Clean energy breathes a sigh of relief! The final version of the "Big Beautiful" bill in the U.S. Senate does not include new taxes on imported components, and solar stocks rise
The large-scale tax reduction and spending bill passed by the U.S. Senate did not include a new consumption tax on imported clean energy components, which relieved the clean energy industry. Solar stocks generally rose, with NextEra Energy's stock price up nearly 4%, Array Technologies and Nextracker rising over 10% and 5%, respectively. The solar ETF Invesco Solar ETF increased by nearly 5.4%, while the iShares Global Clean Energy ETF rose by more than 1.4%. The passage of this bill is seen as a positive development for the clean energy industry
The American clean energy industry can breathe a sigh of relief. Recent news shows that the large-scale tax and spending bill recently passed by the U.S. Senate—the so-called "Inflation Reduction Act"—did not include the controversial import component tax that was questioned by the clean energy industry.
On Tuesday, July 1st, Eastern Time, the U.S. Senate passed the "Inflation Reduction Act" with a vote of 51 to 50. Media reports pointed out that in this narrowly passed final version of the bill, there was no tax aimed at wind and solar projects.
Last weekend, the clean energy industry was surprised and angered to find that the Senate's proposed version of the bill included a new consumption tax on wind and photovoltaic projects that use specific imported components. This consumption tax applies to wind and photovoltaic projects that use components from targeted foreign entities and exceed a certain threshold.
After the Senate passed the "Inflation Reduction Act" close to the midday trading session on Tuesday, solar stocks rose. The stock price of NextEra Energy (NEE), the largest renewable energy developer in the U.S., rose nearly 4% at midday. The stock prices of photovoltaic tracker manufacturers Array Technologies (ARRY) and Nextracker (NXT) rose over 10% and 5%, respectively, at midday. Residential solar installer Sunrun (RUN) rose over 10% at midday.
The photovoltaic ETF Invesco Solar ETF (TAN) reached a daily high, rising nearly 5.4% at midday, while another industry ETF, iShares Global Clean Energy ETF (LCLN), expanded its gains after turning positive towards the end of the morning session, rising over 1.4% at midday.
Wall Street Journal mentioned this week that the new version of the "Inflation Reduction Act" not only accelerates the cancellation of clean energy subsidies but also unexpectedly adds new consumption tax provisions for wind and solar. The American Clean Power Association (ACP) estimates that the new consumption tax will add $4 billion to $7 billion in costs for U.S. clean energy companies over the next decade. Research firm Rhodium Group predicts that this will lead to a 10% to 20% increase in the construction costs of wind and solar energy.
From the stock market reaction, investors undoubtedly welcomed the Senate's final version of the bill that removed the new consumption tax. However, industry associations remain cautious.
After the Senate passed the "Inflation Reduction Act" on Tuesday, the Solar Energy Industries Association (SEIA) warned that the improvements in the final version of the bill were "limited," and overall, the bill remains harmful to renewable energy SEIA's CEO Abigail Ross Hopper stated in a statement: "This legislation undermines the foundation of America's manufacturing recovery and global energy leadership. If this bill becomes law, households will face higher electricity bills, factories will close, Americans will lose jobs, and our power grid will become more vulnerable."
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