Solar stocks rebound as Kamala Harris boosts market growth

As Vice President Kamala Harris's chances of winning the 2024 presidential election improve, the U.S. residential solar market is expected to rebound. The Invesco Solar ETF (TAN) saw a 3% increase in pre-market trading following Harris's perceived debate victory over Donald Trump. Despite being down 28.94% over the past year, the solar sector is optimistic about future growth, with industry leaders predicting double-digit growth by 2025, driven by favorable market conditions and tax incentives. The Biden administration's support for clean energy, particularly through the Inflation Reduction Act, has provided crucial tax credits that benefit solar companies. Enphase Energy and SolarEdge Technologies are among the top companies in the Invesco Solar ETF, which comprises 27.67% of its portfolio. Both companies are optimistic about their products qualifying for a 36% domestic content ITC adder, which is expected to enhance their profit margins. While the U.S. market shows signs of recovery, Europe is facing challenges, particularly in the Netherlands, where demand has plummeted by 70-80% year-over-year due to uncertainties surrounding net metering policies. This contrast highlights the differing trajectories of solar demand in the two regions, with U.S. companies like Sunrun and Sunnova monitoring financing conditions closely amid potential shifts in the market. Overall, the outlook for the U.S. solar market is positive, with key players like Enphase, SolarEdge, and Sunrun leading the charge as they adapt to changing economic conditions and capitalize on emerging opportunities in the clean energy sector.