Solar stocks dive as Senate’s version of Trump’s tax bill reduces incentives for renewable energy.

Solar panels on the Seat Cupra SA plant in Martorell, Spain, on Thursday, March 13, 2025. Bloomberg | Bloomberg | Getty Images

Solar stocks faced pressure on Tuesday as the U.S. Senate’s version of President Donald Trump’s spending bill proposed cuts to renewable energy incentives. Shares of Enphase Energy dropped more than 17% in premarket trading, while First Solar fell about 12%. Sunrun experienced a decline of more than 27%, and SolarEdge Technologies decreased by 22%.

The Senate bill includes a provision that would completely phase out tax incentives for solar and wind power by 2028, although it retains incentives for nuclear, hydropower, and geothermal energy for a longer period. These renewable energy incentives were essential components of former President Joe Biden’s Inflation Reduction Act.

“The House-passed version generally represented a worst-case scenario for the majority of the IRA’s tax incentives; while the Senate proposal still represents a material negative for renewable energy investment/names, it is a significant improvement from the House,” noted Raymond James Washington policy analyst Ed Mills. However, he pointed out that “wind and solar eligibility continue to face pressure in the Senate-passed version.”

Republicans in the Senate aim to pass the bill quickly before the Fourth of July holiday. The tax legislation also seeks to raise the debt limit to $5 trillion from $4 trillion.

“We continue to view the July 4 target as ambitious given pending Byrd Rule decisions and potential amendments. With Republicans holding a narrow 53-47 majority, defections could lead to concessions, particularly on SALT and Medicaid provisions,” Mills indicated. “Unless the Senate is able to pre-negotiate provisions, the Senate will then reconcile differences with the House version through the conference process, likely extending into late July.”