Shares of solar energy companies fell steeply Tuesday after the U.S. Senate introduced a plan to gradually end solar tax credits by 2028. This move is part of President Donald Trump’s broader tax and spending bill. The Senate’s proposal would remove tax incentives created under the Biden administration’s Inflation Reduction Act.
Despite the drop in stock prices, some analysts see the Senate’s plan as more favorable than the version passed by the House in May. J.P. Morgan and Mizuho analysts noted that the Senate bill allows more time for solar projects to qualify for credits.
For example, projects starting construction before the end of 2025 can still receive full credits, with partial credits available for projects beginning in 2026. This contrasts with the House bill, which required projects to start within 60 days of the bill’s passage to qualify.
However, the Senate bill still phases out tax credits significantly. It proposes a 60% reduction in clean-electric tax credits for wind and solar in 2026, a 20% cut in 2027, and a complete phaseout by 2028.
This has caused sharp declines in major solar stocks: Enphase Energy dropped 27%, First Solar fell 19.5%, SunRun plunged 42%, and SolarEdge Technologies declined 38.5%. The iShares Global Clean Energy ETF also fell 4.4%, ending its recent 10-day winning streak.
Some analysts remain cautious. KeyBanc Capital Markets downgraded Enphase, SolarEdge, and SunRun, citing ongoing regulatory uncertainties. Citi analysts also maintain a sell rating on residential solar stocks, expecting further stock weakness due to these policy changes and weak U.S. residential demand.
On the positive side, the Senate bill extends tax credits for hydropower, nuclear, and geothermal energy through 2036, reflecting the Trump administration’s energy priorities. This has helped lift some nuclear-related stocks.
Overall, while the Senate’s tax credit phaseout has rattled solar stocks in the short term, analysts believe the bill provides a clearer, more workable framework for solar projects through the end of the decade. Investors may find reasons for cautious optimism despite the initial selloff.
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