Senate budget plan 'very bearish' for renewables, says Morgan Stanley

Investing.com -- The latest draft of the Senate’s budget reconciliation bill could deal a significant blow to the renewable energy sector, with Morgan Stanley calling the changes “very bearish for renewables.”

According to the bank, the bill “would be meaningfully more bearish for renewable developers (AES (NYSE: AES) and NEE),” citing the proposed early elimination of critical tax credits.

If passed in its current form, the legislation would represent a “worst case outcome” for companies like NextEra Energy (NYSE: NEE) and AES, Morgan Stanley warned.

Among the most damaging provisions is said to be the update to the Investment Tax Credit (48E), which would require wind and solar projects to be placed in service by 2027, “a potentially challenging environment for developers already in the development process,” the analysts said. The Production Tax Credit (45Y) mirrors these changes.

While most of the bill is negative for solar and wind, Morgan Stanley identified some bright spots.

The bank said Bloom Energy (NYSE: BE) stands to benefit from a new fuel cell tax credit, and companies like Sunrun (NASDAQ: RUN), SolarEdge (NASDAQ: SEDG), and Enphase Energy (NASDAQ: ENPH) gain from a short-term extension of residential solar tax credits through 2027.

First Solar (NASDAQ: FSLR) receives a mixed outcome, as “some stacking of manufacturing tax credits” is allowed, but this is “partially offset by the earlier elimination of 48E and 45Y.”

Morgan Stanley also highlighted the reintroduction of Foreign Entity of Concern (FEOC) rules, now backdated to June 16, 2025.

With a Senate vote possible as soon as tomorrow, Morgan Stanley cautioned that unless amended, the bill “could be highly disruptive for the industry.”

You May Also Be Interested In

• Trump On Iran War: Don't Think It'll Be Much Longer
• South Pacific Metals Corp. Provides Clarifying Disclosure Regarding Marketing Agreement with i2i Marketing Group, LLC
• Sell Recreational Cannabis as "Medicine"- Federal Class Action Alleges a "Concerted Campaign"