Trump tariffs, orders rein in thriving battery storage sector
March 10 – The U.S. energy sector is being hit by a series of import tariffs that could impact growth.
Preliminary rulings on new countervailing and antidumping duties on certain Chinese components are expected this month, on top of President Trump’s decision to increase tariffs on China by a further 10% from March 4, representing a 20% tariff since he began his second term. These follow the Biden administration’s decision to increase tariffs on lithium batteries from China from 7.5% to 25% starting in January 2026.
Alongside this, Trump’s review of federal funding and executive orders that steer energy priorities towards oil and gas and energy security could impact storage developers.
Together, the policy headwinds will dent the growth of energy storage, after a sharp uptick installations in 2024.
Wood Mackenzie forecasts annual installations will grow by 10% per year between 2025 and 2028, compared with 25% in 2024, as “early-stage development constraints” will continue and tariffs will hit projects. Battery growth has been fuelled by solar-storage projects as well as stand-alone facilities.
Recent tariff announcements and executive orders have “introduced a significant amount of uncertainty for projects in development,” across the value chain, Brian Pezzetti, EDF Senior Director for Strategic Procurement, told Reuters Events.
While many storage developers are diversifying supply chains and looking to source American-made parts, domestic manufacturing capacity is limited. In 2023, the U.S. had 60 GWh of lithium ion battery manufacturing capacity for all applications and demand from electric vehicles exceeded this, according to data published separately by the Solar Energy Industries Association (SEIA) and the International Energy Agency (IEA).
The import tariffs will drive up the price of equipment for developers as well as the price of energy storage for offtakers, Pezzetti said. Last year, average grid-scale battery system prices fell 17% between Q3 2023 and Q3 2024, from $1,274/kW to $1,062/kW.
All projects will be impacted by the tariffs “as there are no viable energy storage systems where every component and material can be sourced from the U.S.,” he noted.
Price impact
Antidumping and countervailing duties (AD/CVD) are set to be imposed on imports of Chinese active anode materials used in battery storage technology following a petition filed by the American Active Anode Material Producers in December with the Department of Commerce (DOC).
Tariffs of up to 920% have been proposed but most industry sources suggest a rate of 150% is more likely. The DOC’s preliminary CVD ruling is due on March 12 and the AD ruling on May 26.
A rate of 150% for the AD/CVDs, combined with the latest 10% tariff on products from China, would increase storage system costs by about 5%, Allison Weis, Wood Mackenzie Global Head of Storage, told Reuters Events.
She said,
This is not going to make a massive impact on project deployments but marginal projects could be impacted,
The Trump administration is reviewing federal funding plans and any removal of tax credits issued under the 2022 Inflation Reduction Act would further impact clean energy deployment. The inflation act introduced a range of tax credits, including a domestic manufacturing tax credit and a 10% tax credit adder for using domestic content.
If Trump retains the tax credits, storage systems manufactured in the U.S. will be cheaper than Chinese imports, Wood Mackenzie said in their report. It is worth noting, however, that U.S. systems will remain reliant on some imported materials or components.
The tax credits aim to boost local manufacturing capacity but it will take time to build out sufficient capacity to meet demand.
The latest import tariffs will increase demand for domestic inputs and drive up the price of these, Rob Minter, SVP Government and Regulatory Affairs for Engie North America, told Reuters Events. Engie has been working with domestic suppliers to onshore supply chains for some time and operates more than 1.8 GW of U.S. battery storage assets, according to data at the end of 2024.
Minter said,
The current ability to meet demand with onshore production, while growing, is limited,
Supply risks
Weis said,
The energy storage sector is also being affected by shortages for medium voltage equipment such as transformers and switchgear, with some wait times jumping from weeks to years,
Projects due for completion in 2025-2026 are most at risk from supply problems, “as tight timelines increase vulnerability to delays,” Steven Zhu, president of manufacturer Trina Solar U.S. said. Projects due for completion beyond then have more time to adapt.
Large multi-gigawatt portfolios with limited procurement flexibility are
Zhu noted,
More exposed to supply chain disruptions,
Zhu said,
Developers are using various strategies to mitigate supply risks, including using local manufacturers, diversifying supply chains, and expanding inventories of components beyond immediate needs,
In addition, the permitting of projects could be affected by a fire in January that destroyed a 300 MW array at Vistra Energy’s 750 MW Moss Landing energy storage facility in California. The batteries were supplied by LG Energy Solution and the cause of the fire is still being investigated.
Energy storage has a good overall track record of safety and Moss Landing was an unusual and atypical configuration” but as a result of it
Minter said,
We have work to do as an industry to educate and assure the public of energy storage safety,
While Trump’s federal shakeup following his election as President in November has created uncertainty across the clean energy sector, Engie expects “the regular order of the [government] agencies to resume and the direction of their work to continue,” Minter added.
He said,
Rising electricity demand will require an “all of the above” strategy including clean power and energy storage, while the installation of battery storage systems support “energy dominance,” which is one of the Trump administration’s stated goals,
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Trump tariffs, orders rein in thriving battery storage sector, source
