The day started hot for renewable energy shares, with multiple stocks climbing over 10%. A big catalyst was President Trump actually signing the recently passed stimulus bill over the weekend, after he had threatened to veto it. But the excitement over the signing soon wore off.
Most notable today were shares of Blink Charging (NASDAQ:BLNK), which climbed as much as 13.4%; Plug Power (NASDAQ:PLUG), up as much as 5.4%; ReneSola (NYSE:SOL), gaining 29.3%; and Eos Energy Enterprises (NASDAQ:EOSE), up 20.4%.
Blink and Plug Power ended up giving back all of their gains and ended the day down 5.3% and 5.6%, respectively, while ReneSola (28.9%) and Eos (16.9%) closed higher.
From a policy perspective, solar developers are getting a two-year extension of the investment tax credit at 26%. That will extend to energy storage projects that are connected to solar projects as well, which could help Eos Energy Enterprises.
Energy storage was also allocated $1.08 billion for research and development, and there’s grid modernization funds that could be used by storage projects as well. All in all, now that the stimulus has officially been signed, it’s likely good news for a solar developer like ReneSola and a battery company like Eos Energy Enterprises.
The impact on hydrogen and electric vehicles is more minimal, and that’s likely why Blink Charging’s and Plug Power’s pops didn’t last today. There may be a small benefit from more renewable energy installations or R&D funding going to alternative energy more broadly, but direct subsidies weren’t added or extended for their businesses.
Renewable energy stocks have had a strong run over the last six months as investors cheer the combination of a Biden presidency, low interest rates, and increased attention to all forms of alternative energy like solar and electric vehicles. But as 2020 ends, the hype will need to turn to fundamental improvements for these energy stocks.
What I’ll be watching next year is how these companies translate their higher stock prices into growth. Blink Charging needs to rapidly grow its charger network, and Plug Power needs to increase sales of both hardware and hydrogen fuel to keep investors happy.
For ReneSola and Eos Energy, the project cycle is long, but we should expect the backlog of projects they’re working on to grow quickly throughout the year. If they don’t, these hot stocks could be disappointing for investors. For today, there was another last move higher as the year draws to a close.