Solar stocks slump as Manchin says he won’t back climate bill

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Sunrun installer installing electric solar panels on a residential rooftop in California.

Source: Sunrun

Solar stocks fell on Friday after Sen. Joe Manchin said he would not support increased spending to fight climate change, according to NBC News, citing a Democrat briefed on the conversations.

ETF Invesco Solar, which tracks the industry, fell more than 7% at one point. Some of those losses were recouped later in the day, with the fund ending Friday’s session down around 2%. For the week, the fund is down more than 10%. Sunrun, Sunnova, First Solar and Maxeon Solar all fell more than 10% at some point.

The industry has faced a number of headwinds this year, including political uncertainty, supply chain bottlenecks and rising raw material costs.

More recently, the group has been hit by a rotation out of growth-oriented sectors of the market as investors weigh the impact of higher interest rates.

“Manchin’s decision jeopardizes the United States’ ability to meet President Biden’s goal of reducing U.S. greenhouse gas emissions 50% to 52% below 2005 levels by 2030,” he said. Cowen said Friday in a note to clients. “Despite disappointing news, the economic case for transitioning to renewables is increasingly compelling and allows us to remain constructive on the group.”

President Joe Biden’s original Build Back Better Act, passed in the House last November, provided more than $500 billion for climate spending, including some $320 billion in clean energy tax credits. The plan did not pass the Senate, following opposition from Senator Manchin.

An extension of the investment tax credit, which has played a key role in the development of the industry, was included in the bill. The incentive for residential solar systems will increase from 26% this year to 22% next year, before expiring in 2024. In that year, the tax credit for commercial systems will be at a permanent rate by 10%.

But some noted that a streamlined provision could still be passed by Congress. The credit was last extended in 2020 under the Trump administration, after receiving bipartisan support.

“It’s not good for solar and clean power in general – but before everyone panics and runs for the exits … there might be hope for an extension on a stand-alone basis with some Republicans crossing the line. ‘gone to states where solar and wind have become significant industries,’ Northland Capital Markets wrote in a note to clients.

John Berger, CEO of residential roof installer Sunnova, said solar energy is a huge economic opportunity for the United States. He added that the industry is anti-inflationary.

“We are working hard to provide solutions to the energy crisis trio – energy affordability, energy security and climate change – by providing unparalleled energy service to help homeowners achieve true energy independence in the face of the realities of climate change,” a- he declared.

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