Solar sector-related exchange traded funds were among the best performers Wednesday after U.S. lawmakers approved a spending bill that included a five-year extension on renewable energy incentives.
On Wednesday, the Guggenheim Solar ETF (NYSEArca: TAN) and the Market Vectors Solar Energy ETF (NYSEArca: KWT), which track global solar photovoltaic panel producers, increased 7.6% and 5.9%, respectively, as components like First Solar (NasdaqGS: FSLR) jumped 8.5% and SunPower (NasdaqGS: SPWR) surged 13.1%.
Meanwhile, the broader PowerShares WilderHill Clean Energy Portfolio (NYSEArca: PBW) gained 5.2% and First Trust NASDAQ Clean Edge Green Energy Index Fund (NasdaqGS: QCLN) rose 5.4%. Both ETFs track broad exposure to U.S. clean energy companies, including solar photovoltaics, biofuels and advanced batteries.
Clean energy companies advanced Wednesday after Congress extended the solar investment tax credit beyond 2022 with the current 30% level remaining until 2019, reports John Parnell for PV-Tech.
The investment tax credit was set to expire at the end of 2016 for residential systems with large projects dropping from the current 30% level to 10%. The industry has already been planning for life after the tax credit.
“A five-year extension of the ITC will lead to more than $125 billion in new, private sector investment in the US economy,” Rhone Resch, president and CEO of the Solar Energy Industries Association (SEIA), told PV-Tech. “And much of this growth will come from small businesses, which make up more than 85% of America’s 8,000 solar companies. Over the last year, these companies told us they needed the extension of the ITC to provide their businesses with certainty.”
Democratic legislators tacked on the tax credit incentive to the $1.1 trillion government spending and tax package in exchange for ending a 40-year ban on crude oil exports, according to renews.
“Beyond any shadow of doubt, the US solar market has been given the most lucrative and government backed seal of approval yet seen in the PV industry,” Finlay Colville, head of Solar Intelligence, told PV-Tech.
Guggenheim Solar ETF
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Max Chen contributed to this article.