New U.S. tax policies propose to tighten subsidies for the "windfall" subsidy, causing Danish energy giant Orsted and the U.S. solar panel sector to collectively slump.

On Monday, the stock price of Danish energy giant Orsted A/S (DNNGY.US) plummeted, while most US CECEP Solar Energy concept stocks also saw declines in pre-market trading. This volatility was sparked by the latest tax and spending bill draft released by the US Senate, which proposes stricter adjustments to renewable energy tax incentives. Data shows that Orsted A/S dropped 4.2% at the opening of the Copenhagen stock market, while SolarEdge Technologies (SEDG.US), Nextracker (NXT.US) saw pre-market drops of over 7%, and Sunrun (RUN.US), Shoals Technologies (SHLS.US), and Enphase Energy (ENPH.US) dropped over 5%. According to the revised bill announced last Friday night, wind and CECEP Solar Energy projects must be fully operational by the end of 2027 to qualify for tax credits from Clean Energy Fuels Corp. This provision is much stricter than the previous version, which only required projects to commence construction by the end of 2025. If this bill is enacted, renewable energy developers will face a serious challenge and must accelerate project progress to avoid losing key federal policy support. It is worth noting that the new bill also introduces "China Material Limitation provisions," imposing additional taxes on new energy projects that use Chinese-made equipment and materials. Elon Musk, CEO of Tesla, Inc. (TSLA.US), criticized the draft bill as "completely absurd and destructive" in a post on X platform last Saturday. "This is subsidizing a sunset industry with taxpayer money while severely damaging the future industry," he added. However, the industry is not without its bright spots: the largest US CECEP Solar Energy producer First CECEP Solar Energy (FSLR.US) and SolarMax Technology (SMXT.US), a company providing CECEP Solar Energy systems to the US and China, both rose over 3%, while Clean Energy Fuels Corp. manufacturer GE Vernova (GEV.US) also saw a 2% increase. Baird analyst Ben Kallo pointed out that the taxation of Chinese components is "beneficial for domestic manufacturers such as First CECEP Solar Energy, Nextracker, and GE Vernova," but he also warned that this measure will "shrink project pipeline sizes."