Why Solar Stocks Are Surging Today

Solar stocks are surging after the Treasury Department released guidance on the kind of projects that can qualify for clean energy tax credits that was less restrictive than investors feared.

Shares of First Solar (FSLR) were up over 9% in recent trading, making it the best-performing stock in the S&P 500 Monday behind Dayforce. Sunrun (RUN) shares jumped close to 8%. Enphase Energy (ENPH) and SolarEdge (SEDG) shares added about 5%.

The “One Big Beautiful Bill” signed by President Donald Trump last month is set to phase out tax credits for new wind and solar projects unless they begin construction by July 4, 2026, and Friday’s guidelines narrow how projects started on or after Sept. 2 can qualify.

Before, developers could claim tax credits as long as they had spent at least 5% of the project cost and could finish construction in four years. The latest guidance eliminates that 5% “safe harbor” rule for larger projects, but preserves it for smaller ones like rooftop installations. Big projects can still qualify, however, if “physical work of a significant nature” is undertaken.

Analysts Say Latest Guidance Avoids ‘Worst Case Scenario’

“After weeks of speculation and market coalition around a higher hurdle on both the 5% rule + physical work rule, today’s guidance was surprisingly light on changes,” Jefferies analysts wrote Friday, and called it a “clear win” for residential solar. “Many were anticipating a ‘worst case’ scenario including retroactivity to as early as Jan. 1st and even the continuity [safe harbor] window narrowing from 4-years to 2.5-years.”

Citi called Friday’s guidance “better than anticipated,” as it wasn’t retroactive like some investors had feared. There had also been concerns that the 5% investment requirement would be raised to more than 10% to qualify, they wrote.