Trump and a series of Supreme Court rulings that limit environmental regulations have led to a sharp drop in clean energy stocks in recent days. Due to the support of tax breaks and environmental regulations, the clean energy industry is particularly susceptible to political setbacks.

After the Supreme Court limited the charges that a president can face during their term, the Invesco Wilder Hill Clean Energy ETF, which serves as the benchmark for clean energy, fell 2% on Monday. This ruling is likely to delay - and possibly disrupt - Trump's federal trial and increase his chances of winning the presidency.

Some other news from last week also hit the industry. The Supreme Court limited the types of regulations that agencies like the Environmental Protection Agency can issue, which is a major blow to efforts to address climate change. In addition, President Biden's weak performance in last Thursday's debate also had a negative effect on clean energy stocks. Leading solar manufacturer First Solar (FSLR.O) fell 10% on Friday, becoming the second largest decline in the S&P 500 index. Trump said he would repeal the Inflation Reduction Act, which includes $370 billion in funding estimated to be provided to clean energy.

The Wilder Hill Index has fallen 31% this year, partly due to concerns about the November election.

"It's not enough to simply consider Republican initiatives as negative concepts for renewable energy and stock performance," wrote Matt Breidert, portfolio manager of sustainable investment firm Ecofin, in a recent memo.

"If Trump is elected, we do expect a lot of noise," Breidert said in an interview. For example, the Trump administration may stop issuing offshore wind permits, which would be a blow to companies such as Orsted and Vestas Wind Systems. Breidert also said that renewable energy equipment stocks such as SolarEdge Technologies (SEDG.O) may be affected by legal changes.

However, the presidential election is not the only important thing. In fact, only the Republican "Red Tide" election is clearly disadvantageous to the industry. A split Congress or a narrow Republican majority will not result in the complete repeal of the Inflation Reduction Act, just as Trump's narrow majority in his first term did not lead to the repeal of Obamacare. In fact, any result other than the "Red Tide" may lead to a significant increase in renewable energy stocks, Breidert predicted.

Today, clean energy is not an easy industry to bet on. However, the continued softening of these stocks due to political factors may signal buying opportunities for some of them. Trump and the Republican Congress may cancel some of the clean energy subsidies in the Inflation Reduction Act. However, in the next few years, some factors that are expected to promote the development of clean energy are unrelated to this law, but depend on more sustainable economic drivers.

The most important driver here is the growing demand for electricity. The power demand generated by new data centers that provide power for artificial intelligence and electric cars will force utilities to significantly increase their new power sources before the end of this decade. Renewable energy sources such as solar and wind power generation fields will undoubtedly meet most of the demand, as they are cheaper and faster to assemble than other alternative energy sources. It takes six years to build a new natural gas power plant, and more than ten years to build a large nuclear power plant. In contrast, large-scale solar power generation fields can be built in less than two years as long as there are enough transmission lines.

"Unless you think the economy will experience a negative change, you will continue to focus on companies that can meet the growing demand for power generation," Breidert said.

Companies that build wind and solar sites, such as NextEra Energy (NEE.N) and AES Power (AES.N), are expected to continue to develop regardless of who is elected. Breidert said that if the Republicans cancel clean energy subsidies, it will cause electricity prices to rise because it will reduce the construction of new power plants to meet demand, which will benefit NextEra and AES because they have signed power production contracts for the next few years. These contracts will not be affected by future policies. "If you plan to hold NextEra for three to five years, you should be fine," he said.

Breidert also likes power generation companies that own nuclear power plants, such as Constellation Energy (CEG.O) and Vistra Energy (VST.N), which also produce carbon-free electricity. These stocks more than doubled in the past year, but he expects more upside in the future due to the surge in demand for electricity. They also benefit from bipartisan support for nuclear energy.

Even under the Trump administration, electric cars may perform better than expected, despite his pledge to cut their subsidies. Some of the companies that will be affected if Trump cancels government support are Korean manufacturers who have established factories in Republican-controlled states, such as Kia. "There will be serious political consequences," Bradt predicted.