Hedge funds, including Arrowstreet Capital and Qube Research & Technologies, that bet against renewable energy stocks have seen profits soar by over $1.2bn following the steep sell-off in the sector triggered by Donald Trump’s election victory, according to a report by the Financial Times.

The report cites data from Breakout Point as revealing that both firms held significant short positions on companies such as Nel, a Norwegian hydrogen firm, and Nordex, a German wind turbine manufacturer.

Shares in these and other renewable energy companies plunged on Wednesday amid concerns that Trump could “terminate” President Joe Biden’s Inflation Reduction Act (IRA), potentially cutting tax credits and ending offshore wind development.

In the US, hydrogen producer Plug Power and solar developer Sunrun, which have been heavily shorted by hedge funds, saw shares drop 22% and 30%, respectively. These two stocks alone generated about $350m in gains for short sellers, according to S3 Partners data.

In Europe, offshore wind giant Ørsted lost nearly 13%, and Nordex fell close to 8%.

Overall, hedge funds raked in more than $1.2bn from short positions on 20 major renewable stocks in the US and Europe, according to S3's data.

Trump has promised to end offshore wind development in the US on “day one” of his presidency and halt subsidies launched under Biden’s IRA.