Shares of renewable energy companies plunged after Donald Trump won a second term as US president on a platform promising to boost fossil fuels and undo his predecessor’s green agenda.
U.S. clean energy stocks suffered in premarket trading in New York, especially solar companies. Sunnova Energy fell more than 23%, while First Solar and green hydrogen equipment maker Plug Power each fell about 14%.
“Trump back in the White House is not what any U.S. clean energy company would like,” said Raymond James analyst Pavel Molchanov.
The president-elect promised to attack wind efforts offshore of the USA as one of his first measures after taking office. During the campaign, he also promised to lift restrictions on domestic fossil fuel production and said he plans a wide range of tariffs on imported goods. This could increase inflation and eventually lead the Federal Reserve to raise interest rates, making investments in renewable energy more expensive.
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At the same time, while Molchanov expects higher tariffs on imported solar panels to hurt American companies in the sector, he doesn’t see Trump or Republicans getting rid of clean energy tax and investment credits since they are widely appreciated.
“I’m pretty optimistic about the incentives being maintained no matter what,” he said.
Across the Atlantic, Danish wind energy companies Orsted and Vestas Wind Systems also fell, as did Germany’s RWE and Italy’s Enel.
“The world has changed in the last 24 hours,” wrote Rob West, CEO of research firm Thunder Said Energy, in an emailed note. “The momentum behind many energy transition themes is waning in 2024. It is now harder to see a reacceleration.”
A second Trump term would be a stark contrast to the presidency of Joe Biden, who has set an aggressive goal to decarbonize the nation’s power grid, pledged to reach 30 gigawatts of offshore wind power by 2030, and introduced sweeping climate legislation that favored energy sources. renewable energy.
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Citigroup analyst Jenny Ping said in a note that she considers offshore wind to be “potentially riskier” compared to other renewable technologies. These parks require federal approvals and are particularly vulnerable to executive action. It is still possible that the renewable energy sector will expand significantly under Trump, as it did during his first term.
“We expect initial sentiment to take a hit across the renewable energy sector, but we expect it to be short-lived as the market would likely view this as a buying opportunity for stocks that already reflect little in terms of growth,” Ping said.
