Solar and clean energy stocks took a significant hit on Wednesday following Donald Trump’s victory over Kamala Harris in the presidential race. The market reaction reflected renewed concerns among investors that the incoming administration could reduce support for the solar industry and other forms of low-carbon energy.
Sunnova Energy (NASDAQ) dropped 22%, JinkoSolar (NYSE) fell 16%, and SolarEdge Technologies (NASDAQ) slid 15%. Other major losers included First Solar (NASDAQ), down 14%, Enphase Energy (NASDAQ) at -13%, and Array Technologies (NASDAQ) down 12.6%. The iShares Global Clean Energy ETF (NASDAQ), a key index tracking clean energy stocks, plunged nearly 10%.
Trump’s opposition to clean energy is well-known, especially his criticism of wind energy, which he has called “windmills.” He has also repeatedly attacked the Inflation Reduction Act (IRA), describing it as the “biggest tax hike in history.” Trump has pledged to undo parts of the IRA, particularly any unspent funds, if he returns to the White House. He has promised to “terminate the Green New Deal,” calling it a “Green New Scam.”
The IRA, signed by President Biden in 2022, allocated $369 billion in tax credits and subsidies to promote renewable energy. Last year, Biden also signed the Infrastructure Investment and Jobs Act (IIJA), which authorized $1.2 trillion in spending, including $43 billion for battery manufacturing and $7.5 billion to expand electric vehicle (EV) infrastructure.
The IRA has led to an uptick in manufacturing investments. Politico reports that 555 manufacturing facilities have been announced due to IRA incentives. However, less than half of the 230 facilities expected to open by the end of 2024 are likely to meet their deadlines, raising concerns about the future of these projects under a potential Trump administration.
Though Republicans have tried to dismantle parts of the IRA, it has survived, so far. However, experts warn that the law could face significant challenges under Trump. While the president may not be able to fully roll back the climate law, he could make its implementation more difficult, potentially through executive orders that restrict its funding or change its tax credit rules.
Some aspects of the IRA are likely to face more opposition than others. Chris Berkouwer, a portfolio manager at Robeco, noted that investments in grid infrastructure may garner bipartisan support. However, Republicans might push for grid upgrades that benefit traditional coal and gas utilities, rather than those designed to accommodate renewable energy sources.
Trump’s stance on electric vehicles (EVs) has been fluctuating. Last year, he criticized EVs, calling them “too expensive” and “not practical.” However, his relationship with Tesla CEO Elon Musk has softened his anti-EV rhetoric. The auto industry has announced more than $100 billion in EV investments, creating over 100,000 jobs in the U.S. Following Trump’s election, shares of Tesla (NASDAQ
) jumped nearly 20%, with analysts predicting that Trump’s plans to relax environmental regulations could slow the EV rollout.
Despite his reservations about the IRA, Trump may face pushback from his own party if he attempts to dismantle it. In September, 18 House Republicans urged Speaker Mike Johnson not to prematurely repeal energy tax credits that support IRA investments. Many of these credits have benefited Republican-led states, such as Iowa, Oklahoma, and Texas. A 2022 report by Climate Central found that these “red states” have led the nation in wind power production, while California and Florida lead in solar energy.
As Trump prepares to take office, the future of the IRA and the clean energy sector remains uncertain. While his administration may pursue changes to the law, the fight over the IRA is likely to be a major political battle in the years ahead.
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