SEDG - Why did First Solar stock soar today? Clean energy tax credit to bring added boost

2023-05-12 17:56:56 ET

First Solar ( NASDAQ: FSLR ) surged to the top of the S&P 500 Friday, +26.5% , leading a rally in solar stocks after the Biden administration issued new guidance on additional clean energy tax credits for manufacturers that source their components in the U.S.

The tax credits were part of the Inflation Reduction Act, but the new rule clarifies how much domestic content solar systems must use to qualify for a 10% bonus credit.

Some solar stocks jumped on the news, led by First Solar ( FSLR ), the biggest U.S. solar panel producer; other notable gainers in the group included NRG Energy ( NRG ) +5.6% , Enphase Energy ( ENPH ) +4.2% , NextEra Energy ( NEE ) +2.4% , SolarEdge Technologies ( SEDG ) +1.9% , Maxeon Solar Technologies ( MAXN ) +0.4% .

The IRA contains a 30% tax credit for renewable energy facilities such as solar farms, plus 10% of the project cost for using domestic content, but project developers have been awaiting clarification of how the 40% total cost should be calculated.

According to the new Treasury Department proposed guidelines, a combined 40% of the components that comprise the manufactured products in a typical solar energy facility - such as modules, trackers and inverters - must be American-made.

In effect, the solar cells could be made overseas so long as the domestic content cost threshold is met by other components in a facility's manufactured products.

First Solar ( FSLR ) also announced an acquisition of European thin film company Evolar, which it said would boost its technological position in the space.

More on First Solar:

• Financial and valuation comparisons to sector peers
• Analysis: First Solar: 180% Rally In 9 Months Has Priced In Anticipated Growth Tailwinds
• Stock price return: Up 58.5% YTD, up 277% in the past 12 months

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