Shares of solar companies tumble as new rules threaten access to key tax incentives and add regulatory uncertainty
U.S. solar stocks plunged Tuesday after former President Donald Trump issued an executive order that could significantly restrict access to renewable energy tax incentives. The move follows recent budget cuts and intensifies uncertainty for clean energy developers.
Sunrun Inc., the largest U.S. residential solar company, dropped as much as 13%, while solar equipment maker Nextracker Inc. declined 5.6%. First Solar Inc., a leading domestic solar manufacturer, saw its shares fall 5.3%.
The executive order, released Monday evening, directs the U.S. Treasury Department to more narrowly define when a renewable energy project qualifies as having “begun construction” — a key threshold for locking in federal tax credits. Under current rules established in the July 4 tax-and-spending bill, solar and wind projects can claim credits if construction begins within 12 months. The new directive would make that timeline more stringent, requiring physical construction milestones rather than mere financial commitments.
“The risk is to the downside,” wrote Roth Capital analyst Phil Shen, calling the order a potentially negative development for the entire solar sector.
The move is widely viewed as part of a deal with the House Freedom Caucus, which had pushed to rein in renewable energy subsidies as part of the broader $3.4 trillion budget bill. Trump’s order also targets projects tied to foreign entities of concern, notably China, and calls for the Interior Department to eliminate favorable regulations for wind and solar projects within 45 days.
“This adds yet another layer of instability,” said Keith Martin, a tax and project finance attorney with Norton Rose Fulbright. “It’s like trying to do business while bouncing up and down on a trampoline.”
Analysts warn that the new rules could delay or derail renewable energy projects across the U.S.
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