The ALPS Clean Energy ETF Soared 30%, But Faces a 2026 Policy Cliff

"ALPS Clean Energy ETF (NYSEARCA:ACES) has surged 30% year-to-date through, nearly doubling the S&P 500's 16% gain. But context matters: ACES remains down 49% over five years, trading around $33.60 versus its 2020 peak above $66. This is a recovery rally, not a breakout. The question heading into 2026 is whether momentum can continue or structural headwinds will reassert themselves."

"The biggest macro factor is the June 30, 2026 deadline in the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025. This legislation modified the Inflation Reduction Act's clean energy tax credits, requiring most renewable projects be placed in service by mid-2026 to qualify. According to IRS guidance, credits for residential solar, commercial clean vehicles, and energy-efficient homes all sunset after that date."

"This creates a double-edged sword. The deadline could accelerate project completions and boost near-term revenue for holdings like First Solar (NASDAQ:FSLR), the fund's third-largest position at 5.55%, already up 51% year-to-date. But policy uncertainty beyond June 2026 raises questions about demand sustainability. Monitor quarterly earnings calls from top holdings for commentary on project pipelines and how companies navigate the compressed timeline. The Solar Energy Industries Association publishes quarterly installation data revealing whether developers are racing to beat the deadline or pulling back."

ALPS Clean Energy ETF (ACES) has risen about 30% year-to-date but remains roughly 49% below its five-year level, trading near $33.60 versus a 2020 peak above $66. A June 30, 2026 OBBBA deadline requires most renewable projects to be placed in service to qualify for modified clean-energy tax credits, and IRS guidance says residential solar, commercial clean vehicles, and energy-efficient home credits sunset after that date. The deadline could accelerate completions and boost near-term revenue for holdings such as First Solar, but policy uncertainty after June 2026 clouds demand sustainability. ACES holds $108.7 million in assets with top ten positions around 45% concentration. Albemarle, the largest holding at 6.91%, remains unprofitable and trades at a forward P/E above 320x.

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