Solar stocks retreated Tuesday after President Donald Trump issued an executive order on Monday ending subsidies for green energy sources. The Department of Energy released a corresponding report the same day warning of a major spike in blackouts by 2030 due to the retirement of coal-fired plants.
The White House on Monday released the new executive order that eliminates subsidies for "unreliable" green energy sources, like wind and solar. The order claims that such projects displace "affordable, reliable" dispatchable domestic energy sources, which "compromises our electric grid." Dispatchable energy sources include conventional energy sources like fossil fuels. President Trump's announcement claims that reliance on green subsidies threatens national security by making the U.S. dependent on supply chains controlled by foreign adversaries.
Energy Executive Order
"Ending the massive cost of taxpayer handouts to unreliable energy sources is vital to energy dominance, national security, economic growth and the fiscal health of the Nation," the order reads.
The executive order aims to eliminate taxpayer-funded green energy as well as support for green energy sources and supply chains built in or controlled by "foreign adversaries." The EO also builds on the One Big Beautiful Bill Act by strengthening repeals and modifications to wind, solar and green energy tax cuts.
The Secretary Of Treasury has been ordered to within 45 days terminate clean electricity production and investment tax credits for wind and solar facilities as part of the Internal Revenue Code. There are some additional "beginning of construction" revisions, including restricting safe harbor provisions unless a "substantial portion of a subject facility has been built."
During that time period, the Department of the Interior will determine if wind and solar facilities have been given any preferential treatment compared to dispatchable energy sources. The Secretary of the Interior will then revise any regulations or policies to eliminate any such preferences for wind and solar.
The Treasury and Interior departments will submit their findings to the president after the 45 day period in order to plan for the next steps.
Need For New Energy
Meanwhile, the Department of Energy released a report on Monday warning that blackouts in the U.S. could increase 100x by 2030 "if the U.S. continues to shutter reliable power sources and fails to add additional firm capacity." Firm capacity refers to natural gas plants, coal-fired plants and nuclear power plants, which do not rely on variable sources like wind and sunlight.
The department warned that the status quo is "unsustainable" with growing electricity demand from AI and data centers. The U.S. currently plans for 104 gigawatts (GW) of power generation plant retirements, to be replaced by 209 GW of new energy generation by 2030. But only 22 of those new GW come from what the DOE deems firm generation sources.
The DOE wrote this could lead to significant outages when weather conditions do not accommodate wind and solar generation. Wind and solar facilities increasingly use batteries and other energy storage strategies in order to save their generated power supply and extend availability.
The DOE's model predicts annual outage hours could increase from "single digits today to more than 800 hours per year." Even without retirements, the model found outage risks in "several regions" would rise more than 30-fold during the forecast period, meaning "the queue alone cannot close the dependable-capacity deficit."
Solar Stocks
Morgan Stanley in a Tuesday research note wrote that energy companies AES and NextEra Energy may be the most affected by the executive order, The Fly reported. The firm noted that the EO directs agencies to adjust construction guidelines for tax credit eligibility, implement FEOC restrictions and remove preferential policies for renewables from the Department of Interior. The order targets clean tech, solar stocks and other renewable developers the most, primarily AES and NextEra. It looks "less meaningful" for the likes of GE Vernova, Bloom Energy, Plug Power, First Solar and Fluence Energy.
RBC Capital analyst Shelby Tucker noted that the plan to curtail renewables does not come as a surprise following commentary from members of the House Freedom Caucus last week, according to The Fly. Tucker expects more pressure on the sector as the order leaves the solar industry in another state of limbo while awaiting the Treasury interpretation. Meanwhile, it is still unclear how the Trump administration plans to redefine the "beginning of construction."
Solar Stocks
Renewables and several other energy stocks trended lower Tuesday following the order.
AES stock fell nearly 4%. First Solar and Array Technologies both tumbled almost 7%.
NextEra slid 3%.
SolarEdge pared its Tuesday declines to around 1%, while GE Vernova eased slightly.
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