MW First Solar and other solar stocks are climbing. A House proposal has hit the 'more bullish end of investor expectations.'

By Victor Reklaitis

But the proposal is not encouraging for the nuclear industry and EV makers

A new proposal in Congress was helping spark gains for solar stocks on Tuesday, but the plan from the House Ways and Means Committee was viewed as negative for the nuclear-power industry and makers of electric vehicles.

The committee released its contribution on Monday for a big tax and spending package that President Donald Trump and his fellow Republicans are working to enact this year.

The committee's blueprint "aligns with, or exceeds, the more bullish end of investor expectations" for solar-power providers and some other power providers, said J.P. Morgan analysts in a Tuesday note.

It's "a clear positive against very low expectations, though we caution that the bill is merely the first step in the process and that potential changes are still possible as the bill navigates broader Congress," the analysts also said. There have been longstanding expectations that Democrats' big climate and healthcare law from 2022 - the Inflation Reduction Act - could be getting rolled back, at least partially, this year.

Among solar stocks, panels maker First Solar Inc. $(FSLR)$ recently was up 20%, as shares also benefited from an upgrade to outperform from Wolfe Research. Shares in two companies that make products used in solar projects - Array Technologies Inc. (ARRY) and Nextracker Inc. $(NXT)$ - jumped 21% and 8%, respectively.

In the House committee's proposal, a credit that's important for solar companies "was tweaked at most," said Christopher Niebuhr, a senior research analyst at Beacon Policy Advisors. The credit would phase out basically a year earlier than it would have under the IRA, and there are some additional proposed restrictions on foreign entities of concern, Niebuhr told MarketWatch.

On the other hand, the House committee's proposal aims for a rather quick phaseout for credits that are important for nuclear-power production and other power sectors, the Beacon analyst said.

Analysts at Jefferies also highlighted the hit for the nuclear-power industry. "Nuclear has been bipartisan and was expected to be intact, so the phaseout is one of the most adverse surprises from the draft," they said in a Tuesday note. It's negative primarily for Constellation Energy Corp. $(CEG.UK)$, Vistra Corp. $(VST)$, Talen Energy Corp. $(TLN)$ and Public Service Enterprise Group Inc. $(PEG)$, according to the Jefferies team. Those stocks were recently trading mostly higher on Tuesday afternoon.

There have been expectations that Trump and congressional Republicans would kill the IRA's $7,500 tax credit for buyers of electric vehicles at the end of this year, and that's exactly what the House committee has proposed. There is a reprieve for carmakers who have sold less than 200,000 EVs, however; they're due to have their customers continue to qualify for the credit for an extra year, meaning until the end of 2026.

-Victor Reklaitis

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May 13, 2025 14:33 ET (18:33 GMT)

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