Solar and clean energy stocks experienced a significant uptick on Wednesday after the first debate ahead of the USA’s upcoming November election.
The Invesco Solar ETF (TAN) rose by 6%, while the iShares Global Clean Energy ETF (ICLN) climbed by more than 3%. Despite these gains, both benchmarks have faced losses this year, with TAN down 24% and ICLN down 7.7%, due to ongoing uncertainty surrounding the election and its potential impact on the clean energy sector.
First Solar surged by 15.2%, SolarEdge saw an 8.5% rise, Sunnova advanced by about 6.2%, and Sunrun jumped 11.5%.
“We expect a near-term bounce towards Vice President Harris following the first debate with former President Trump, but the longer-term impact remains unclear,” said Raymond James analyst Ed Mills in a note to clients on Tuesday night.
Citi analysts noted that betting markets have shifted in favour of Harris, but only to levels seen before a recent New York Times/, Siena College poll gave former President Donald Trump a slight one-point lead in the race for the White House.
The upcoming election is viewed as a critical juncture for the energy transition, with some investors concerned that a Trump win could lead to the weakening or even repeal of the Inflation Reduction Act (IRA) if Republicans take control of both the White House and Congress.
Debate points
Trump, while discussing energy policy, criticised the Biden administration’s approach and claimed that if Harris wins in November, “fossil fuel will be dead.” He criticised both wind and solar energy but offered a cautious acknowledgement of clean energy initiatives.
“We’ll go back to windmills and we’ll go back to solar, where they need a whole desert to get some energy to come out,” Trump said. He added, “By the way, I’m a big fan of solar.”
During the debate, Harris addressed a statement she made in 2019 supporting a fracking ban, a stance she now appears to be walking back. Fracking has contributed to the U.S. natural gas boom, and under the Biden administration, both oil and natural gas production have reached record levels.
“I will not ban fracking,” Harris clarified during the debate. She also emphasised the administration’s investments in clean energy, supported by the IRA.
“I am proud that as vice president over the last four years, we have invested a trillion dollars in a clean energy economy while we have also increased domestic gas production to historic levels,” Harris said. She further highlighted how a clean energy economy has boosted investments in “American-made products, American automobiles.”
Analysts predict that if Harris wins, the current provisions of the IRA will likely remain in place. However, if Trump returns to the White House, they expect he may target specific aspects of the law, particularly tax credits for electric vehicles.
Trump’s views on solar energy remain somewhat ambiguous, although it’s worth noting that solar investments have disproportionately benefited districts represented by GOP members of Congress.
