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Solar stocks sink as Manchin says he won’t support climate bill

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

Source: Sunrun

Solar stocks tumbled Friday after Sen. Joe Manchin said he is not going to support increased spending to deal with climate change, in line with NBC News, citing a Democrat briefed on the conversations.

The Invesco Solar ETF, which tracks the industry, fell greater than 7% at one point. By 1:40 p.m. on Wall Street a few of those losses were recovered, with the fund last trading 2.6% lower. For the week, the fund is down greater than 10%. Sunrun, Sunnova, First Solar and Maxeon Solar all fell greater than 10% at one point.

The industry has grappled with quite a few headwinds this yr, including policy uncertainty, supply chain bottlenecks and rising raw material costs.

More recently, the group’s gotten hit amid a rotation out of growth-oriented areas of the market as investors assess the impact of upper rates of interest.

“Manchin’s decision impairs the flexibility for the U.S. to realize President Biden’s goal to scale back U.S. greenhouse gas emissions 50% to 52% below 2005 levels by 2030,” Cowen said Friday in a note to clients. “Despite the disappointing news, the economic rationale for the shift toward renewable power is increasingly compelling and keeps us constructive on the group.”

President Joe Biden’s original Construct Back Higher Act, which passed within the House last November, earmarked greater than $500 billion for climate spending, including some $320 billion in clean energy tax credits. The plan didn’t pass the Senate, following opposition from Sen. Manchin.

An extension of the Investment Tax Credit, which has been key to the industry’s development, was included within the bill. The inducement for residential solar systems will drop from 26% this yr to 22% next yr, before expiring in 2024. That yr the tax credit for industrial systems will settle at a everlasting 10%.

But some noted that a slimmed-down provision could still pass Congress. The credit was last prolonged in 2020 under the Trump administration, after it received bipartisan support.

“This is just not good for solar and clean energy generally — but before everyone panics and runs for the exits … there may be some hope for an extension on a standalone basis with some Republicans coming across the aisle in states where solar and wind have turn into necessary industries,” Northland Capital Markets wrote in a note to clients.

John Berger, CEO of residential rooftop installer Sunnova, said solar is a large economic opportunity for the U.S. He added that the industry is anti-inflationary.

“We’re working hard to bring solutions to the energy crisis trifecta — energy affordability, energy security and climate change — by providing an unparalleled energy service to assist homeowners gain true energy independence within the face of climate change realities,” he said.

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