By Avi Salzman
Stocks in an unlikely industry have been rallying in recent weeks: solar panel manufacturing.
Two solar companies with operations in the U.S.-- T1 Energy, headquartered in Austin, and Ontario-based Canadian Solar--have seen their stocks jump since the start of October. They are up 176% and 80% respectively. First Solar, the largest U.S. manufacturer, has gained 16% since the start of October.
The stocks' outperformance is surprising because it coincides with a mostly bleak period for solar. Congress cut subsidies for solar installations in this summer's big tax bill, and the Trump administration made changes that are slowing down the permitting process. U.S. solar installations are expected to fall this year from 2024 levels, and drop even more in 2026, according to the Solar Energy Industries Association, a trade group.
Earlier this month, 143 companies wrote to Congress complaining that the Department of Interior has imposed "a nearly complete moratorium on permitting for any project in which the Department of Interior may play a role, on both federal and private land, no matter how minor."
A Department of Interior representative told Barron's that "the current review process ensures that wind and solar projects -- regardless of whether they are proposed on federal, state or private lands -- receive appropriate oversight when federal resources, permits or consultations are involved."
One reason the moves in Washington haven't sunk the stocks is that investors had already anticipated some of those effects. And President Donald Trump has also made changes that could benefit domestic solar manufacturers who compete against Asian producers. Some of his tariffs have made it more expensive to import solar panels.
In addition, the tax bill wasn't all bad for solar manufacturers. It kept in place some subsidies for domestic clean-energy manufacturing, as long as the companies involved don't have close ties to Chinese companies. And the Trump administration's interpretation of some of the rules in the bill have turned out OK, including those allowing grandfathered solar projects to receive tax credits.
The rise in the stocks since the fall appears to be connected to some of these regulatory positives. Analyst notes predicting that the companies can produce steady profits have helped as well.
Despite Trump's general antipathy to renewable energy, a boom in U.S. solar manufacturing that began under President Joe Biden and his Inflation Reduction Act has shown few signs of slowing. The whole supply chain is growing. Corning, known for its glass products, recently ramped up production of base materials for solar panels, the first time that as happened in the U.S. in a decade.
T1 and Canadian Solar have made particularly big strides in the last couple of months to fully domesticate their supply chains so they can take advantage of the government subsidies. That has clearly helped their stocks.
T1's Dallas factory was initially developed by Chinese solar company Trina Solar. T1, which bought the factory in 2024, has been working with a law firm to realign the company so it can be fully compliant with rules in the tax bill that prohibit companies from using too much foreign material in their products.
Russell Gold, a spokesman for T1, said that T1 expects to be fully compliant by Jan. 1 with the government's so-called "foreign entity of concern" rules, which forbid tax credits for companies that use too much material from China and some other countries.
The details of those rules are still being completed by the U.S. Treasury Department. "This is going to be a problem for other people," not for us, Gold said. "That's one of the reasons our stock is taking off."
The Dallas solar factory is on track to make five gigawatts of solar panels per year, or about 10% to 20% of U.S. demand. The company is also planning to build a factory to make solar cells, a building block of panels.
Gold says that the company has contracted for most of its 2026 capacity and isn't worried that Trump's rules will kill the industry. "We don't see a cliff in our commercial relationships," he said.
Canadian Solar has also worked to distance itself from some of its foreign ties. The company said in its latest annual report that it has "a significant portion of our manufacturing operations in China" and it makes much of its revenue there. On Dec. 1, the company announced that it will acquire 75.1% of its U.S. solar and battery operations from a China-based subsidiary, CSI Solar, and continue moving manufacturing back to North America.
That said, both companies still face hurdles.
Canadian Solar's acquisition of most of its U.S. operations may not bring it into full compliance with the rules, notes Mizuho analyst Maheep Mandloi. "Key remaining question is if CSI Solar has any control over operations, IP, or board oversight of US factories," he wrote in a note last week. Mandloi rates the stock at Underperform with a price target of $21. Shares were trading around $23.50 on Tuesday. Canadian Solar didn't respond to a request for comment.
T1 Energy is confident it will be in compliance with the tax bill's new rules, but the coming regulations from the Treasury Department could end up being more strict than expected.
In addition, T1 disclosed last week that it had received a grand jury subpoena from the Department of Justice about stock trades by an executive and director at the company. It also got a voluntary document request from the Securities and Exchange Commission. T1 had no comment on the case, or the identity of the director.
The solar growth story is real, but investors should be choosy in how they play it, says Shawn Kravetz, president and chief investment officer of Esplanade Capital, which invests in renewable energy. He prefers First Solar, which has a longer record of making solar products at profitable margins. Other companies in the sector have made progress, but are more exposed to future policy shifts, he wrote in an email.
Solar manufacturing has momentum, even if it is precarious.
Write to Avi Salzman at avi.salzman@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
December 09, 2025 15:46 ET (20:46 GMT)
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