Vestas Wind Systems A/S shares jumped on Monday after guidance issued by U.S. government agencies brought much-anticipated clarity to the rules on how clean energy projects can qualify for tax credits and were more straight-forward than feared.
Shares rose as much as 18%, the steepest intraday gain since July 2022 in Copenhagen. The guidance is the last hurdle that investors need to move forward with renewable investments including wind. The rules are less stringent than many analysts were expecting and could open up a wave of wind turbine orders for Vestas.
Certainty on the scope of President Donald Trump's tax bill had already eased a bottleneck for new wind turbine orders in the US. And this guidance on the bill's implementation could spur more developers to buy turbines knowing they can start construction soon enough to qualify for tax credits.
"People have been lining up and waiting for policy clarity," Vestas Chief Executive Officer Henrik Andersen said last week on Bloomberg TV.
Wind and solar assets that start generating after Dec. 31 2027 don't get a tax credit unless construction begins by July 4 2026, which could mean a rush to start building. Eligibility is measured by physical work carried out at the site, not by investment, according to the guidance.
The so-called "safe harbor" rule has been eliminated, where developers can delay physical work by paying at least 5% of the costs but projects with existing safe harbor will be allowed to retain it.
The construction start milestone is "far less onerous than any stricter rules that had been widely feared," according to analysts at Citigroup Inc.
Vestas is a major supplier to wind farm developers in the U.S., where Trump has cut back support for the power source since his election. The outlook for wind power is still dimmer than it was under former President Joe Biden but the guidance gives investors clarity that at least for the next few years, the situation is not as bad as it could have been.
"We see close to the best possible outcome in the guidance compared to initial talks," analysts at Jefferies wrote in a note.
The jump in the share price advance added the equivalent of about $3 billion to the company's market value, taking it to more than $21 billion. Other European renewables stocks also strengthened on the news. EDP Renovaveis SA climbed as much as 6.9%, Nordex SE advanced as much as 4.4% and Orsted AS rose 4.1%.
