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Investing.com -- Shares of solar energy companies took a hit in today’s trading session, with Sunrun Inc (NASDAQ:RUN) down 8.2%, First Solar Inc (NASDAQ:FSLR) down 5%, Enphase Energy Inc (NASDAQ:ENPH) falling 3.1%, SolarEdge Technologies Inc (NASDAQ:SEDG) dropping 4%, and Array Technologies Inc (NASDAQ:ARRY) sinking 4.4%. The sector’s decline follows reports that Republican lawmakers have reached an agreement to potentially terminate key clean-energy tax credits earlier than expected.

The move is part of a broader strategy to advance President Trump’s tax and spending plans. Representative Ralph Norman, hinting at the developments on X, stated, "Yes, we’re putting an end to the Green New Scam subsidies." These "subsidies" refer to the financial incentives associated with the Green New Deal, a proposal aimed at transitioning the U.S. to 100% clean energy within a decade. The deal has been a significant driver for the solar industry, relying on tax credits like the Investment Tax Credit ( ITC (NSE:ITC)) or Production Tax Credit ( PTC (NASDAQ:PTC)) to help solar companies compete with fossil fuels.

The proposed changes have stirred concerns among investors about the future profitability and growth of solar energy companies, which have benefited from these subsidies to offset installation costs. The potential early termination of these tax credits could lead to increased operational costs for solar companies and slow down the adoption of clean energy technologies.

The market’s reaction reflects the importance of these subsidies for the solar sector’s financial health and expansion. As the political landscape shifts, solar companies may face a challenging environment, with the need to adjust their strategies in response to changing government policies.

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