The sharp selloff in solar stocks this month—Sunrun down 43%, Enphase off 27%, and SolarEdge sliding nearly 39%—was triggered by the U.S. Senate’s draft tax bill that proposes a full phase-out of solar and wind tax credits by 2028. Residential solar incentives would vanish even sooner—within 180 days of the bill’s enactment. That’s a seismic shift from the Inflation Reduction Act’s original timeline, which extended support through 2032.

The impact? Project financing just got a lot harder. Without the 30% Investment Tax Credit (ITC), solar developers face thinner margins and higher capital costs. Residential solar could be hit hardest, especially in states like California where net metering reforms have already dented demand. Analysts warn of delayed installations, canceled projects, and a potential slowdown in U.S. solar manufacturing expansion.

That said, the bill isn’t law yet—and there’s still room for amendments. Some analysts argue the Senate version is slightly less harsh than the House’s, offering a longer runway for utility-scale projects to qualify for partial credits. But unless the final legislation softens significantly, the sector may face a multi-year reset.