Why NextEra Dropped Today, Even as Other Solar Stocks Rallied

Shares of NextEra (NEE -1.93%) fell on Monday, down by as much as 5.2% before recovering to a 2.3% decline as of 3 p.m. ET.

NextEra is both a utility and a developer of renewable power systems, and has therefore been under pressure since details of the One, Big, Beautiful Bill began emerging back in May.

Renewables-related stocks did bounce back a bit this month after the Senate’s version appeared to offer some tax credit relief that had been restricted in the House’s version passed back in May. But over the weekend, a few new provisions divided certain renewable energy stocks into winners and losers, with NextEra coming up on the short end.

Chinese components and start dates restricted further

In the final version of the Senate bill that is getting a vote today, the renewable tax credit is more relaxed relative to the very restricted House version, but is still not as loosened as many in the industry would have hoped.

While an earlier version of the Senate bill required utility-scale renewable projects to begin construction by the end of 2027, the current version now restates the project must be placed into service by that time. That could speed up near-term development but halt growth in the industry after 2027.

Additionally, the new version of the bill puts an unexpected tax on projects that use Chinese components, which are often cheaper and sometimes the only source for certain project components. While good news for U.S. panel and component suppliers, the provision has the potential to raise costs for developers, such as NextEra.

NextEra should manage, albeit in an adverse environment

While NextEra’s earnings is divided between its utility business, Florida Power & Light, and its development business, NextEra Energy Resources, the development business contributed nearly half of the company’s adjusted (non-GAAP) earnings last quarter. The bill being passed today therefore raises questions about the growth of that important Resources segment beyond 2028.

So while NextEra’s 3.2% dividend should be protected by the FPL utility, the growth of the payout may be incrementally harder to come by, unless there’s a change in power in Washington three years from now.