What happened?Stocks of solar energy stocks began the week on a high note, with many jumping double-digit percentages on Monday. Canadian Solar (NASDAQ CSIQ) saw a 12.6% jump, Enphase Energy (NASDAQ :ENPH), a supplier, rose 7.8% and ReneSola (NYSE :SOL) rose 10.3%. Residential and commercial developer SunPower was at its peak 11.8%. These stocks closed the day higher by 12.5%, 7.4% and 8.7% respectively.Over the past year, solar stocks have experienced some volatile swings. They have moved in unison sharply higher over the past week. While momentum trading may be a factor, there have been positive developments in the industry.What are you waiting for?The momentum was ignited last week by Jon Ossoff, a Democratic Senator from Georgia, who introduced legislation to give tax credits for manufacturers in the entire solar energy supply chain. Washington has shown more support for the idea of incentivizing onshore solar manufacturing than many observers might have expected.Although it isn't clear exactly what impact this bill will have on the industry, manufacturers would be the first to benefit if it becomes law. This would explain why Canadian Solar is up and Enphase down. They are market leaders in their respective niches. PV Magazine reports that solar modules would receive a credit of 11c per watt, cells 4c, wafers $12 per square meter and polysilicon $3 per kilogram under the proposed legislation. These are very generous numbers. However, it is reasonable to assume that Congress will reduce them.Downstream, developers like ReneSola or SunPower could benefit from some of the cost savings in U.S. manufacturing. However, the real benefit this bill may have for them is that solar energy will become more affordable and more popular in America.It's not possible to predict what the legislation will look like when it reaches key votes in Congress. Even if the bill passes, it could not. Investors should for the moment assume that solar companies will continue to operate as normal, with the possibility of some tax relief.Another factor that helped solar energy stocks Monday was the further decline in interest rates. The 10-year U.S. Treasury yield fell 5 basis points to 1.488%. Solar developers benefit from lower interest rates because they have a lower cost of capital. This allows them to reduce the price they charge for electricity or increase their margins. SunPower and ReneSola received the greatest boost on Monday due to their lower interest rates.What now?The Washington environment was a key reason solar energy stocks rose in late 2018 and early 2021. It seems that the industry's hopes of federal support are beginning to translate into legislative proposals with at least some chance for passing.While bond yields have risen significantly over the past year, they have dipped in recent months which is good news for solar companies. It could lead to a new boom for the U.S.'s solar industry if rates stay low and end-users have lower costs. Investors were responding to this Monday.
