Shares of First Solar and SunPower, the two major U.S. solar makers, crashed on Monday (December 4) local time after the U.S. Senate passed tax cuts over the weekend. Because the tax reform will make the financing of renewable energy projects to further increase.
First Solar on Monday, the United States dropped 6.9%, the largest intraday decline in more than a month. SunPower fell 7.6%, Bloomberg global solar index (16 companies) fell 3.2%.
Bloomberg said the Senate tax reform plan could stifle the tax-stock market, which is the main source of renewable energy financing. It includes provisions that levy the minimum tax on foreign transactions of multinational corporations. In tax-equity deals, renewable energy developers sell tax credits for some of their projects to big banks and insurers, which can use credit for their own tax bills.
In a research note, Brian Lee, an analyst with Goldman Sachs Group, said in a research note that the rule "will in some cases effectively affect the tax rebate credit up to 100%, resulting in a significant reduction in value." "It may have implications for the United States Of the wind energy, the main source of funding for solar projects have a negative impact. "
On Monday, other solar companies also fell sharply, with Canadian Solar dropping 9.9% and shares of Crystal Energy, the world's largest maker of solar panels, plunged 7.6%.
The main goal of Trump's tax reform is to lower corporate interest rates, which may further reduce the interest of large multinationals in tax credits for investing in wind energy and solar developers.
Ben Kallo, an analyst with Robert W. Baird & Co., said in a research note that "the tax financing available for tax equity may decline as a result of lower tax rates, which may have a negative impact on First Solar and SunPower."