Clean Energy ETFs Hit a 52-Week High: Here's Why

Core Viewpoint - Solar stocks experienced a significant rally on August 18, 2025, following the U.S. Treasury Department's release of guidance on clean energy tax credits, which were less restrictive than initially feared [1] Market Reaction - First Solar (FSLR) saw a jump of over 9%, becoming the second-best performer in the S&P 500 on that day, while Sunrun (RUN) gained nearly 11.4%. Enphase Energy (ENPH) and SolarEdge (SEDG) each increased by approximately 3% [2] - Several exchange-traded funds (ETFs), including Proshares S&P Kensho Cleantech ETF (CTEX), Fidelity Clean Energy ETF (FRNW), SPDR Kensho Clean Power ETF (CNRG), Global Clean Energy iShares ETF (ICLN), and Global X Cleantech ETF (CTEC), reached a 52-week high on August 18, 2025 [2] Tax Credit Phase-Out Timeline - The "One Big Beautiful Bill" signed by President Donald Trump phased out tax credits for new wind and solar projects unless construction begins by July 4, 2026. The IRS's new guidance clarifies that smaller projects, like rooftop solar installations, can still benefit from a 5% "safe harbor" rule, allowing developers to qualify for tax credits if they invest at least 5% of the project's total cost and complete construction within four years [3] - For larger, utility-scale projects, the new guidance requires that "physical work of a significant nature" must have begun to qualify for the credits, eliminating reliance on the previous safe harbor rule [4] Analyst Takeaways - Jefferies analysts described the update as a "clear win" for residential solar, alleviating fears of stricter rules and retroactive changes [5] - Citi analysts noted that the guidance was "better than anticipated," as it was not retroactive and the investment threshold did not increase above 10%, providing relief to investors [5]