Shares of the residential solar provider Sunrun (RUN 2.11%) rose 10.5% today, as investors appeared bullish on several solar stocks and how they might benefit from recently passed legislation.
Congress recently passed President Joe Biden's Inflation Reduction Act bill, which will raise $737 billion of revenue, invest $437 billion, and cut the U.S. deficit by roughly $300 billion. Of the amount invested, roughly $369 billion is slated to go toward energy, security, and climate change initiatives.
Not only is the Inflation Reduction Act the largest amount ever allocated by the U.S. government to combat climate change, but it's going to encourage consumers to fight climate change through initiatives like installing solar panels on their rooftops. The bill is expected to offer a 30% tax credit on several different types of solar installation.
This should bode well for a company like Sunrun, which is the No. 1 residential solar market leader. Sunrun now has more than 724,000 customers and provides a range of solar services including the installation of residential solar panels and electric vehicle charging stations.
The company also has a massive market opportunity ahead. While Sunrun is the residential solar leader in the U.S. it has only penetrated less than 1% of the U.S. electricity market, which is valued at more than $194 billion annually.
I think the thesis is pretty clear here. Sunrun is the largest retail solar provider in the U.S. It has a huge market opportunity and the Inflation Reduction Act should help create more demand going forward because of the tax credit. The stock looks well positioned.