The solar industry has made a strong recovery from May’s bottom with several solar stocks posting 40-60% gains over the past few weeks. Yesterday, Biden energized the solar industry with big announcements…
How it started: In 2018, Trump implemented tariffs on solar imports to make U.S. solar production more competitive. The tariffs had a big impact on China — which has ~80% market share on solar cell manufacturing.
- In March, the U.S. launched an investigation — suspecting Chinese companies of dodging tariffs by moving to Southeast Asian countries like Vietnam, Cambodia, Malaysia and Thailand.
- The investigation slowed imports which make up over half of the U.S. solar panel supplies — delaying or canceling over 300 U.S. solar projects.
Moving towards renewables is a top priority, but the investigation delayed solar projects at a critical time when energy costs are soaring.
In April, major U.S. renewable energy company NextEra (NYSE:NEE) said solar projects powering over a million homes wouldn’t be completed this year (NYT).
Change of plans: Yesterday, Biden ordered to pause new tariffs for two years, which doesn’t remove existing tariffs but prevents new tariffs from being implemented.
- The announcement benefits foreign exporters — but increases competition for domestic U.S. manufacturers
- To keep both parties happy, Biden invoked the Defense Production Act to support domestic manufacturers — speeding up manufacturing
Investors: The Invesco Solar ETF (NYSE:TAN) jumped over 30% since the solar industry hit lows on May 11, and since then:
- U.S. residential solar companies: Sunrun (NASDAQ:RUN) and Sunnova (NYSE:NOVA) are both up over 60%
- Chinese solar suppliers: JinkoSolar (NYSE:JKS) and Daqo New Energy (NYSE:DQ) are up ~60% and 42%, respectively
Rising material costs and supply chain issues have impacted the solar industry — sending it down over 20% from its 2022 peaks. Analysts are see the news as a “clear positive” — with the Biden administration expecting domestic solar manufacturing to triple by 2024.
