Renewable energy stocks slide as Senate eyes tax-credit rollbacks

U.S. Senate Republicans have reversed course on clean-energy incentives and credits, opting for tougher provisions added to the White House’s “One, Big Beautiful Bill” (OBBB) that recently cleared the House of Representatives. President Trump has called for a July 4 deadline for Congress to agree and pass the legislation.

Initially, the Senate had included legislative language that delayed solar and electric-vehicle rollbacks. Over the weekend, Senate Republicans pivoted to harsher mandates, including the elimination of the 45Y clean energy production tax credit and 48E clean energy manufacturing credits by September 30, 2027.

Additionally, the Senate’s latest version of the OBBB bill added a tax on wind and solar energy initiatives launched after 2027 if China contributed a specific level of renewable project supplies.

The new Senate bill takes an axe to popular tax credits for clean energy initiatives in the EV, home efficiency, and manufacturing sectors. Here’s a breakdown:

• Under the legislative changes, wind and solar tax credits are pegged to be repealed immediately. Also, the new taxes on wind and solar projects, coupled with the elimination of sector tax credits, could curb expected new wind and solar capacity by 50%, according to the advocacy group Evergreen Action.
• EV tax credits are also on the Senate chopping block, particularly for new and used vehicles, commercial EV’s, and fueling and charging infrastructure.
• As proposed, the legislation also curbs tax credits for residential homes and commercial buildings that made them more energy efficient. Those cuts will “take money out of the pockets of Americans who rely on these credits but also add more pressure to the electric grid,” Evergreen Action said.

High profile clean energy advocates were quick to condemn the new legislation.

On X, Tesla founder Elon Musk said the latest Senate draft bill “will destroy millions of jobs in America and cause immense strategic harm to our country! Utterly insane and destructive. It gives handouts to industries of the past while severely damaging industries of the future.”

The clean energy advocacy group American Clean Power weighed in, declaring in a June 28 statement the legislation would lead to “new taxes that would freeze energy investments, reduce domestic energy production, and drive-up household energy bills.”

The timing of the Senate bill is under scrutiny, too.

“In what can only be described as ‘midnight dumping,’ the Senate has proposed a punitive tax hike targeting the fastest-growing sectors of our energy industry,” the ACP noted. “It is astounding that the Senate would intentionally raise prices on consumers rather than encouraging economic growth and addressing the affordability crisis facing American households.”

Senate Republicans defended the updated bill, with Wyoming Sen. John Barrasso stating that “under Joe Biden, energy prices rose 31%."

Barrasso said the draft bill can cut prices “by opening up American energy production onshore, offshore, and in Alaska."

"America is an energy superpower,” Barrasso added. “Once again we're going to act like it.”

Clean energy stocks were largely in decline in Monday trading, with bellwether companies losing steam on Wall Street.

Solar battery provider Enphase fell 2.3% and utilities giant Nextra Energy saw its shares fall by 4%. Meanwhile, the iShares Global Clean Energy ETF (ICLN), with $2 billion in assets under management, traded flat for the day, at an 0.05% gain.

Analysts say some clean energy stock declines were baked into the mix weeks ago, when Congress began debating the bill.

"I think that in general, we will see a mild reaction in the market today. So many of these stocks have already been pressured when the earlier versions of the bill came out, in both the House and Senate, over the past six weeks." said Raymond James analyst Pavel Molchanov in a research note.