The U.S. stock market experienced another significant shake-up on Thursday, with the renewable energy sector, particularly solar power, suffering a dramatic drop. This sell-off was triggered by the House's passage of a tax and spending bill led by Trump, known as the "Beautiful Bill," which introduced unexpected massive cuts to clean energy tax credits.
Tax Reform Shocks the Energy Sector
The bill passed the House by a narrow margin of 215 to 214 votes, marking a return to traditional energy policies under Trump. It significantly reduces green incentives, including the Inflation Reduction Act (IRA), especially ending clean energy investment credits that were meant to last until 2031. Tax benefits for residential solar installations are weakened, and the commercial solar 48E credit will end in 2028.
Analysts widely believe that if the bill passes the Senate unchanged, it will have a systemic impact on the green energy industry. Although the Senate might adjust some radical elements, the market is already showing signs of panic.
Solar Sector Leads the Decline as U.S. Stocks Tumble
Impacted by the news, U.S. renewable energy stocks fell for the second consecutive trading day, marking the worst two-day performance of the year. Several major solar stocks plummeted, with Enphase Energy dropping nearly 20% and Sunrun falling about 37%, due to its heavy reliance on the 48E policy.
NextEra Energy, the largest renewable energy company in the U.S., closed down by 6.4%, with the Invesco Solar ETF's net asset value decreasing by 10%, reflecting a rapid capital withdrawal.
Investor Confidence Plummets, Wall Street Sees Gloom
Market sentiment has turned extremely negative. Manish Kabra, head of U.S. equity strategy at Societe Generale, noted, "There's almost no reason to hold solar stocks now." Analysts generally fear that while tax cuts might stimulate the traditional economy, they severely undermine long-term profit expectations for the clean energy sector.
JPMorgan's analysis points out that since even moderate Republican congressmen did not support the green subsidy amendment, investor expectations for the Senate to intervene have become pessimistic.
Fossil Energy Lobby Celebrates Policy Shift, Nuclear Energy Gains Ground
Following the bill's passage, the American Petroleum Institute (API) quickly stated that "this will help restore U.S. energy dominance." Notably, the nuclear energy sector is one of the few beneficiaries. The bill maintains tax credits for advanced nuclear facilities, boosting the stock of Oklo, a small nuclear reactor company backed by OpenAI CEO Sam Altman, by 8%, with an additional 18% rise in after-hours trading.
Summary
Trump's "Beautiful Bill" not only reshapes the trajectory of U.S. fiscal policy but also directly impacts the green energy industry. Clean energy companies face the dual challenge of policy reversal and declining market confidence, while fossil fuels and nuclear energy quietly benefit from the policy shift. The decade-long golden cycle of clean energy may be approaching a turning point.
