Morgan Stanley notes that the House Rules Committee passed a manager’s amendment to the budget reconciliation bill that is significantly more challenging than the prior draft reconciliation bill for renewables. Tax credits are eliminated after 2028, projects must be started very soon to be eligible at all, residential leasing now loses tax credits. Nuclear modestly positive vs. the prior draft, Morgan Stanley adds. The firm points out that NextEra Energy (NEE) and AES Corp. (AES) have already safe harbored projects into 2028 but lose visibility beyond that point and will have only 60 days to accelerate any additional projects into 2028. Much of the rest of the utility-scale market is unlikely to be able to accommodate these changes and could see projects slow down sooner, in the next 1-2 years, it adds. Importantly, there can still be significant changes through the rest of the legislative process, and the Senate could potentially take a more supportive stance, Morgan Stanley says. Publicly traded companies in the space include Array Technologies (ARRY), Canadian Solar (CSIQ), Emeren (SOL), Enphase Energy (ENPH), FTC Solar (FTCI), First Solar (FSLR), JinkoSolar (JKS), Maxeon Solar (MAXN), Shoals Technologies (SHLS), SolarEdge (SEDG), SunPower (SPWR) and Sunrun (RUN).

Morgan Stanley says amendment to OBBB more challenging for renewables

Morgan Stanley highlights that a revised budget reconciliation bill amendment poses significant challenges for renewable energy projects, including the elimination of tax credits after 2028 and strict timelines for project initiation. The analysis notes impacts on companies like NextEra Energy and AES Corp., with potential legislative changes in the Senate.