Arizona-based solar energy company First Solar's (NASDAQ:FSLR) stock climbed by over 20% Friday morning. A few other domestic solar companies moved higher too, including New Mexico’s Array Technologies, which gained 16%, and California’s Enphase Energy (NASDAQ:ENPH), up 3%.
Gains were tied directly to positive changes in U.S. tax law for solar energy companies after the Department of the Treasury released guidance for the implementation of the Inflation Reduction Act’s (IRA) domestic content provisions.
"The IRA’s domestic content incentive represents a monumental opportunity to continue growing our domestic clean energy supply chain. This guidance will help provide clarity around its eligibility requirements, unlocking billions of dollars of investment in American clean energy manufacturing and its workforce," said the American Clean Power Association in a statement.
Roth MKM analysts explained more about the changes, "To qualify for the 10% domestic content adder, a project will need -- it appears -- cell plus module."
They pointed to this language included in the new domestic content guidance:
"A Manufactured Product is considered to be produced in the United States (U.S. Manufactured Product) if: (1) all of the manufacturing processes for the Manufactured Product take place in the United States; and (2) all of the Manufactured Product Components of the Manufactured Product are of U.S. origin."
They said checks this morning with industry contacts post-release indicate there is no grace period for foreign-produced cells. Overall, this is seen as a meaningful positive for First Solar.
"Look for the stock to be up and the company to announce more capacity expansion soon," said the analysts.