JPMorgan sees Senate bill as ‘mild negative’ for First Solar

JPMorgan comments on the clean energy space after the Senate Finance Committee released its initial version of a budget reconciliation bill. While Inflation Reduction Act tax credits were generally negatively impacted versus current law, there was a material improvement versus the budget reconciliation bill passed in the House of Representatives in late May, the analyst tells investors in a research note. However, JPMorgan points out that investor expectations were raised last week following a broker report of significant improvementSes in the bill, and therefore some stocks may react negatively. The firm continues to believe that utility-scale is best positioned within clean energy, with favorable changes from the House version regarding project timing and Foreign Entities of Concern restrictions in the Senate bill, particularly for energy storage. The Senate version is broadly positive for the sector compared to the House version, and would still be supportive of premium pricing for U.S.-made product compared to current law, though a “mild negative” for First Solar (FSLR) if publicly-traded foreign competitors would be eligible, contends JPMorgan. The firm say the Senate FEOC version is also a positive for Fluence Energy (FLNC) as its initial interpretation is that the company’s partnership with AESC would be eligible for credits.