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NextEra Energy (NYSE:NEE) and AES Corp. (NYSE:AES) – power companies that install large-scale solar projects – rank among the largest decliners on the S&P 500 in early trading Monday, -4.2% and -5.5% respectively, after the latest version of the Senate’s contentious tax and spending bill delivered a surprise blow to the solar industry.
In the latest version of the “Big Beautiful Bill,” solar and wind projects would qualify for tax credits only if placed in service by the end of 2027, faster than the previous version that allowed projects to qualify based on their construction start date.
The latest version also includes an unexpected new tax on projects that use supplies from China and the phaseout of residential solar credits by the end of the year, similar to the version of the bill passed by the U.S. House.
The power industry already is grappling with meeting electricity demand that is surging largely due to the need for artificial intelligence and the rush to build huge data centers, and developers say renewables would help meet the rising demand because they account for most of the near-term electricity generation in the works.
“Should the current version of the Senate’s language be voted into law, the likely result would be a dramatic pull-in of build activity” for wind and solar, followed by a sharp decline beginning in 2028, Guggenheim analysts led by Joe Osha said in a note.
But Sunrun (RUN), the largest U.S. residential solar developer, +9.8% in early trading; while the latest Senate bill would limit the company’s ability to receive tax credits for leasing panels to homeowners, the door was left open to receive credits for power purchase agreements.
First Solar (FSLR), which is seen benefiting from the tax on companies using Chinese-made equipment, +7.8%, as Baird analyst Ben Kallo said the tax on companies using Chinese components is “good for domestic producers such as First Solar,” although the measure would “shrink the pipeline” of projects.
Among other relevant stocks: Fluence Energy (FLNC) +11.6%, Eos Energy Enterprises (EOSE) +10.2%, Solaredge Technologies (SEDG) +1.8%, but Shoals Technologies (SHLS) -14%, Array Technologies (ARRY) -10.1%, Nextracker (NXT) -7.4%, Enphase Energy (ENPH) -4.5%, JinkoSolar (JKS) -3.3%, Canadian Solar (CSIQ) -2.9%, FTC Solar (FTCI) -2.7%, Maxeon Solar Technologies (MAXN) -0.3%.
The Senate and House still must agree on one version of the bill – hardly a given – before it gets sent to President Trump for his signature.