Senate Passes Inflation Reduction Act, Solar Stocks Surge 5.2% to 12.5%

The United States Senate has passed the final version of the Inflation Reduction Act, commonly referred to as the "Big Beautiful" bill, without including a controversial provision that would have imposed new taxes on imported components used in wind and solar energy projects. This development has brought a sigh of relief to the clean energy industry, which had expressed concerns about the potential financial burden of the proposed tax.

The initial draft of the bill, which was circulated over the weekend, included a provision that would have levied a new consumption tax on wind and solar projects that use specific imported components. This tax was projected to increase costs for clean energy companies by 400 million to 700 million dollars over the next decade. The final version of the bill, however, does not include this tax, which has been welcomed by industry stakeholders.

The Senate voted 51 to 50 in favor of the bill on July 1, with the final version omitting the tax on wind and solar projects. This decision has been met with relief from the clean energy sector, which had been bracing for the potential financial impact of the proposed tax. The American Clean Power Association had estimated that the new tax could have increased the cost of wind and solar energy projects by 10% to 20%.

The removal of the tax provision has had a positive impact on the stock market, with shares of companies in the solar energy sector experiencing significant gains. Sunrun, a residential solar installer, saw its stock price rise by more than 10% during midday trading. Array Technologies, a manufacturer of solar trackers, and Nextracker, another solar tracker manufacturer, also saw their stock prices increase by 12.5% and 5.8%, respectively. NextEra Energy, the largest renewable energy developer in the United States, saw its stock price rise by 5.2%.

The final version of the bill also includes provisions to accelerate the phase-out of clean energy tax credits, which has been a point of contention for the industry. Despite the removal of the tax on imported components, some industry groups have expressed caution, noting that the bill still contains provisions that could be harmful to the renewable energy sector.

The Solar Energy Industries Association (SEIA) has warned that the improvements made to the final version of the bill are limited and that the overall impact of the bill on renewable energy remains negative. The SEIA has expressed concerns that the bill could lead to higher electricity costs for American households, the closure of manufacturing facilities, and job losses in the renewable energy sector. The association has also raised concerns about the potential impact of the bill on the resilience of the U.S. power grid.