Renewable Energy Sector at Risk

Solar and wind energy stocks continue to face pressure as Congress works to pass President Trump’s landmark "Big Beautiful Bill." Key clean energy incentives could be significantly reduced, potentially creating turbulence within the renewable energy sector.

The Senate’s version of the bill builds on the House’s framework but adds aggressive deadlines. Under the new proposal, clean energy projects must be fully operational by the end of 2027 to qualify for major incentives. This accelerated timeline may force project developers to either speed up construction or cancel projects altogether.

Additionally, the Senate bill introduces a new tax on wind and solar projects completed after 2027 if companies cannot prove that Chinese components were not used. This presents a major challenge, as China currently dominates the global supply chain for solar panels and related components. In contrast, domestically manufactured panels tend to be more expensive due to higher labor costs and difficulties sourcing certain materials at scale.

Despite these hurdles, solar remains a critical part of the U.S. energy mix, especially with the surge in electricity demand driven by data center expansion. However, without significant advancements in battery storage technology, the pace of solar adoption may slow over the next decade.

According to the U.S. Energy Information Administration (EIA), solar and wind have led the growth in U.S. power generation in recent years. In fact, solar power generation is on track to grow by 75% from 2023 to 2025. While changes to tax credits may have short-term effects, even with renewed political enthusiasm for coal, the energy market is not equipped to make a rapid transition away from solar and wind.

The Senate plans to begin its “vote-a-rama” today, and if successful, the bill is expected to return to the House of Representatives by the middle of this week for final passage. There is still some hope that the language surrounding renewable energy incentives may be softened, but the market has already priced in a significant portion of the risk premium, anticipating that many of the incentives in place since 2005 could be severely rolled back or eliminated entirely.