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On Thursday, JPMorgan provided insights into the potential impact of the latest U.S. House of Representatives’ amended budget reconciliation bill on the clean energy sector. The bill, which has seen significant changes from its initial proposal, could have substantial effects on companies like First Solar, Inc. (NASDAQ:FSLR), currently valued at nearly $1 billion with a remarkable 554% return over the past year, and residential solar installer Sunrun Inc . (NASDAQ:RUN). According to InvestingPro data, First Solar has shown significant market momentum, with analysts maintaining a strong buy consensus.
The House recently passed an amendment that would remove Investment Tax Credit ( ITC (NSE:ITC)) and Production Tax Credit ( PTC (NASDAQ:PTC)) for clean energy projects starting construction 60 days after the bill’s enactment. Projects must be operational by December 31, 2028, to qualify for the credits. This represents a significant shift from the previous language, which allowed full credit allocation through 2028 with a gradual phase-out by 2031. First Solar’s strong financial health score from InvestingPro suggests it’s well-positioned to navigate these regulatory changes, trading at 7.3 times book value. As a result, there could be a rush of orders for equipment manufacturers as developers aim to finish projects by the 2028 deadline. Utility-scale projects are expected to benefit more than residential solar projects due to longer construction timelines.
The amendment also brings forward the enforcement of restrictions on projects with material assistance from foreign entities of concern (FEOC) to the end of 2025, as opposed to one year after the bill’s passage as previously proposed. This could provide a competitive edge to companies like First Solar, which is expected to derive around 60% of its estimated earnings over the next two years from 45X manufacturing credits and faces less impact from FEOC limitations.
However, the bill’s amendment would immediately end the transferability of credits, a mechanism that accounts for roughly half of the approximately $40 billion U.S. tax equity market. Equipment manufacturers, including FSLR, may now need to utilize the "direct pay" process for 45X credits, which allows them to apply credits to the following year’s tax filings.
The amendment does offer an exemption for advanced nuclear facilities, requiring construction to begin by the end of 2028 to qualify for credits. This could prove challenging for many planned Small Modular Reactor (SMR) projects in the U.S., although General Electric ’s (NYSE:GE) SMR project with the Tennessee Valley Authority is on track to start construction in 2026.
The new legislation’s impact on the clean energy sector will likely be closely monitored in the coming days as investor focus shifts to the Senate, where the outcome remains uncertain despite some Republican support. With First Solar’s next earnings report due in just 6 days, InvestingPro subscribers can access comprehensive analysis tools and additional insights to evaluate the company’s potential under these changing market conditions. InvestingPro’s Fair Value analysis suggests the stock is currently fairly valued, with analysts setting price targets between $45 and $50.
In other recent news, NANO Nuclear Energy Inc. has announced a collaboration with the Massachusetts Institute of Technology to initiate a comprehensive irradiation testing program. This two-year project is backed by a $500,000 R&D investment from NANO Nuclear and aims to explore the behavior of nitrate molten salts under nuclear conditions. Additionally, NANO Nuclear has completed its multimillion-dollar demonstration and testing facility in Westchester County, New York, designed to support the development of its microreactors, including the ZEUS™ model. The U.S. Nuclear Regulatory Commission has also issued a final Safety Evaluation for the Fuel Qualification Methodology related to the KRONOS microreactor, marking a significant regulatory milestone for the company.
Furthermore, NANO Nuclear is expanding its team to support the construction and regulatory efforts for its KRONOS microreactor systems in the U.S. and Canada. This recruitment drive is aimed at professionals across various engineering and project management disciplines. The company plans to construct a demonstration reactor in Canada, which will undergo the licensing process under the Canadian Nuclear Safety Commission. Meanwhile, the U.S. government is considering executive orders to accelerate nuclear power plant construction, which could benefit companies like NANO Nuclear. These developments underscore NANO Nuclear’s ongoing efforts to advance its nuclear technology projects.
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