The new U.S. tax policy aims to tighten "wind and solar" subsidies, causing Danish energy giant Orsted and the U.S. solar panel sector to collectively decline
Danish energy giant Orsted A/S's stock price plummeted, and many U.S. solar concept stocks also fell as a result of the tax and spending bill draft proposed by the U.S. Senate, which plans to impose stricter adjustments to renewable energy tax incentives. The new regulations require wind and solar projects to be operational by the end of 2027 to qualify for tax credits. Additionally, the new bill imposes extra taxes on the use of equipment from China. Tesla CEO Elon Musk strongly opposed this, stating that the draft would severely impact future industries
According to Zhitong Finance APP, on Monday, the stock price of Danish energy giant Orsted A/S (DNNGY.US) plummeted, while most U.S. solar concept stocks also saw declines in pre-market trading. This turbulence stems from the latest tax and spending bill draft released by the U.S. Senate, which proposes stricter adjustments to renewable energy tax incentives.
Data shows that Orsted A/S's stock opened in Copenhagen with a drop of 4.2%, while SolarEdge Technologies (SEDG.US) and Nextracker (NXT.US) both fell over 7% in pre-market trading. Sunrun (RUN.US), Shoals Technologies (SHLS.US), and Enphase Energy (ENPH.US) dropped over 5%.
According to the amendment announced last Friday evening, wind and solar projects must be fully operational by the end of 2027 to qualify for clean energy tax credits. This requirement is significantly stricter than the previous version, which only required projects to start construction by the end of 2025.
If the bill is ultimately enacted, renewable energy developers will face severe challenges and must accelerate project timelines to avoid losing critical federal policy support. Notably, the new bill also introduces a "China materials restriction clause," imposing additional taxes on new energy projects that use equipment and materials from China.
Tesla (TSLA.US) CEO Elon Musk criticized the draft on the X platform last Saturday, calling it "completely absurd and destructive." "This is using taxpayers' money to subsidize sunset industries while severely undermining future industries," he added.
However, the industry is not without its bright spots: the largest solar producer in the U.S., First Solar (FSLR.US), and solar company SolarMax Technology (SMXT.US), which provides solar power systems to the U.S. and China, both rose over 3%, while another clean energy manufacturer, GE Vernova (GEV.US), increased by about 2%.
Baird analyst Ben Kallo pointed out that the tax on Chinese components "favors domestic manufacturers such as First Solar, Nextracker, and GE Vernova," but he also warned that this measure will "compress project reserve sizes."
