U.S. solar stocks experienced a major sell-off after a Senate panel proposed scaling back key renewable energy tax incentives. The suggested changes are part of revisions to President Donald Trump’s “One Big, Beautiful Bill Act.” Under the proposed plan, tax credits for solar and wind would be reduced to 60% by 2026 and phased out entirely by 2028—four years earlier than the current schedule. This shift sent shockwaves through the market, triggering sharp declines in major solar companies’ stock prices.
Solar Stocks Plunge as Uncertainty Grows Over Future of Federal Tax Incentives
Leading the decline, solar inverter maker Enphase Energy saw its stock plunge by 27.2%, while solar panel giant First Solar fell 19.3%. Other companies in the sector fared even worse, with Sunrun and SolarEdge Technologies suffering losses of 43% and 39.4%, respectively. These companies were among the worst performers on the S&P 500, as investors reacted to the potential rollback of federal support that has long underpinned industry growth.
Solar Sector Tumbles as Senate Plan Threatens Tax Credits and Industry StabilityThough the Senate’s draft bill is causing immediate market volatility, analysts doubt it will pass in its current form. Differences between House and Senate Republicans on tax credit provisions may delay the final version of the bill beyond President Trump’s July 4 deadline. This provides an opportunity for industry stakeholders to lobby for more favorable terms. Raymond James analyst Pavel Molchanov noted the bill is “worse than hoped” for clean energy sectors, though slightly different from the House version.
Solar Struggles Grow Amid Policy Shifts and Broader Support for Stable Renewables
The proposed tax credit rollback comes at a challenging time for the solar industry, which is already under pressure from high interest rates and regulatory changes like California’s new net metering rules. These factors have reduced the financial returns of home solar systems, further dampening consumer demand. As a result, some solar firms have seen sustained losses over the past year, with Enphase Energy down 63% and Sunrun off 27%. The broader Invesco Solar ETF has also dropped 22.8%.
While solar and wind face cutbacks, the Senate proposal extends support to other renewable energy sources. Tax credits for hydro, nuclear, and geothermal energy would be maintained through 2036, potentially benefiting companies in those areas. For example, Nano Nuclear Energy recorded a modest 1.2% gain following the announcement. This shift in policy focus suggests a rebalancing of U.S. energy investments, with a preference for more consistent and reliable energy generation.
