Buying or selling stocks based on the shifting political moods in the U.S. (or any other country) isn't a good investing strategy. That doesn't mean, though, that politics have no impact on companies. Over the last two years, solar and wind energy companies have struggled due to President Donald Trump's decisions to impose tariffs on solar panels and push policies that explicitly make it easier for fossil fuels to compete in electricity markets. 

But the White House is not the only place from which political winds blow. California now mandates that solar energy systems be installed on all new homes built in the state, and Hawaii has mandated 100% renewable energy for its electrical grid by 2045. At the federal level, the "Green New Deal" is gaining some traction, changing the narrative nationwide. If anything close to that proposal eventually gets passed and signed into law, it would supercharge a few stocks in renewable energy, particularly in the solar segment.

Large solar farm in the desert.

Image source: First Solar.

The U.S. solar manufacturers

There are only two major solar panel makers with factories in the U.S.: First Solar (FSLR -0.09%), which has a manufacturing plant in Ohio, and SunPower (SPWR 5.91%), which acquired a manufacturing facility in Oregon. Because buyers of their domestically made products don't have to pay the tariffs currently levied on imported solar panels, they are enjoying a cost advantage. And they can also charge something of a premium for that "made in the U.S.A." emblem.

If the "Green New Deal" incentivizes U.S. solar manufacturing -- the resolution suggests "expanding renewable energy manufacturing" -- these are the two solar companies that stand to benefit most. They're already in America, and could expand their facilities quickly if the economics justified doing so. 

Rooftop solar's biggest names

Solar power system installers could see their potential market soar. In 2018, 10,600 megawatts (MW) of solar power capacity and 6,600 MW of wind were installed. If the government was supporting renewables, annual installations of solar and wind could collectively rise to nearly 100,000 MW to meet the grid's needs for new power plants each year, growing the industry more than five-fold.

Residential solar installers like Sunrun (RUN 7.03%) and Vivint Solar (VSLR) are just starting to tap into their potential. In 2018, they installed 373 MW and 196 MW of rooftop solar systems, respectively. The vast majority of residential installations are still in California, so a Green New Deal that supported solar nationwide could make it more attractive in markets it has yet to penetrate widely. 

That would also help component suppliers like SolarEdge Technologies (SEDG 5.82%) and Enphase Energy (ENPH 6.86%), which supply inverters and power optimizers to installers. Because they sell to many installers, if the residential market grows, it wouldn't matter as much to them whether Sunrun or Vivint Solar gain or lose market share. 

Big solar and big finance

The big-money market in solar is still utility-scale solar projects. They aren't as valuable as residential solar on a per-watt basis (about $1 versus $3 per watt) but those projects can be hundreds of megawatts in size. That makes for big opportunities for manufacturers, installers, and financiers. 

Three of the biggest renewable energy asset owners in the country are TerraForm Power (TERP), Brookfield Renewable Partners (BEP 0.07%), and NextEra Energy Partners (NEP 4.33%). These companies aren't going to be huge growth opportunities because they aren't manufacturing or installing wind or solar projects, but they could grow steadily for decades given their ownership of clean energy assets. As icing on the cake, the dividends they pay out are currently yielding 5.5%, 6.2%, and 4%, respectively -- excellent yields given the companies' long-term growth potential. 

Political winds are changing

As I said earlier, buying or selling stocks based on political projections alone is a terrible investment strategy. But investors do need to understand how politics can impact their stocks, for better or worse. Right now, the idea of expanding clean (green) energy production and manufacturing in the U.S. has serious popularity, and it looks to be gaining momentum. If that trend persists, and any sort of "Green New Deal" passes in Washington, D.C., these stocks could all be big winners.

In the meantime, states like California, Washington, Arizona, and Florida are opening up incentives and pathways to expand renewable energy production. Those state-level incentives will keep the renewable energy industry on its feet for the next couple of years, but a big, sweeping change like the Green New Deal may be necessary for these stocks to be huge winners for investors.