European clean energy stocks fall after Trump wins US election

Shares of Europe’s leading clean energy companies fell sharply on November 6 following Donald Trump’s resounding victory in the US presidential election. This comes as investor concerns grow over the future of US renewable energy policy under a second Trump administration, according to a detailed Reuters report.

Trump has previously expressed his intention to roll back climate policies, including withdrawing from the Paris Agreement. He also discussed repealing President Biden’s Inflation Relief Act (IRA), which provides significant incentives for clean energy development, and he also vowed to halt offshore wind projects through executive orders, casting doubt on the future of the critical U.S. renewable energy industry. , the Reuters report further explains.

As a result of these developments, shares of Europe’s leading clean energy companies have corrected significantly. Shares in Danish offshore wind giant Ørsted (ORSTED.CO) fell 14 percent, while wind turbine makers Vestas (VWS.CO) and Nordex (NDXG.DE) fell 11 percent and 7.6 percent respectively.

Uncertainty has returned to the US renewable energy sector

Alphavalue analyst Pierre-Alexandre Ramondencq said the election results had once again introduced significant uncertainty into the market. “The key message is that uncertainty is back,” he said, as the Reuters report further explains.

The US renewable energy sector is critical to many European utilities, including Portugal’s EDP Renováveis ​​(EDPR.LS), Ørsted and Germany’s RWE (RWEG.DE), all of which have significant operations in the country.

Deutsche Bank analysts noted that a complete repeal of the IRA would depend on the US Congress, but changes in the law could still derail planned projects, especially those that are far from completion.

Despite the market downturn, companies such as Ørsted and Vestas remain optimistic about the long-term growth of the US economy. Both companies said before the election that they expected clean energy demand in the U.S. to continue regardless of the election outcome.

Angelo Meda, head of equities at Banor SIM in Milan, called the sharp fall in Ørsted’s share price an “overreaction”, explaining that the transition to green energy is unlikely to be fully reversed. He also added that he sees the fall as a buying opportunity.

Nordex, another wind turbine maker, acknowledged potential delays in the project’s timeline but remained hopeful that the U.S. onshore wind market will continue to grow.

Other notable decliners included shares of RWE, which fell 6.6%, and EDP Renovaveis, which fell 11%. The iShares Global Clean Energy ETF (INRG.L) also fell 6 percent, hitting its lowest level since mid-2020.

Despite these concerns, analysts are divided on the potential long-term impact of a Trump presidency on the clean energy transition. Some see this as a temporary setback, while others warn of more serious disruption ahead.