Stunning reversal: Senator Joe Manchin just reached a deal with Democrats that includes $369 billion in climate spending — and solar stocks are on fire

In a 50-50 Senate with a united Republican opposition, Democrats needed the West Virginia senator’s vote to move the package forward.

But in a surprising reversal, Manchin announced on Wednesday that he reached an agreement with Senate Majority Leader Chuck Schumer to vote on the climate spending package.

“Rather than risking more inflation with trillions in new spending, this bill will cut the inflation taxes Americans are paying, lower the cost of health insurance and prescription drugs and ensure our country invests in the energy security and climate change solutions we need to remain a global superpower through innovation rather than elimination,” Manchin said in a statement.

The news shocked the green energy sector — again.

A wild ride for solar

Solar stocks took a big hit on July 15 when reports came out that Manchin wouldn’t support the package.

On that day, First Solar plunged 8.1%, Sunrun dropped 6.4%, Sunnova Energy International fell 5.0%, while SunPower was down 3.4%. The Invesco Solar ETF (TAN) tumbled as much as 7% at one point before ending the session with a 2% loss.

But with Manchin’s reversal, sentiment has completely changed.

As of Thursday morning, First Solar climbed 14%, Sunrun jumped 19%, Sunnova Energy International surged 23%, while SunPower edged up 12%. It looks like a huge victory for the sector as the Invesco Solar ETF rose 5%.

“The entire clean energy industry just breathed an enormous sigh of relief,” said Heather Zichal, CEO of American Clean Power, a trade association that represents solar and wind energy companies. “This is an 11th hour reprieve for climate action and clean energy jobs, and America’s biggest legislative moment for climate and energy policy.”

Despite Thursday morning’s surge, however, Sunrun, Sunnova Energy International and Sunpower are still down year to date.

For those who don’t want to pick individual winners and losers, ETFs like TAN, the First Trust Global Wind Energy ETF (FAN), and the iShares Global Clean Energy ETF (ICLN) could provide a good starting point for further research.

Is coal dead now?

Climate advocates point out that Manchin has longtime ties to the coal industry.

Manchin helped found coal brokerage firm Enersystems, Inc. in 1988. And according to CNN, he had a between $1 million and $5 million stake in the company in 2021.