US solar stocks rebound from Trump’s clean energy rollback

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Hello and welcome to Energy Source, coming to you from New York.

My colleague Jamie Smyth reported that Amazon-backed X-energy closed one of the largest funding rounds by a nuclear reactor developer, thanks to backing from Jane Street, ARK Invest, Reaves Asset Management and other investors. The deal, which brought the company’s 13-month fundraising total to $1.4bn, could help X-energy with its goal of delivering small modular reactors to Amazon, Dow and Centrica.

Although nuclear has seen a lot of interest from investors this year, most have not forgotten about solar. After President Donald Trump was elected last year, a group of US solar stocks began selling off over fears that the president’s agenda would threaten the clean energy industry. But now, many of those stocks are surging. In today’s Energy Source we look at why a group of US solar stocks are on track to outpace the S&P 500 this year. — Alexandra

Why the US solar sector ‘isn’t as dead as people thought’

US solar stocks have been on a bumpy ride this year, with investors fleeing the sector over fears that the Trump administration would end lucrative tax credits for the industry. But sentiment has since shifted and a group of solar stocks are on track for double- and triple-digit gains in 2025 that outpace the S&P 500.

Shares of Nextpower, Sunrun, First Solar and SolarEdge — some of the largest US solar companies by market capitalisation — are up 120, 77, 39 and 133 per cent, respectively, since the start of the year.

Many investors feared that the Trump administration would be hostile to an industry that had enjoyed expanded tax credits under the Biden administration’s Inflation Reduction Act. Although Trump’s landmark tax policy, the “One Big Beautiful Bill” (OBBB), still phased out some subsidies, many in the industry viewed the timeline as more favourable than expected.

“The sector, despite Trump, clearly isn’t as dead as people thought,” said Jeff Osborne, an analyst at TD Cowen.

The legislation requires commercial solar projects to be put into service by the end of 2027 or start construction by July 4 2026 in order to maintain eligibility for the investment tax credit. Projects that start construction by the 2026 deadline have four years to enter into service, while the manufacturing tax credit for solar developers remains available until it is fully phased out by the end of 2032.

The final version of the OBBB “was not nearly as bad as the market had expected”, said Christine Cho, an analyst at Barclays. “In a lot of ways a large majority of the IRA was really kept intact.”

Relief over the bill also coincided with artificial intelligence enthusiasm, which has driven stock market gains this year. AI data centres desperately need power and the ageing power grid must add more capacity in order to meet surging electricity demand.

Utility-scale solar is the fastest technology to deploy to the grid, since a gas turbine shortage has further delayed the construction of new natural gas plants. The US Energy Information Administration reported that solar would account for half of new generating capacity this year.

“Renewable or clean energy stocks missed out on the early stages of the AI power rally because of policy uncertainty,” said Jon Windham, an analyst at UBS. “Once we got more policy certainty . . . there’s been a significant run in many of these stocks.”

Nextpower and First Solar, both exposed to the utility-scale solar market, have seen shares surge. Nextpower recently expanded its business model to sell a variety of equipment for these projects, widening its market reach. First Solar, a solar panel manufacturer, will benefit from the manufacturing tax credit and restrictions on Chinese solar modules.

Residential solar, on the other hand, has had a more complicated year. The OBBB phased out tax credits for homeowners who own clean energy systems, mostly through loans, by the end of the year. The industry saw a wave of collapses this year with residential solar provider Sunnova and financing firm Mosaic filing for bankruptcy.

But not all residential solar developers have suffered the same fate. Sunrun, which leases solar panels to homeowners, can claim the commercial investment tax credit because it owns the systems. Investors have taken notice and the company’s shares have jumped 77 per cent this year.

SolarEdge is the primary equipment provider for the lease market and its shares are up 133 per cent. However, rival Enphase is exposed to the loan market, where customers own their rooftop solar systems. Its shares are down 62 per cent since the start of the year.

Some analysts expect potential growth in homeowner adoption of residential solar in the coming years as more households face higher electricity prices and grid resiliency issues, largely driven by a surge in data centres.

“Electricity prices are clearly trending higher and that then makes the proposition of going solar more economic,” said Osborne.

Barclays’ Cho agreed, adding that residential solar typically competes against utility prices. If utility prices rise, that makes residential solar more attractive. Rooftop solar can also help reduce reliance on the ageing power grid, providing backup electricity during outages that may become more common.

“The grid is looking like it’s going to be more unstable and with instability and outages, people want resilience,” she said. (Alexandra White)

Power Points

• A push by more than 80 countries for plans to quit fossil fuels at a divided UN COP30 summit in Brazil failed, as they conceded to a less ambitious agreement that kept global co-operation on climate alive.

• The UK has become the most expensive country to build a nuclear power station, according to a new government review that scrutinised what it described as the UK’s excessive focus on eliminating safety risks.

• Shell, Chevron, TotalEnergies, Eni and Repsol are returning to Libya to bid on its first auction of oil exploration licences in 18 years. The oil industry’s return to the country comes nearly 15 years after the overthrow of Muammer Gaddafi.

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Energy Source is written and edited by Jamie Smyth, Martha Muir, Alexandra White, Rachel Millard and Malcolm Moore, with support from the FT’s global team of reporters. Reach us at energy.source@ft.com and follow us on X at @FTEnergy. Catch up on past editions of the newsletter here.