Late Wednesday night, the U.S. Senate passed its Coronavirus Aid, Relief, and Economic Security (CARES) Act. In total, the stimulus bill promises some $2 trillion in funding to help taxpayers and companies struggling to survive under government-mandated measures to slow the spread of the coronavirus.
Alternative energy stocks were quick to respond to the news today, with shares of General Electric (NYSE:GE), Clean Energy Fuels (NASDAQ:CLNE), and Vivint Solar (NYSE:VSLR) all soaring close to -- or more than -- 10% in early trading.
By the time markets closed, GE stock remained up 7% and Clean Energy Fuels 9.3%. In contrast, Vivint Solar had given up all its gains, sinking to a 1.8% loss.
Why the strong initial reaction, and why is enthusiasm for these three renewable energy stocks already beginning to wane? The first question is easiest to answer:
Within the CARES Act is a mammoth $500 billion allotment of money to be given out in the form of loans and loan guarantees to industry, to tide companies over through the crisis. As three of the biggest names in renewable energy, GE (which has a $15 billion-a-year windmills business), Clean Energy, and Vivint all stand to benefit from this government largesse.
That's the good news, now here's the bad: Efforts by certain senators to add tax credits specifically benefiting the renewable energy industry to the CARES Act appear to have fallen flat, and the version of the bill published by the Senate after its passage last night makes no specific mention of wind power, solar power, or even clean renewable natural gas. Nowhere in the 880 pages, it seems, is there money being earmarked for the renewable energy industry.
Perhaps this is the reason that Vivint Solar stock ended the day in negative territory -- and even GE and Clean Energy Fuels gave up some of their gains before the day was out.