On Thursday, solar stocks rose after Senator Joe Manchin and Chuck Schumer, the Senate Majority Leader, announced that they had reached a deal on climate spending.
The said deal is the most ambitious package on climate spending to be seen in the history of the United States.
There is an amount of $369 billion included in the ‘Inflation Reduction Act of 2022’ which is for clean energy provisions.
On Wednesday evening, Heather Zichal, the CEO of American Clean Power, said that the whole clean energy industry was relieved to see this news.
The chief executive added that this was the biggest legislative moment in America for energy and climate policy and an 11th hour reprieve for clean energy jobs and climate action.
On Thursday morning, there was a 9.6% gain in the Invesco Solar ETF. Sunnova and Sunrun, the residential solar companies, recorded gains of 33% and 26%, respectively.
There was a more than 12% gain in SunPower. More than 10% gains were also recorded in Enphase Energy and SolarEdge.
The group also got a boost due to a strong start in the earnings season. On Wednesday evening, there was a rise in Sunnova shares after it exceeded revenue expectations for the second quarter.
Meanwhile, there was an 18% surge in Enphase, which made it the top performer for the S&P 500 index on Wednesday.
Thanks to strong demand in Europe, Enphase was able to post a record revenue in the second quarter.
Earlier this month, Senator Manchin had said that he would not support the climate spending proposals in the reconciliation package, which had resulted in a decline in solar stocks.
In recent months, the solar industry, along with other renewable energy companies, has had to deal with a number of hurdles.
These not only include policy uncertainty, but operations have also suffered because of rising prices of raw materials and supply chain bottlenecks.
Therefore, the announcement on Wednesday had come as a big relief for the entire sector.
The legislation in question will be considered next week by the full Senate. It includes an extension in the tax incentives for clean energy for the next 10 years.
The Investment Tax Credit had last been extended back in 2020 and has played a vital role in the growth of the industry and has also earned bipartisan support.
It had been scheduled for a decline by the end of the year. Moreover, the package also comprises of incentives given to domestic manufacturing.
On Thursday, there was a 19% gain recorded in the shares of solar panel makers Maxeon Solar and First Solar.
The proposed funding also includes provisions for nuclear and hydrogen power, along with electric vehicles.
Considering the energy crisis that the world is currently facing, especially because of the Russia and Ukraine conflict, there has been a greater demand for renewable energy.
With climate change impacts becoming more obvious, it is likely that the sector will undergo rapid growth.