U.S. solar stocks took a sharp hit on Tuesday following the Senate’s proposal to phase out solar and wind tax credits by 2028, raising fresh concerns over the future of clean energy incentives under President Donald Trump’s evolving tax-and-spending plan.
Market Reaction
The impact was immediate and widespread:
Enphase Energy fell nearly 21 percent, making it one of the steepest losers on the S&P 500.
Sunrun and SolarEdge Technologies both plunged more than 30 percent.
First Solar dropped 17.3 percent, contributing to broader weakness across the solar sector.
The Invesco Solar ETF (TAN), a sector benchmark, is down 22.8 percent over the past year.
The declines reflect growing investor anxiety about the policy headwinds facing solar companies, many of which already face structural challenges like high interest rates, sluggish residential demand, and net metering reforms in key states such as California, Reuters news report said.
Legislative Uncertainty
The market selloff was triggered by a draft bill from a Senate committee that proposes to:
Cut Investment Tax Credit (ITC) and Production Tax Credit (PTC) incentives for solar and wind to 60 percent of their current value by 2026.
End the credits entirely by 2028, four years earlier than under current law, which extends benefits until 2032.
While the Senate version is seen as slightly less severe than the House’s earlier bill, analysts say it is still “far more restrictive than the original bill,” according to Citi strategists. Raymond James’ Pavel Molchanov noted the changes are “worse than the industry had hoped.”
Broader Energy Implications
In a twist, the proposed legislation does extend tax credits for hydro, nuclear, and geothermal energy through 2036, signaling a shift in federal energy priorities. As a result, nuclear-related stocks rose, including:
Nano Nuclear Energy, up 4.8 percent
Oklo, a nuclear startup backed by OpenAI CEO Sam Altman, up 5.1 percent
Outlook
With the Senate and House proposals diverging, the fate of the tax credit provisions remains uncertain. The legislative tug-of-war could complicate passage of the bill before Trump’s self-imposed July 4 deadline. In the meantime, investor sentiment around solar stocks is likely to remain fragile.
Bottom Line
The proposed rollback of federal tax support for solar and wind has created fresh headwinds for a sector already struggling with demand softness and policy shifts. Until there’s more clarity from Washington, solar stocks may remain under pressure, while alternative clean energy sectors like nuclear could attract increased attention from investors.
GreentechLead.com News Desk