Solar Stocks Crash 44%: Why FSLR, ENPH, RUN Are Buying Opportunities

Fear of losing a tax credit may have sent shares prices too far down for solar providers First Solar, Enphase and Sunrun

Americans have a lot of good reasons to migrate from the frozen North to the sunny South. But whatever the motivation, air conditioning makes the move feasible. When it’s 100 degrees and the humidity is so high you can drink the air, handheld paper fans and iced tea don’t cut it. So when the power goes out in the summer and the HVAC is dead, people start thinking about a back-up plan.

For some homeowners, it’s a giant battery recharged by solar panels. That makes sense because there’s no shortage of sunshine in the summertime. But a big issue for these home solar/battery systems is their cost. The bigger the system, the more expensive it is. And bigger is measured by how many watts of electricity the system can generate.

The average cost of a solar/battery back-up in the US is about $2.75 per watt but varies greatly by location. That said, a 10 kW (10,000 watt) system for an “average” US home might cost about $28,000. Not exactly pocket change. To tip the balance of a person’s decision in favor of solar, the government has offered tax credits to make it less expensive — if not exactly affordable.

That’s why last week when Congress was discussing cuts to the solar tax credits as part of the Big Beautiful Bill, the solar industry took a hit. Sector stocks like First Solar (FSLR), Enphase Energy (ENPH) and Sunrun (RUN) were sharply lower. In a single day, First Solar fell as much as 22%, Enphase dropped 28% and Sunrun declined 44%. And the latter two hit their 52-week lows. But would reduction or even elimination of the tax credit impact their businesses that much?

The original credit was created during the energy crisis back in 1978, but the Residential Clean Energy Credit that’s used today was instituted in 2005. Under the current plan (it’s been amended and renamed many times), you can earn a tax credit of 30% of the cost when you install solar power in your home.

Installations for commercial properties can also receive a similar credit under the Investment Tax Credit. Add in savings from lower power bills or even the opportunity to sell excess electricity to the power company, and solar installations can make financial sense.

But realistically, solar is a long way from being a wide-adoption consumer product.

The tax credit of 30% of the system’s cost is nice. But it hardly makes them affordable to most homeowners. Even for a small 6kW system that might cost $15,000, the $10,000 post-credit cost is still beyond what most people can pay. And if a homeowner has to finance the installation, the current high interest rates make it even harder. That’s why solar is a high-end item. So, on the residential side, it’s still a niche product.

On the commercial side of solar, which is smaller than the residential side, the calculations are somewhat different and more sensitive to changes in utility rates. The number of commercial installations went up from Q1 2024 to Q1 2025 while the residential installations fell over that time. Considering that, the tax credits might not have as big an impact as the market thinks.

As for First Solar, Enphase and Sunrun, each has a different business model and its own products, but the response of their stock prices to the uncertainty about the tax credit might be overdone. An investor who thinks wealthy homeowners and businesses will continue to install solar regardless of the credit might see those stocks as a bullish opportunity.

Tom Preston, tastylive chief market strategist, is responsible for the brokerage’s trading strategy, client-facing trading software and futures trading products. He contributes to Luckbox magazine and writes tastylive's Cherry Bomb newsletter. He's been trading options since 1992.