Solar stocks fall as Manchin says he won’t support climate bill

Sunrun installs solar panels on the roof of an apartment building in California.

Source: Sanran

Solar energy stocks tumbled on Friday after Senator Joe Manchin said he would not support increased spending to fight climate change. NBC Newsquoting a Democrat briefed on the talks.

Invesco Solar ETF, which tracks the industry, fell over 7% at one point. At 11:45 am on Wall Street, some of those losses were reversed, with the fund last trading down 3.3%. The fund fell over 10% in a week. Sanran, Sunnova, First solar as well as Maxeon Solar all fell over 10% at one point.

The industry has faced a number of headwinds this year, including policy uncertainty, supply chain bottlenecks and rising raw material costs.

More recently, the group has been hit by a retreat from growth-oriented areas of the market as investors assess the impact of higher interest rates.

“Manchin’s decision undermines the ability of the US to meet President Biden’s goal of reducing US greenhouse gas emissions by 50% to 52% from 2005 levels by 2030,” Cowan said Friday in a note to clients. “Despite the disappointing news, the business case for moving to renewables is becoming more and more compelling and is forcing us to be constructive about the group.”

President Joe Biden’s original Better Recovery Act, which was the last to be passed by the House of Representatives novemberallocated more than $500 billion for climate spending, including some $320 billion tax credits for clean energy. The plan did not pass the Senate due to senator opposition. Manchin.

The bill included an extension of the investment tax credit, which played a key role in the development of the industry. The incentive for residential solar systems will drop from 26% this year to 22% next year, before it expires in 2024. This year, the tax credit for commercial systems will be set at a constant 10%.

But some pointed out that the reduced provision could still be passed by Congress. The loan was last granted in 2020 under the Trump administration after it received bipartisan support.

“It’s not good for solar and clean energy in general, but before everyone panics and runs for the exits…there may be some hope for a stand-alone extension as some Republicans cross the aisle in states where solar and wind power are becoming important industries.” , Northland Capital Markets wrote in a note to clients.