By Avi Salzman

The latest moves in renewable-energy stocks show how bad news can be good news, as long as it isn't as negative as feared.

Renewable-energy stocks including First Solar and Vestas Wind Systems were rising sharply on Monday, adding to gains from Friday because of new rules for tax credits from the Treasury Department. The regulations give companies that want to install solar and wind projects a window of opportunity to receive the credits before the Republican tax bill's limits kick in.

First Solar, America's largest manufacturer of solar modules, rose 8.8% on Monday, after jumping 11% on Friday. That put it on track to close at its highest level since October, before President Donald Trump was elected.

NextEra Energy, a major renewable project developer, was up 1.3% after rising 4.4% on Friday. Vestas, which makes wind turbines, soared 13%. Sunrun, America's largest residential solar developer, rose 8.4%.

The gains in the stocks came after the Treasury Department, responding to an executive order from Trump, tightened rules on how companies can become eligible for tax credits. The shares rose because the change wasn't as draconian as it could have been.

The tax bill that Trump signed in July took away tax credits for wind and solar projects that amounted to 30% of a development's value. But the bill allowed for a transition period before those credits fully disappear.

As long as a project could "begin construction" within a year of the bill's passage, it could still be eligible for credits. Under so-called safe harbor rules that had existed since 2013, companies could qualify by buying 5% or more of the equipment for a project, or by starting a significant amount of construction.

The new rules will no longer allow companies to qualify by simply buying equipment. They will need to show that they have started construction. But the rules for reaching a "significant" amount of construction appear to be similar to the old rules, an indication that companies won't need to vastly accelerate their work to qualify. And it gives companies four years to finish a project and place it in service from when it starts construction.

Companies can still qualify for the old rules until Sept. 2, a window that will help any company that had already stockpiled equipment. Nextera, for instance, said on its latest earnings call that it had already been preparing aggressively for the new regime, and should be able to qualify its projects under the safe harbor rules until at least 2029.

"The guidance is manageable, especially given its effective date in September," wrote Heather Cooper, a lawyer at McDermott Will & Emery who works with clean energy companies, in an email.

Speaking more broadly, the outlook is mixed. For companies installing a lot of solar energy, the overall regulatory picture is positive. Trump is no fan of solar, but his administration is expected to allow most projects to proceed.

For wind power, the road ahead looks trickier. The Interior Department is imposing much more stringent reviews of wind projects. The department said that it considers wind power unreliable and is investigating how the turbines kill birds.

Wind energy is the largest source of utility-scale renewable power in the U.S., but installations had already been declining in the past few years, in part because of the slow process to connect projects to the grid. The next few years could be even slower.

Write to Avi Salzman at avi.salzman@barrons.com

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August 18, 2025 12:34 ET (16:34 GMT)

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