After initially plummeting amid an early vote count in the U.S. presidential election that leaned toward a second term for President Donald Trump, renewable energy stocks roared back along with the prospects of Democratic challenger Joe Biden.

As ongoing vote counting in several battleground states pushed the former vice president closer to victory on Nov. 5, stock traders placed big bets on U.S.-listed renewable energy companies, especially solar panel makers based in China or with substantial manufacturing operations in the country, which is the primary target of import tariffs Trump imposed on foreign-made solar cell and panels in January 2018 and later extended to other components.

JinkoSolar Holding Co. Ltd., the world's largest maker of solar photovoltaic panels, saw its stock jump 28.4% on Nov. 5, while Daqo New Energy Corp. advanced 18.6% and Canadian Solar Inc. rose 12%. Solar, smart grid and wind energy companies Enphase Energy Inc., SolarEdge Technologies Inc., SunPower Corp., Sunnova Energy International Inc. and TPI Composites Inc. also notched double-digit gains. First Solar Inc., the largest U.S.-based solar panel maker, increased 8.9%, while geothermal power plant developer Ormat Technologies Inc. ended the day up 7.7% and Sunrun Inc., the nation's leading home solar installer, increased 7.4%.

After all, Biden has proposed a sweeping $2 trillion climate plan for his first term focused on clean energy jobs and infrastructure, along with an ambitious goal to completely decarbonize the U.S. power mix by 2035, a full decade ahead of California and more aggressive than any state with a similar policy. Moreover, with the U.S. Senate still up for grabs as two seats in Georgia appear headed toward a possible January runoff, and Democrats still in control of the House of Representatives, the pieces could fall into place for an extension of the federal tax incentives that have helped fuel the rise of U.S. renewable energy installations in recent years.

"I think [Biden's] aspirations are pretty significant, and the decarbonization goals and transmission, infrastructure, investment, et cetera, would clearly be... very favorable for renewables over the long term, without a doubt," Bryan Schumaker, CFO of TPI Composites, an Arizona-headquartered maker of wind turbine blades, said during a Nov. 5 earnings call with investment analysts.

The company, which manufactures in the U.S., Mexico, China, India and Turkey, could increase its domestic production capacity "depending on demand and what [Biden's policies] might ultimately be if they come into fruition," Schumaker said.

'Difficult to predict'

Given ongoing uncertainty over the continuing availability of tax equity investments for solar installations and the broader renewable energy market, and persisting unemployment across the clean energy sector as the COVID-19 pandemic continues to drag on the economy, renewable energy groups for months have been calling for direct cash payments in lieu of federal tax credits. The American Recovery and Reinvestment Tax Act of 2009, endorsed by the Obama administration, established such a program that funneled billions of dollars into renewable energy companies in the wake of the global financial crisis.

But a Biden White House would face high hurdles to repeat that approach or implement any of its bold climate proposals via legislation, even if Democrats squeak out a 50:50 split in the Senate, with a Vice President Kamala Harris holding the deciding vote.

"The Democratic caucus will have at least two members that are likely to be hostile to major climate reforms: Joe Manchin (of West Virginia) and, to a lesser extent, newly elected John Hickenlooper (of Colorado)," Pavel Molchanov, director and equity research analyst at Raymond James & Associates, said in a Nov. 6 email. "They would attempt to block or at least water down net zero legislation, and Biden's associated proposal for mandating a 100% carbon-free U.S. electricity mix by 2035 would also be at risk, since this would imply phasing out all coal-fired and gas-fired power plants nationwide."

If Republicans retain majority control of the Senate, it would be "virtually impossible" for Biden to enact a $2 trillion funding package or other major climate policies, Molchanov said. Although Biden could pursue regulatory changes through the U.S. Environmental Protection Agency or U.S. Interior Department, "these changes will be constrained by existing law and judicial review, including a 6-to-3 conservative Supreme Court," he added.

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That could leave the onus on states to continue their leading role on climate and clean energy issues.

"It's very difficult to predict exactly when these sorts of policies might be enacted," Edward Fenster, chairman and co-founder of Sunrun, told analysts on a Nov. 5 earnings call. Fenster does not see Sunrun currently constrained by any lack of financing but said the tax-equity market may tighten in 2021.

The executive declined to speculate on what kind of impact a Biden administration could have on the market for tax equity. Biden has said he would fund his climate plan by repealing Trump's tax cuts, which could also reduce the corporate profits that fuel the tax-equity market.

"Well, I feel like the last thing the world needs is more election speculation at the moment," Fenster said.