Elsa Ohlen and Avi Salzman

Solar stocks were plummeting on Thursday as President Donald Trump's tax-and-spending bill narrowly passed in the House of Representatives, threatening the huge tax benefits granted to clean-energy companies during the Biden era.

Solar equipment maker Enphase Energy was the worst performer in the S&P 500 index, down 16% in early trading. NextEra Energy, the largest publicly traded developer of renewable projects in the country, dropped 7.8%.

Shares of rooftop solar developer Sunrun plunged 39%.

The bill would wind down tax credits from President Joe Biden's Inflation Reduction Act early, and change some rules that could make it nearly impossible for many projects to qualify. Those credits can be worth up to 50% of a project's value. The new rules would also restrict tax credits for projects that use material from suppliers in China, the largest manufacturer of solar products in the world.

"[The] latest draft represents among the most restrictive interpretations we have heard speculated and the closest to 'complete' gutting of [the] bill we've ever seen," Jefferies analyst Julien Dumoulin-Smith wrote early Thursday. It isn't clear whether the Senate will pass a more lenient version, he said.

The bill is a mixed bag for First Solar, the largest U.S. manufacturer of solar modules, because while the tax-credit rules will depress demand for its products, restrictions on Chinese goods could help the company. The stock fell 4.7%.

The bill now moves to the Senate.

Many solar stocks were struggling even before Trump returned to the White House because high borrowing costs were cutting into demand for residential solar projects.

BMO analyst Ameet Thakkar downgraded Sunrun stock to Underperform from Market Perform Thursday. The analyst cut BMO's target for the price to $4 from $9 in response to the possibility that the tax bill will become law, removing the company's ability to claim the tax credits.

Coming into Thursday trading, Sunrun stock had already fallen 11% in the past 12 months. First Solar stock has lost 35% over the same period while Enphase has plunged 60%.

Write to Elsa Ohlen at elsa.ohlen@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

May 22, 2025 10:34 ET (14:34 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.