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Investing.com - Shares in solar power companies tumbled in premarket U.S. trading on Tuesday after a U.S. Senate panel released its version of a White House-backed fiscal package that included the phasing out of solar, wind and energy tax credits by 2028.
Solar inverter-maker Enphase Energy (NASDAQ:ENPH) slumped by more than 17% prior to the opening bell on Wall Street, while solar panel groups Sunrun (NASDAQ:RUN) and SolarEdge Technologies (NASDAQ:SEDG) shed roughly 31% and 24%, respectively. Peer First Solar (NASDAQ:FSLR) also dropped by over 12%.
A draft bill circulated on Monday, which is part of a massive budget proposal currently making its way through Congress, would phase out subsidies for solar and wind placed in a Biden-era law from 2026, reducing them to 60% of its value. The tax credits would then be eliminated entirely in 2028.
Under the current law, the subsidies would not begin to be phased out until 2032.
However, the Senate committee’s version of President Donald Trump’s so-called "One Big Beautiful Bill Act" would extend incentives for hydropower, geothermal and nuclear energy until 2036.
Republican Senator Mike Crapo, who heads the committee who unveiled the update of the bill, said the changes would eradicate hundreds of billions of dollars in clean energy subsidies that he described as unncecessary.
In a note to clients, analysts at Jefferies said that while the alterations in the Senate committee’s bill were "much better than" a version previously approved by the House of Representatives, they are "still restrictive."
The strategists flagged that, in order to qualify for all of the tax credits currently available, solar and wind projects would need to commence this year.
Senate Republicans are racing to approve their version of the tax-cuts and spending bill, with the aim of having it on Trump’s desk by July 4. The House must sign off on the Senate’s changes before the package can be signed into law.
(Reuters contributed reporting.)