Solar-related stocks, including First Solar, experienced a significant decline as the U.S. Senate moved to reduce tax benefits for renewable energy. Korean companies targeting the U.S. market, such as Hanwha Solutions and OCI Holdings, also saw their stock prices drop.
On June 17 (local time), First Solar, a leading U.S. solar module manufacturer, closed at $143.90, marking a 17.89% decrease from the previous trading day. The proposed tax law revisions by the U.S. Senate are viewed as a substantial reduction in tax credits for renewable energy, stemming from the Inflation Reduction Act (IRA). The bill suggests lowering the investment tax credit for solar and wind projects to 60% next year, decreasing it to 20% in 2027, and eliminating it entirely by 2028. If passed, the associated production tax credit (PTC) would also face gradual reductions. Notably, residential solar tax benefits would cease within 180 days of the bill’s enactment.
In reaction to this news, Sunrun, a company that sells residential solar systems, plunged by 40.04% on June 17. Other solar inverter manufacturers, SolarEdge and Enphase Energy, also experienced notable declines of 33.44% and 23.97%, respectively. The exchange-traded fund (ETF) Invesco Solar (TAN), which includes major solar stocks like First Solar, NextEra Energy, and Enphase Energy, fell by 9.16% in just one day. This tax reduction proposal has significantly dampened investor sentiment across the U.S. solar industry.
Hanwha Solutions, which operates a solar module plant in the U.S., closed at 32,050 won on June 18, down 3.32% from the previous day. The company had already fallen by 9.05% the day before the bill was revealed. OCI Holdings also experienced a decline, closing at 72,100 won, down 3.61% after a 4.96% drop the day before. OCI Holdings is set to begin solar cell production in Texas in the first half of next year and is currently operating a module factory there.
Additionally, domestic renewable energy stocks also fell. HD Hyundai Energy Solutions, which produces solar modules, dropped by 5.41%, while SK E&C, engaged in solar and wind businesses, decreased by 1.15%. Wind tower manufacturer CNSwind declined by 5.84%, and turbine producer Unison fell by 4.42%.
Market analysts predict that stock prices in the solar power sector will remain volatile due to U.S. policy developments. Lee Jin-ho, a researcher at Mirae Asset Securities, commented that there is potential for further revisions as the bill has yet to be approved, indicating that stock prices will likely fluctuate with any changes to the provisions. He noted that with the U.S. imposing anti-dumping duties on Chinese solar products, a deepening supply shortage in the U.S. could lead to increased sales prices for Korean companies.
Despite the short-term fluctuations expected due to policy changes, some analysts believe there could be long-term investment opportunities. Kim Si-hyun, a researcher at Hana Securities, stated, “Although short-term stock price fluctuations are inevitable, future solar demand is expected to rise due to increasing electricity needs driven by reshoring and data centers.” He added that for First Solar, this adjustment might represent a buying opportunity amidst efforts to exclude Chinese competitors.
Ham Hyung-do, a researcher at Shinhan Investment & Securities, noted that volatility in the renewable energy sector is likely to increase until the final bill is passed next month. However, he also emphasized that regardless of the policy outcomes, demand for renewable energy is projected to rebound next year, as U.S. electricity demand is expected to surge by 2030 while supply remains significantly short.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/u-s-senate-moves-to-cut-renewable-energy-tax-benefits-causing-solar-stocks-to-plummet/
