The SolarCity Corp. (Nasdaq: SCTY) stock price rose nearly 10% to $58.60 intraday today (Thursday). After today's gain, the SCTY stock price is now up more than 58% in the last week.
Solar and wind companies have been in focus this week after U.S. lawmakers voted to extend lucrative subsidies for renewable energy on Tuesday.
Tax credits for new power projects like wind turbines and solar panels have fueled the rapid expansion of renewable energy in the United States. However, the solar subsidy was set to significantly shrink at the end of 2016.
The environmental tax credit extensions were part of the $1.15 trillion federal spending bill, which prevented a government shutdown and also lifted the antiquated 40-year-old U.S. oil export ban. The House and Senate still have to pass the bill, and President Barack Obama must sign it into law.
The legislation allows solar power companies to continue claiming federal tax credits at 30% of the price of a solar panel. The credits apply to both home solar kits and big commercial installations. The credits last through 2019. The credits then begin to gradually drop. By 2022, the solar credit will have fallen 10%, where it will remain.
Homeowners who buy solar panels get the credits. If they lease solar equipment from providers like SolarCity, the tax credits go to whoever finances the home installation projects, like banks.
Additionally, solar companies will be able to take advantage of a tax credit in the year construction begins on solar projects. They don't have to wait until the projects are completed.
The news sent the Solar City stock price surging 34% to $53.69 on Tuesday alone.
Here's what next for the SCTY stock price...
Where the SCTY Stock Price Is Headed in 2016
SolarCity is just beginning to venture into community solar programs. And the move could prove profitable in 2016.
Community solar farms sell energy to a group of buyers or renters who may not otherwise be able to "go solar." These buyers or renters receive a discount on their electric bills.
Utility companies are involved in the process of helping customers go solar. That greatly reduces the risk for SolarCity compared to the direct lease process between SolarCity and a homeowner.
Community solar farms are still in their infancy, but the future for such programs could be hugely profitable for SolarCity.
Roughly 65.9 MW (megawatts) of community solar were installed in the United States in 2014 out of 6,201 MW installed countrywide, according to GTM Research. The figure is expected to swell to 465 MW in 2016, as SolarCity and others focus on these projects.
Wall Street is bullish on the SCTY stock price too.
Of the 19 analysts covering the stock, 11 rate SCTY shares "Buy." One has an "Overweight" rating, and seven maintain a "Hold," according to data from The Wall Street Journal.
Thursday, Bernstein upgraded SolarCity to "Outperform" from "Market Perform" with a $69 price target. Hitting that target would be an additional gain of 21.1% for the SCTY stock price from today's opening price of $56.94.
Stay informed on what's going on in the markets by following us on Twitter @moneymorning or liking us on Facebook.
Investing in the World's First "Universal Fuel": Physicists have known about an unlimited source of free fuel for over 100 years. And now thanks to a stunning breakthrough in chemical engineering, we have the ability to power the entire planet for over 36,000 years. And the cost of this fuel is zero. It's free. Click here to continue reading...
Related Articles:
- The Washington Times: Schumer: Solar Tax Credits to Be Extended
- MarketWatch: Elon Musk $770 Million Richer After Big Day for Tesla, Solar City
- FOX Business: SolarCity Corporation's Best Moves in 2015
[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]