Uncertainty Surrounds Clean Energy Stocks Post-Election

Investing.com – Uncertainty clouds the outlook around clean energy and sustainability stocks after the US presidential election, according to analysts at Bank of America.

Trump, the Republican candidate, secured an overwhelming victory over Democratic rival Kamala Harris, while his party also won a majority in the Senate, the upper chamber of the US Congress. The outcome of the House of Representatives remains undecided, although Republicans are close to holding a majority in the lower chamber as well.

Shares in clean energy stocks, including Enphase, a manufacturer of solar micro-inverters and battery energy storage, and renewable power firm SolarEdge (NASDAQ:SEDG), both slid sharply on Wednesday as election results emerged.

In a note to clients, the Bank of America analysts led by Dimple Gosai indicated that the specific policy approach Trump's administration will take to clean energy in his second term remains unclear. They anticipate that there will likely be "reduced sector support and lower sentiment" until more details are provided by the new administration. However, they argued that Trump will likely aim to alter the Biden-era Inflation Reduction Act, which offers grants and loans to clean energy companies, and increase tariffs, potentially leading to inflated project costs.

These potential changes heighten the risk of significant sector impact. The uncertainty surrounding the future of federal support could make it harder for utility-scale solar developers to secure financing, increasing risk premiums and capital costs. In their view, utility-scale solar would still grow, supported by a strong pipeline—especially in states with strong RPS mandates—but at a slower pace.

Enphase and SolarEdge were highlighted by the analysts as two companies potentially at risk from a reduction in federal support.

In separate notes on Thursday, analysts at Jefferies downgraded their rating of Enphase to "Underperform," while analysts at Piper Sandler lowered their outlook for SolarEdge to "Underweight."