Following Donald Trump's US presidential election victory, hedge funds betting against renewable energy stocks have amassed profits exceeding $1.2bn due to a significant sell-off in the sector, the Financial Times has reported.

The election result has sent tremors through the renewables industry and shares of the renewable energy companies have declined sharply as concerns emerged that the US president-elect could cut key elements of President Joe Biden's Inflation Reduction Act (IRA).

Trump has made bold claims to cease offshore wind projects in the US from the outset of his presidency and to put an end to the subsidy rollouts for renewable energy projects that were a hallmark of Biden's IRA.

Following the election results, US solar stocks tumbled last Wednesday, with companies such as First Solar dropping 10% while solar developers Sunrun and Sunnova plunged more than 29% and 51%, respectively.

Hydrogen producer Plug Power and Sunrun also saw their stock prices plummet by 22% and 30% respectively, reported the Financial Times.

In Europe, the repercussions were felt as well, with Denmark's Ørsted witnessing a nearly 13% drop in share value on 6 November. Similarly, Nordex's shares declined by approximately 8%.

The clean energy sector has become a prime target for short sellers, particularly as high inflation and rising interest rates have exerted pressure on businesses that had previously seen their share values surge during the early stages of the Covid-19 pandemic.

During their quarterly results announcements last Tuesday, renewable energy companies, including Ørsted and Vestas, attempted to counteract the negative sentiment.

They emphasised to the Financial Times the significant role of renewables in generating jobs, especially in US states that support the Republican party.

Vestas CEO Henrik Andersen was quoted by the news agency as saying: “Sometimes comments are comments made in political statements, and then we will see what actually comes out of it.”