European clean energy stocks sharply declined on Wednesday as investors grew concerned about potential shifts in U.S. energy policy following Donald Trump's presidential election win. Trump's campaign promises to dismantle key climate policies and withdraw the U.S. from international climate commitments sparked fears of a major rollback in renewable energy support, including the potential repeal of the Inflation Reduction Act (IRA), a landmark policy under President Joe Biden that provides extensive subsidies for clean energy initiatives.
Orsted, the world's largest offshore wind developer, saw its stock drop as much as 14%, while shares in wind turbine manufacturers Vestas and Nordex fell approximately 11% and 7.6%, respectively. Major clean energy ETFs, such as the iShares Global Clean Energy ETF, also experienced significant drops, hitting levels not seen since mid-2020.
The U.S. renewable energy market represents a critical area of growth for European utility giants, including Portugal's EDP Renováveis, Denmark's Orsted, and Germany's RWE, according to Deutsche Bank analysts. These companies have invested heavily in the U.S. clean energy sector, particularly in wind energy, which could face delays if Trump implements promised regulatory changes. Deutsche Bank noted that while repealing the IRA would require congressional action, modifications to the act might be feasible under the new administration.
Despite the market turbulence, some investors see the reaction as short-sighted. Angelo Meda, head of equities at Banor SIM, viewed Orsted's share price decline as an overreaction, stating his belief that the transition to green energy remains inevitable. “Thinking that the trend toward green energy transition is completely over seems irrational,” he commented, revealing he had added to his position in Orsted.
Both Vestas and Orsted expressed confidence that demand for renewable energy in the U.S. would continue to grow despite policy uncertainties. A spokesperson for Nordex acknowledged that while the U.S. onshore wind market remains promising, uncertainty might cause delays in customer decisions.
