How are energy investors positioned?
Investing.com - Shares in First Solar (NASDAQ:FSLR) gained in premarket U.S. trading on Monday, as analysts suggested that the solar-panel manufacturer may have been one of only renewable-energy winners in the Senate’s proposed sweeping tax-cuts and spending package.
Republicans in the U.S. Senate have voted to begin debate over their version of the massive "One Big Beautiful Bill Act," even as President Donald Trump’s signature legislative agenda faces holdouts from inside the GOP and staunch Democratic opposition.
The measures, which a nonpartisan forecaster said could add around $3.3 trillion to the country’s ballooning $36.2 trillion debt pile over the next decade, are widely tipped to be passed by the upper chamber of the U.S. Congress, potentially as early as Monday.
Among a variety of initiatives, the bill would extend tax cuts first put in place by Trump in 2017, slash other taxes and increase spending on defense and border security.
Meanwhile, the Senate’s version would slap new taxes on wind and solar projects completed after 2027 that utilize some foreign components.
Wind and solar projects would also only qualify for certain current tax incentives if they begin before the final day of 2027. Last week, the text of a bill from a Senate committee included a phaseout of tax credits based on the start date of construction, but did not include a hard deadline for any project placed in service after 2027, analysts at Wolfe Research flagged.
"[This] is a major negative surprise for renewables developers, making this even more restrictive" than a separate version previously passed by the House of Representatives, the analysts said in a note to clients.
However, the strategists noted that the Senate’s update would make subcomponents in renewable projects eligible for tax credits if they are produced in the same facility as the larger component into which they are integrated and at least 65% of the total costs of the larger component are domestic.
"[A}t first blush, it looks like this should/is intended to fix the issue for First Solar while still limiting cell credits for some battery module manufacturers," they wrote.
First Solar shares advanced by more than 7% prior to the opening bell on Wall Street.
Senators now likely face hours of debate before beginning a voting session on amendments to the legislation -- a step which could then be followed by a vote on full passage. The bill would next need to be approved by the House.
GOP lawmakers in Congress are pushing to have the package on Trump’s desk ready for signing by a self-imposed July 4 deadline.