Solar stocks have rallied on Aug. 18, 2025 after the U.S. Treasury Department released guidance on which projects qualify for clean energy tax credits. The rules proved to be less restrictive than investors had feared initially, leading to a sharp rally across the sector.
First Solar FSLR jumped more than 9%, making it the second-best performer in the S&P 500 on Monday, as part of a relief rally. Sunrun RUN gained nearly 11.4%. Enphase Energy ENPH & SolarEdge SEDG each added more-or-less 3%.
Exchange-traded funds (ETFs) like Proshares S&P Kensho Cleantech ETF CTEX, Fidelity Clean Energy ETF FRNW, SPDR Kensho Clean Power ETF CNRG, Global Clean Energy iShares ETF ICLN and Global X Cleantech ETF CTEC hit a 52-week high on Aug. 18, 2025.
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Tax Credit Phase-Out Timeline
The “One Big Beautiful Bill” signed by President Donald Trump last month phased out tax credits for new wind and solar projects unless construction begins by July 4, 2026. The new guidance, released Friday by the IRS, clarifies how projects can qualify:
Under the new guidance, smaller projects such as rooftop solar installations will continue to benefit from the 5% “safe harbor” rule, which allows developers to qualify for tax credits if they have invested at least 5% of the project’s total cost and complete construction within four years.
Larger, utility-scale projects, however, will no longer be able to rely on this rule. Instead, they must demonstrate that “physical work of a significant nature” has begun in order to qualify for the credits.
Jefferies – Analysts called the update a “clear win” for residential solar. Many feared stricter rules, including retroactive changes to Jan. 1 and a reduced safe harbor window from four years to just 2.5 years.
Citi – Citi analysts also described the guidance as “better than anticipated,” as it was not retroactive. They noted concerns that the investment threshold could have been raised to above 10%, which did not materialize, proving a relief to investors.
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First Solar, Inc. (FSLR) : Free Stock Analysis Report
Enphase Energy, Inc. (ENPH) : Free Stock Analysis Report
SolarEdge Technologies, Inc. (SEDG) : Free Stock Analysis Report
Sunrun Inc. (RUN) : Free Stock Analysis Report
iShares Global Clean Energy ETF (ICLN): ETF Research Reports
SPDR S&P Kensho Clean Power ETF (CNRG): ETF Research Reports