Stock Volatility of Enphase Energy During Recent Weeks
The solar sector, including Enphase Energy, is currently grappling with various negative factors such as high costs and significant competition. A recent development that could further exacerbate these issues is the Senate's proposal to phase out solar energy tax credits by the end of 2028.
The Senate Finance Committee's proposal aims to get President Trump's pet Big, Beautiful Bill passed in that chamber. If approved, projects would need to be placed in service by December 31, 2027, instead of merely started by then, posing significant challenges for Enphase Energy (ENPH) and the broader solar energy sector.
Key implications for Enphase Energy and the solar sector include an accelerated incentive cutoff, reduced project pipeline and demand, competitive disadvantage versus other energy sources, impact on energy storage and large projects, and market uncertainty.
The shift from allowing credit eligibility based on beginning construction by 2027 to requiring completion and grid connection by 2028 forces solar developers and companies like Enphase to accelerate project timelines substantially. This could potentially compress the market growth and affect companies reliant on ongoing solar installations and upgrades, such as Enphase, which specializes in solar microinverters and energy management systems.
The stricter deadlines likely reduce the number of eligible new solar projects post-2027, which could affect the market growth. The bill retains and even extends incentives for Republican-favored energy technologies such as nuclear, geothermal, hydropower, and clean hydrogen through the 2030s, potentially diverting investment and policy support away from solar energy.
Energy storage projects tied to solar will see more lenient phaseouts under Section 48E, which may offer some relief for integrated Enphase products, but large-scale solar projects with federal land use may face more restrictions and loss of credits. Companies face regulatory uncertainty with the Senate bill under parliamentary review and ongoing legislative negotiations, complicating investment and supply chain decisions.
As a result of these challenges, Enphase Energy's stock has been particularly affected in this rout, with a decrease of 2.36%. The downturn in Enphase Energy's stock was compounded by several downbeat analyst notes, including Sophie Karp of KeyBanc, who downgraded her recommendation on Enphase Energy from sector weight (hold) to underweight (sell). Sophie Karp expressed caution towards Enphase Energy and its peers due to the Senate's proposal.
Sophie Karp assigned a price target of $31 per share for Enphase Energy. The downgrade in recommendation by Sophie Karp was based largely on the Senate's proposal to phase out tax credits for green energy solutions by 2028. The Senate Finance Committee recommends phasing the credits out completely by 2028, instead of the current deadline of 2032.
As of late Thursday, Enphase Energy's share price was down more than 20% week to date, reflecting the market's concerns about the impact of the Senate's proposal on the solar sector. The Senate's proposal to phase out tax credits for green energy solutions could further negatively impact the solar sector, potentially slowing solar market expansion after 2028 and shifting industry dynamics toward other clean energy forms favored by the bill. This regulatory backdrop demands faster project execution and strategic adaptation to evolving policy landscapes in the solar sector.
In the solar industry, Enphase Energy and other solar developers face a potential competitive disadvantage due to the Senate's proposal to phase out solar energy tax credits by 2028, as this decision could divert investment and policy support away from renewable-energy sources like solar. The tightened deadlines for solar project completion may lead to a reduction in the number of eligible new solar projects post-2027, negatively impacting the solar energy market growth. As a result, companies like Enphase Energy may need to adjust their strategic plans and execution timelines to navigate the increased regulatory uncertainty and meet the new project requirements to secure financing and maintain market growth.
