Solar energy stocks soared in premarket trading Monday following a report that the Biden administration will suspend tariffs on solar panels from four countries.
President Joe Biden will declare a 24-month tariff exemption for solar panels, Reuters reported, and use the Defense Production Act to promote domestic production. The move comes as a Commerce Department investigation into Cambodia, Malaysia, Thailand and Vietnam has added more hurdles to importing equipment.
“If confirmed, we believe the announcement will be a clear positive for our coverage, particularly within the utility-scale solar market, which has faced uncertainty since the US Department of Commerce’s AD/CVD investigation was launched in late-March,” JPMorgan analyst Mark Strouse said in a note to clients.
The tariffs had received increased criticism in recent months as the war in Europe has driven up energy prices around the world. The tariffs were originally put in place by the Trump administration, with Biden announcing a four-year extension in February.
Solar stocks have slumped since last November, when market sentiment toward unprofitable growth companies soured. However, the sector has staged a nice rally in recent weeks. The Invesco Solar ETF (TAN) has gained more than 27% from its lows in May.
The run up in solar stocks in 2020 and 2021 was due in part to optimism that a Democratic administration would boost federal support for the industry. However, the Build Back Better bill, which would include additional clean energy spending, stalled in Congress last year.