Clean Energy Stocks Plummet As Trump’s Tax Bill Pulls the Rug on Subsidies and Credits

Clean energy investors are reassessing the sector’s outlook after House Republicans advanced President Donald Trump’s tax legislation. The bill, which passed with narrow support, proposes accelerated cuts to clean energy tax credits, many of which were central to the Inflation Reduction Act. Solar stocks led the declines, and industry analysts warn the damage may continue as investor confidence erodes.

Shares of Sunrun fell 37 percent after losing eligibility for a key investment tax credit under Section 48E. Enphase Energy and SolarEdge also dropped sharply, falling 19 and 24 percent, respectively. These companies rely on residential and small commercial solar demand, which could decline if installation costs rise due to expiring credits. The Invesco Solar ETF, a basket of solar-focused stocks, lost 10 percent on the news.

First Solar, which benefits from a preserved manufacturing tax credit, held up better. Its stock fell just over 4 percent, a modest drop compared to peers. Companies with U.S.-based production and minimal exposure to leasing models now appear more insulated from further policy risk.

Solar and Wind Developers Brace for Impact

The bill revises the timeline for project eligibility under production and investment tax credits. Instead of a gradual phaseout through 2032, projects must now begin construction within 60 days of enactment and be operational by 2028 to receive full benefits. That revision could disqualify many planned solar and wind projects, especially those still awaiting permits or financing.

Jefferies analysts described the cuts as “sledgehammer strikes” that could force a revaluation across the sector. Residential solar is particularly exposed, with nearly 70 percent of installations structured through lease arrangements. The bill terminates credits for leased systems, removing a key incentive for consumers and installers alike.

Developers now face a compressed window and reduced financial predictability. Investors in firms dependent on federal incentives may reconsider positions unless revisions emerge from the Senate.

Nuclear and Manufacturing Carve-Outs Offer a Lifeline

Not all clean energy segments face the same headwinds. The bill includes carve-outs for nuclear developers, allowing credits based on when construction starts instead of when energy is delivered. Oklo, a small modular reactor firm, gained 6 percent as a result. Legacy nuclear operators also received extended support through 2031.

Manufacturing credits tied to domestic clean energy production remain intact. First Solar benefits here, as its U.S. factories continue to qualify for incentives even if end-user tax support declines. This protection may help investors pivot toward companies with similar profiles.

Still, analysts from Société Générale caution that sentiment around clean energy will likely remain negative. The sector’s recent gains had been tied closely to policy tailwinds. With those incentives cut, many stocks will face valuation pressure even if fundamentals remain unchanged.

Senate Debate Could Shift the Outlook

The bill’s next stop is the Senate, where at least four moderate Republicans have raised concerns about the scope of the cuts. While some changes may emerge, analysts expect the broader rollback to remain intact. JPMorgan notes that “the absence of House resistance sets a precedent,” suggesting limited momentum to undo the core provisions.

The American Petroleum Institute praised the legislation for restoring “energy dominance” and redirecting federal support toward fossil fuels. That shift signals a broader policy realignment under Trump that investors will need to monitor closely. Energy portfolios weighted toward clean infrastructure may need rebalancing.

For now, green energy equities remain volatile. Traders are watching the Senate, but long-only investors may begin reducing risk. Without clarity on tax incentives, the case for high-multiple solar and wind stocks weakens.

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