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Lifting of levies and a special law boosted the prices of solar companies

News from the Biden administration drove stock prices for solar businesses including First Solar Inc. (NASDAQ: FSLR) and Enphase Energy, Inc. (NASDAQ: ENPH), among others, on Monday.

The cause for the increase was the President of the United States’ public pronouncement that the Defense Manufacture Act will be applied to the solar sector in order to boost local production of solar energy solutions.

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At the same time, import tariffs on panels and components for solar power plant installation would be postponed for two years. Duties on goods from Cambodia, Malaysia, Thailand, and Vietnam, in particular, will be eliminated.

As a result, the United States is likely to seek to use the future benefits of increased oil and gas exports to set its own economy on a greener path. By 2024, plans are in place to raise domestic solar panel production capacity from 7.5 GW to $22.5 GW. As early as 2023, a significant rise in output is possible.

It is unclear if the relocation of solar cell manufacturing to the United States will be added. Nonetheless, investors reacted favorably to the news, and shares of major solar businesses soared in value. Shares of Array Technologies, FTC Solar, Shoals Technologies Group, and Sunrun, in particular, have been added.

Clearly, government backing may help the business expand in the long run. Many analysts think that solar cells (the fundamental components of solar panels) will be substantially more expensive in the United States than in Asia. As a result, despite the support, the production transfer will not take place.

Even if this is true, the stimulus will still assist boost local manufacturing and likely shift production of the most innovative and high-margin solutions to the US, such as high-efficiency panels.

The stock of First Solar Inc. (FSLR) is down -0.03% this week and -5.78 percent in the last month. Its price has dropped -17.40% this year and -4.03 percent in the previous year.

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