Shares of U.S. solar energy companies experienced a sharp decline in trading last Thursday, after the House of Representatives advanced President Donald Trump’s sweeping tax and spending bill. This proposed legislation, threatening to eliminate numerous green-energy subsidies that have supported the renewable energy sector, sent significant shockwaves through the market. Leading companies in the field suffered heavy blows: Sunrun, a residential solar giant, spearheaded the negative trend with its shares plummeting nearly 40

% in early morning trade. SolarEdge Technologies, a leading power inverter manufacturer, lost almost 26% of its value. Enphase Energy, another solar inverter maker, was down 17.7%, and Complete Solaria plunged by over 15%. Other companies, including Maxeon Solar, which fell 9%, Emeren Group down 5.2%, JinkoSolar dipping 4.7%, while First Solar and Canadian Solar dropped 5.4% and 6.4% respectively, indicating the broad impact across the entire industry. These declines come amidst existing pressures on the solar industry, as reflected by the Invesco Solar ETF which has fallen by approximately 22.8% over the past year, and the performance of prominent stocks like Sunrun which lost 27% and Enphase Energy which decreased by 63% during the same period.

Trump’s budget package – which he calls “one big beautiful bill” – is set to eliminate funding established under the Biden Administration’s Inflation Reduction Act (IRA) and repeal grants intended to reduce air pollution and greenhouse gas emissions, or for the purchase of heavy-duty electric vehicles. Specifically, the bill aims to remove the 30% federal tax credit provided to taxpayers who install rooftop solar systems, posing a particularly significant challenge for the industry. While the industry was already anticipating a gradual phase-out of wind and solar tax credits in the future, this new version of the bill dramatically accelerates that timeline, as noted by Raymond James analyst Pavel Molchanov in an interview with Reuters. Under the proposed new timeline, solar or wind projects must begin construction within 60 days of the bill’s enactment and be completed by the end of 2028. Otherwise, they will no longer be eligible for tax credits, a draconian condition compared to current law.

Broad Impact on the Renewable Energy Sector and the Political Battle

The proposed change in tax policy comes at a time when U.S. solar companies are already under significant pressure. They are contending with weakening domestic demand for residential solar systems, partly driven by the high interest rate environment that makes project financing more expensive, as well as Net Metering reforms in California, which have considerably reduced the credits consumers receive for feeding excess electricity back into the grid. These reforms have substantially impacted the economic viability of private solar installations, and now the new bill exacerbates the situation. Analysts note that even if the bill is slightly more moderate than more extreme versions, it still significantly curtails the industry’s growth potential by drastically shortening the window for realizing credits. This means that companies in the sector will be forced to expedite projects under tighter timelines, which could lead to higher costs, a decrease in the volume of future investments, and a significant reduction in the development of new projects.

Consequently, clean energy stakeholders are now turning their attention to the Senate, where the bill is expected to head after its approval in the House of Representatives, hoping the upper chamber will reverse many of the proposed revisions to the Inflation Reduction Act. Raymond James analyst added that “while the bill is in the Senate, the solar and wind industries will actively lobby to reverse the new changes made by the House.” This battle is expected to be fierce, as Trump has a clear political interest in passing the bill as a central part of his domestic agenda. The bill’s impact is not uniform across all energy sectors; while it reduces support for solar and wind energy, the Senate panel also proposed extending tax credits for hydropower, nuclear, and geothermal energy until 2036. This move aims to promote different types of energy and, accordingly, shares of nuclear energy-related companies like Nano Nuclear Energy and Oklo saw gains. This divergence in approach highlights a potential shift in the governmental support mix for the energy sector, which could reshape the direction of investments and development in the sector in the coming years, although differences between the bill’s versions in the two chambers of Congress could complicate the overall legislative passage.

Uncertain Future: Long-Term Implications and Hidden Opportunities

The implications of the proposed bill, should it pass in its current form, could be far-reaching for the renewable energy industry in the U.S. A rapid cut in tax credits might significantly slow down the pace of new solar and wind project deployments, as they would become less economically attractive. This could push companies towards new directions, such as focusing on international markets where incentive policies are more stable, or accelerating technological development to reduce costs and become more competitive without reliance on subsidies. At the same time, this situation might also create opportunities for players who can quickly adapt to the changing regulatory environment, for instance, through innovative business models or specialization in specific niches not directly impacted by the cuts. For investors, this implies increased volatility and the need for deeper analysis of companies’ financial resilience and their ability to navigate policy changes, while also considering alternative energy sectors that are now receiving greater government support.