Microvast Holdings announces departure of chief financial officer
On Thursday, Roth Capital Partners (WA:CPAP) provided an analysis of the latest manager’s amendment to the budget reconciliation bill, which could have significant implications for the solar industry. The amendment, issued by the House Rules Committee on May 21, 2025, contained unexpected provisions that were seen as more challenging than initially anticipated, particularly for residential solar companies.
The amendment proposed denying residential leasing companies the Investment Tax Credit ( ITC (NSE:ITC)) under Section 48E, combined with an immediate end to the Section 25D credit for homeowner residential solar installations starting January 1, 2026. This change could potentially disrupt the residential solar industry. Companies like Sunrun Inc . (NASDAQ:RUN), Enphase Energy Inc . (NASDAQ:ENPH), and SolarEdge Technologies Inc . (NASDAQ:SEDG) could be adversely affected, along with the broader residential solar ecosystem. Enphase, currently valued at $6.2 billion, has already experienced significant headwinds with a 31% decline year-to-date. According to InvestingPro analysis, the company maintains strong liquidity with a current ratio of 1.9, though it trades at a relatively high P/E multiple of 42.5.
For utility-scale solar, the amendment suggested that the ITC (48E) and the Production Tax Credit ( PTC (NASDAQ:PTC)) under 45Y would not phase out as previously expected but would instead be completely eliminated for projects not in service by the end of 2028. The amendment also introduced a construction start requirement within 60 days of the bill’s enactment.
Additionally, the amendment stated that no 48E or 45Y credits would be allowed for projects that either start construction later than 60 days after enactment or are placed in service after December 31, 2028. The ITC adders, which include domestic content, energy communities, and low-income adders, seem to remain unchanged and would also be eliminated for projects not in service by 2028.
The amendment also included a "denial of credit" for residential solar leasing arrangements under 48E and 45Y, where no credit would be allowed if the taxpayer rents or leases to a third party or if the lessee would qualify for 25D themselves if they owned the property. The construction start date for "material assistance" under the Foreign Entities of Concern (FEOC) language was changed from "one year after the date of the enactment" to "after December 31, 2025," giving companies less time to adjust.
Transferability for the 45X tax credits would be eliminated upon the enactment of the legislation, which contrasts with the previous language that would end transferability two years after enactment. It appears that transferability for 48E and 45Y would also be eliminated two years after enactment, aligning with the first draft of the House bill.
Despite these challenges, the 45X credits and phase-downs remain unchanged, which is a positive development for First Solar, Inc. (NASDAQ:FSLR). For Enphase, InvestingPro data reveals concerning trends, with revenue declining 22% in the last twelve months. However, the company maintains robust operational efficiency with healthy profit margins. InvestingPro subscribers have access to over 15 additional key insights and detailed financial metrics for ENPH, available in the comprehensive Pro Research Report.
As the Senate considers the bill, insiders suggest there may be some improvements, but the overall structure is unlikely to resemble current law. The Senate parliamentarian will play a crucial role in the process, and while some adjustments are expected, such as potentially cleaning up the FEOC rules and extending the transition period, the Senate will also need to pass their bill through the House, which limits the scope of changes that can be made. Based on InvestingPro’s Fair Value analysis, ENPH currently appears undervalued despite market challenges. Investors seeking deeper insights into solar industry stocks can access comprehensive analysis and real-time valuations through InvestingPro’s advanced stock screener and detailed research reports.
In other recent news, Enphase Energy has initiated the shipment of its IQ8™ Microinverters to Japan, partnering with ITOCHU Corporation. This move aligns with Tokyo’s new mandate requiring rooftop solar on all new homes by large-scale builders from April 2025. Meanwhile, Enphase Energy has faced several downgrades from financial analysts. BMO Capital Markets downgraded Enphase’s stock from Market Perform to Underperform, reducing the price target to $39, citing potential policy changes affecting the solar sector, particularly the termination of the Section 25D Residential Clean Energy Credit. Barclays (LON:BARC) also downgraded Enphase from Overweight to Underweight, setting a new price target of $40 due to anticipated shifts in the residential solar market structure. RBC Capital Markets adjusted its price target for Enphase to $50, maintaining a Sector Perform rating, while noting concerns about the early termination of 25D credits. These analyst actions reflect uncertainties in the solar market and potential impacts on Enphase’s future demand and market share.
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