US Solar Stocks Gain as China Pulls Back on Export Subsidies
Beijing's move to scrap export tax rebates for its solar producers is seen as a competitive boon for American manufacturers like First Solar.
Shares of American solar manufacturers are rallying as Beijing moves to dismantle a tax rebate policy that has long supported its dominance in the global solar supply chain. The policy shift is being interpreted by investors as a significant step toward leveling the competitive landscape, potentially boosting the fortunes of US-based producers.
China's Ministry of Finance has announced a plan to phase out and ultimately eliminate Value Added Tax (VAT) export rebates for its solar and battery producers. According to a report from PV Magazine, the rebates for solar products will be completely removed by April 2026. This move is expected to increase the cost of Chinese solar panels on the global market, eroding a key price advantage that has created intense pressure on international rivals.
The change is seen as an attempt by Beijing to address significant overcapacity within its domestic industry and ease international trade tensions. While the move is expected to squeeze the margins of Chinese exporters, some of the nation's largest solar company stocks, like Trina Solar, gained following the news as analysts believe it could help stabilize prices and reduce cutthroat competition.
For American manufacturers, the development provides a welcome tailwind. First Solar (NASDAQ: FSLR), a major US producer of thin-film solar modules, stands to benefit significantly. The company, which is less reliant on Chinese components than many competitors, saw its stock rise in recent trading sessions. First Solar has a market capitalization of over $25 billion and has demonstrated strong performance with yearly revenue growth of nearly 80%, partially bolstered by domestic incentives from the Inflation Reduction Act (IRA).
However, the ripple effects of China's policy shift are not uniformly positive across the US solar sector. Residential solar installers, which often rely on lower-cost imported panels, could face higher procurement costs. Sunrun (NASDAQ: RUN), one of the nation's largest residential solar installers, could see its margins pressured if global panel prices rise as anticipated. The company's stock has had a volatile year, and while it has a strong analyst buy rating, it currently carries a negative earnings per share (EPS) of -$11.33.
The shifting dynamics highlight a complex realignment in the global renewable energy market. While US manufacturers gain a more solid footing to compete on the world stage, installers may need to navigate a new era of higher equipment costs. The long-term impact will likely depend on how effectively American producers can scale up to meet demand and how the installer segment adapts its supply chain strategies in response to a changing global price floor for solar technology.