brian Lee, CFA, said.

Companies with high U.S. revenue exposure, such as Sunrun Inc., Shoals Technologies Group Inc., First Solar Inc., and Array Technologies Inc., stand to benefit the most, according to the expert.

For First Solar, the revision to the 45X credit is especially supportive, potentially contributing 75% of its 2026 earnings per share, according to Goldman estimates. The company's U.S.-based manufacturing footprint could also gain from the foreign-entity restrictions.

Conversely, residential-focused firms like Enphase Energy Inc. ENPH and SolarEdge Technologies Inc. SEDG may face pressure from the removal of the 25D credit in 2026, which could hurt demand for solar loan and cash sale products.

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