(Bloomberg) — Shares in renewable energy companies tumbled after Donald Trump won a second term as president of the United States on a platform that promises to boost fossil fuels and undo his predecessor’s green agenda.
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U.S. clean energy stocks suffered in pre-market trading in New York, especially solar companies. Sunnova Energy International Inc. fell more than 23%, while First Solar Inc. and green hydrogen equipment manufacturer Plug Power Inc. each fell about 14%.
“Trump’s return to the White House is not what any clean energy company in the US would want,” said Pavel Molchanov, an analyst at Raymond James.
The president-elect has pledged to target U.S. offshore wind energy efforts as one of his first actions after taking office. During his campaign, he also pledged to lift restrictions on domestic fossil fuel production and said he plans a wide range of tariffs on imported goods. That could drive up inflation and ultimately cause the Federal Reserve to raise interest rates, making investments in renewable energy more expensive.
At the same time, Molchanov expects that higher tariffs on imported solar panels would hurt American companies in the sector, but he does not see Trump or the Republicans eliminating taxes on clean energy and investment credits, which are widely appreciated.
“I’m pretty optimistic about the roots staying in place no matter what,” he said.
Across the Atlantic, Danish wind companies Orsted A/S and Vestas Wind Systems A/S also declined, as did Germany’s RWE AG and Italy’s Enel SpA.
“The world has changed in the last 24 hours,” Rob West, CEO of research firm Thunder Said Energy, wrote in an email message. “The momentum behind many energy transition themes has diminished in 2024. It is now more difficult to see a new acceleration.”
A second Trump term would be in stark contrast to the presidency of Joe Biden, who set an aggressive goal to decarbonize the country’s power grid, pledged to reach 30 gigawatts of offshore wind power by 2030 and introduced sweeping climate legislation which favored renewable energy sources.
Analyst Jenny Ping of Citigroup Inc. said in a note that she thinks offshore wind energy is “potentially more at risk” compared to other renewable technologies. Such farms require federal approvals and are particularly vulnerable to executive action. It is still possible that the renewable energy sector could grow significantly under Trump, as it did during his first term.
“We expect initial sentiment in the sustainable sector to be hit, but expect this to be short-lived as the market would likely see this as a buying opportunity for stocks that already reflect little growth,” Ping said.
(Updates with analyst commentary from third paragraph.)
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