What happened

Shares of Brookfield Renewable (NYSE:BEP)(NYSE:BEPC) rallied as much as 5.3% by 11 a.m. EST on Wednesday. Powering the renewable energy stock was the anticipated outcome of the Senate runoffs in Georgia.  

So what

Democrats appear poised to capture both Senate seats in Georgia following a runoff election on Tuesday. That would give the political party full control over the U.S. government, making it easier to pass legislation. That powered speculation that they might offer more support to the solar energy industry, which could accelerate its growth rate. 

Solar panels with the sun shining from behind.

Image source: Getty Images.

That would benefit Brookfield Renewable, given its plan to supercharge its investments in solar energy over the next several years. The company has been building up an extensive backlog of solar energy projects around the world, including in the U.S., with it recently bolstering the latter by acquiring Exelon's solar energy business. Thus, if Democrats emerge the victors and pass legislation favoring solar energy, it could boost Brookfield's investment returns, enabling it to grow its earnings at an even faster pace in the coming years. 

That possibility overshadowed an analyst downgrade by Wells Fargo today. The bank cut shares of Brookfield from equal weight to underweight following a massive surge in its stock over the past year, powered by enthusiasm for the future of renewable energy.  

Now what

With today's rally, shares of Brookfield Renewable are up almost 90% over the past year. Because of that, it's trading at a premium valuation. However, the company has a long history of growing shareholder value, which should continue in the coming years. Because of that, investors with an ultra-long-term outlook might still want to consider buying and holding.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.