Senate Passes Trump Megabill, Drops Solar Excise Tax; Solar Firms Surge While Renewable Energy Faces Setbacks"

Key Points

• Research suggests solar firms' stocks surged after the Senate dropped an excise tax on wind and solar projects from Trump's tax bill.

• It seems likely that the removal boosted short-term stock prices, with Sunrun Inc. up 11%, Enphase Energy Inc. up 4%, and Solaredge Technologies Inc. up 9%.

• The evidence leans toward long-term challenges, as the bill still phases out subsidies post-2027, potentially impacting solar project development.

Stock Market Reaction
On July 1, 2025, solar firms saw significant stock price increases following the Senate's decision to remove an excise tax on wind and solar projects from President Trump's tax and spending bill. This immediate market reaction reflects investor optimism about reduced costs for renewable energy projects.

Bill Details and Impact
The excise tax, aimed at projects using Chinese components, was dropped to secure votes, benefiting solar firms reliant on foreign parts. However, the bill still phases out subsidies after December 31, 2027, and changes tax credit criteria, potentially leading to higher consumer bills and job losses, with estimates of 2.3 million jobs at risk.

Industry Perspective
While the short-term boost is clear, critics like Abigail Ross Hopper from the Solar Energy Industries Association warn of long-term threats, including factory shutdowns and reduced electricity capacity, projected at a 300 GW loss. Domestic manufacturers like First Solar may face challenges, as the tax removal could favor cheaper foreign components.

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Detailed Analysis of Solar Firms' Surge Following Senate's Decision to Drop Excise Tax From Trump Bill on July 1, 2025

This report provides a comprehensive analysis of the surge in solar firms' stocks following the U.S. Senate's decision to remove an excise tax on wind and solar projects from President Donald Trump's tax and spending bill, known as the "One Big Beautiful Bill Act," passed on July 1, 2025. The analysis is based on recent news reports and market data, ensuring a thorough understanding of the immediate and potential long-term impacts as of 12:01 PM PDT on July 1, 2025.

Background and Context

The "One Big Beautiful Bill Act," a comprehensive legislative package spanning 940 pages, was debated extensively before its passage, requiring a marathon voting session lasting over 24 hours. Among its provisions, a proposed excise tax on wind and solar projects that use components made in China was included late in the process, drawing significant opposition from renewable energy developers. After last-minute negotiations, the Senate dropped this excise tax to secure enough votes for passage, leading to an immediate market reaction in solar firm stocks.

Senate's Decision on Excise Tax

The Senate's decision to remove the excise tax was announced on July 1, 2025, as part of the bill's final amendments. The proposed tax was intended to penalize wind and solar projects that do not meet strict standards, particularly those relying on foreign components, especially from China. This tax was supported by some U.S. manufacturers seeking to protect domestic production but was opposed by renewable developers, who argued it would increase project costs due to their reliance on global supply chains. Senator Ed Markey (D-MA) played a crucial role in advocating for its removal, announcing the decision on X before the bill's passage .

The removal was part of broader negotiations to secure votes, with key senators like Iowa Senators Joni Ernst and Chuck Grassley, and Alaska Senator Lisa Murkowski, whose support was crucial for the bill's 50-50 passage, with Vice President JD Vance breaking the tie.

Immediate Stock Market Reaction

Following the announcement, shares for solar companies surged, reflecting investor optimism about reduced costs and regulatory burdens. Specific stock performance as of 12:49 p.m. in New York on July 1, 2025, included:

• Sunrun Inc. up 11%

• Enphase Energy Inc. up 4%

• Solaredge Technologies Inc. up 9%

This surge was reported by Bloomberg, highlighting the market's positive response to the excise tax removal

. The immediate boost is attributed to the alleviation of potential cost increases for solar projects, particularly those reliant on foreign components.

Bill Details and Long-Term Implications

Despite the removal of the excise tax, the bill contains provisions that could pose significant challenges for the solar industry in the long term. Key changes include:

• Phase-Out of Subsidies: The bill phases out subsidies for wind and solar projects after December 31, 2027, which could reduce financial incentives for new developments.

• Tax Credit Changes: Projects can use the 2022 Inflation Reduction Act’s tax credits if they begin construction before 2026, a shift from the original requirement based on when projects enter service. This offers a one-year window for solar and wind projects to start construction, as noted in the latest amendments .

Critics argue these changes could make it harder to develop solar energy projects, potentially leading to higher consumer bills, factory shutdowns, and job losses. Research firm C2ES estimated that 2.3 million jobs could be lost due to the bill's provisions, while Energy Innovation projected a fall of 300 GW of electricity capacity

.

Impact on Domestic Manufacturers

While the removal of the excise tax is generally positive for the renewable industry, it may have nuanced effects on domestic solar manufacturers. According to Mizuho, the absence of the excise tax is slightly negative for companies like First Solar, as it could reduce the incentive to use domestically produced components. The tax was intended to protect domestic manufacturers by penalizing projects that rely on foreign, particularly Chinese, components. Its removal might lead to increased competition from cheaper foreign alternatives, potentially hurting domestic producers

.

Economic and Industry Perspective

The immediate surge in solar firm stocks reflects market confidence in the short-term cost savings from the excise tax removal. However, the long-term implications suggest a challenging environment for the solar industry, with potential job losses and reduced capacity threatening growth. Lena Moffitt from Evergreen Action criticized the bill, stating, "Senate Republicans just voted to trigger the largest spike in utility bills in American history," emphasizing the potential consumer impact

.

The bill's passage, with a projected deficit increase of over $3 trillion over 10 years, adds further complexity, as fiscal concerns could influence future policy decisions affecting renewables. The interplay between short-term market gains and long-term industry challenges underscores the nuanced impact of the Senate's decision.

Summary Table of Key Impacts

Aspect	Short-Term Impact	Long-Term Impact
Stock Performance	Sunrun Inc. up 11%, Enphase up 4%, Solaredge up 9%	Potential volatility due to subsidy phase-out post-2027
Project Costs	Reduced due to excise tax removal	Increased due to subsidy cuts, higher consumer bills
Job Impact	Immediate boost in investor confidence	Estimated 2.3 million jobs at risk, per C2ES
Electricity Capacity	No immediate change	Projected 300 GW loss, per Energy Innovation
Domestic Manufacturers (e.g., First Solar)	Mixed, slight negative for domestic producers due to foreign competition	Potential long-term decline in domestic production

This table summarizes the dual nature of the impacts, highlighting both immediate market reactions and potential future challenges.

Conclusion

The Senate's decision to drop the excise tax on wind and solar projects from Trump's tax bill on July 1, 2025, has led to a surge in solar firm stocks, with significant increases observed in companies like Sunrun Inc., Enphase Energy Inc., and Solaredge Technologies Inc. This short-term boost reflects investor optimism about reduced costs for renewable energy projects. However, the bill's long-term provisions, including the phase-out of subsidies post-2027 and changes to tax credits, pose significant challenges, potentially leading to higher consumer bills, job losses estimated at 2.3 million, and a projected 300 GW loss in electricity capacity. While generally positive for the industry, the removal may negatively affect domestic manufacturers like First Solar due to increased foreign competition. The interplay between immediate market gains and long-term industry risks highlights the complex landscape for solar firms moving forward.

Key Citations

• Solar Firms Surge as Senate Drops Excise Tax From Trump Bill

• Senate passes megabill that curbs IRA tax credits, drops wind and solar excise tax

• Despite last-minute changes, Senate bill deals big blow to renewable energy

• Excise tax dropped in Senate bill negative for First Solar, says Mizuho

• Markey's Announcement

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