Under the Inflation Reduction Act, passed during the US Biden administration, large transferable tax credits were given to projects of electricity production from renewable sources and energy storage. But now, as the US massive budget deficit, the wave of renewable energy projects construction, and different Republican priorities need to be reduced, the House has passed tax bills that include cancellations of these tax benefits.
Enlight Energy (Tase: Enlt) fell by 5.55%, while Doral Energy (Tase: Dorl) fell by 4.59% today. Both companies have large projects in the US. But both claim that the project will be completed before the changes to the law come into effect.
Under the tax bill, tax benefits will only be cancelled for projects that have not started construction within the next three months, or for projects that are not connected to the power grid by the end of 2028. In the original version of the bill, the tax credits were gradually phased out, but the final version would go bankrupt at the start of 2029.
For example, Enlight will almost triple US solar capacity to 8.6 gigawatts by the end of 2027 from 3 gigawatts today, increasing annual revenues from $500 million to $1.4 billion. The company is entitled to a tax credit on this revenue, but later projects will be affected by credit cancellations.
DORAL emphasizes that flagship projects, including the Indiana project, which had been acquired three days ago with a financial closure (in regard to tax credits), will be ready before the tax credit deadline.
More vulnerable is Solar Energy Technology Company Solaredge (NASDAQ: SEDG), whose stock price has fallen 25%, wiping out all profits after the release of Good First Quarter Financials two weeks ago.
Incoming CEO Yoni Huntis told Groves: The remaining parts are under construction on the grid.
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“The demand for electricity in the US is at its peak, and the most efficient, quick and cleanest way is through the large-scale construction of renewable energy facilities. Above all else, it is the economic balance of this sector that creates an economic balance with the market that generates renewable energy and represents the continued growth to continue the US economy for continued growth in the US economy.
Published by Globes, Israel Business News – En.globes.co.il – May 22, 2025.
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