Solar stocks jumped on Thursday after Senate Majority Leader Chuck Schumer, D-N.Y., and Sen. Joe Manchin, D-W.V., said they’ve reached a deal on what would be the most ambitious climate spending package in U.S. history.
The “Inflation Reduction Act of 2022” includes $369 billion for clean energy provisions
“The entire clean energy industry just breathed an enormous sigh of relief,” American Clean Power CEO Heather Zichal said Wednesday evening.
“This is an 11th hour reprieve for climate action and clean energy jobs, and America’s biggest legislative moment for climate and energy policy,” she added.
The Invesco Solar ETF added 9.6% on Thursday morning. Residential solar installers Sunrun and Sunnova jumped 26% and 33%, respectively. SunPower gained more than 12%. SolarEdge and Enphase Energy each added more than 10%.
A strong start to earnings season also lifted the group. Sunnova shares jumped on Wednesday evening after the company topped revenue expectations during the second quarter.
Enphase meantime surged nearly 18% on Wednesday, making it the top-performing S&P 500 component. The company posted record revenue during the second quarter, boosted by strong demand out of Europe.
The announcement Wednesday evening from lawmakers comes after Sen. Manchin said earlier this month that he would oppose the climate spending in the reconciliation package, which sent solar stocks tumbling.
The solar industry — and renewable energy companies broadly — have faced a number of hurdles in recent months, including policy uncertainty. Supply chain bottlenecks and rising raw material prices have also impacted operations.
The bill, which the full Senate will consider next week, includes a 10-year extension of clean energy tax incentives. The Investment Tax Credit, which has been key to the industry’s growth and has typically garnered bipartisan support, was last extended in 2020. It was set to decrease at the end of this year.
Provisions for electric vehicles, hydrogen and nuclear power are also included in the proposed funding.