Trump’s “tariff coaster” threatens price hikes for US wind and solar projects, but batteries hit hardest

The global chaos stemming from US President Donald Trump’s haphazard tariff policies will be mirrored in the country’s power sector, according to energy analysts Wood Mackenzie, with prices likely to rise across the board – for wind, solar and conventional technologies – and with big batteries hit the hardest.

predict the cost of most power generation technologies will increase anywhere from 6 per cent to as much as 50 per cent for utility-scale storage projects.

Donald Trump’s so-called “Liberation Day” – the day he followed through on his love affair with tariffs and announced his country’s “reciprocal tariff” strategy – was meant to herald in a “declaration of economic independence” for America.

In reality, the announcement and subsequent imposition of tariffs served only to trigger an immediate global trade war with the entire planet (including the penguins on Heard Island), a stock market slump, and has begun to wreak untold economic harm across the country.

Aa new report from Wood Mackenzie (WoodMac), says Trump’s tariff strategy has added costs and increased uncertainty to the US power markets, which is likely to lead to a slowdown in development activity – the very opposite of his plan to ‘unleash American energy’ and ‘secure America’s energy dominance’.

“In a business with 5- to 10-year planning cycles, not knowing what a project will cost next year or the year after is disruptive and causes massive uncertainty for US power industry participants,” said Chris Seiple, vice chairman, Power and Renewables at Wood Mackenzie.

“As a result, we could see potential delays in project development and rising power purchase agreement (PPA) prices. We will definitely see impacts on power sector capital projects. The severity depends on what scenarios play out.”

The report was based on WoodMac’s inhouse tariff calculator which was used to estimate the impact tariffs would have on the cost of power sector capital projects.

The analysis relied on two specific scenarios:

• ‘Trade tensions’: by the end of 2026, the US effective tariff rate will settle at 10 per cent with a 34 per cent tariff on China.
• ‘Trade war’: the US adheres to an aggressive tariff policy and implements reciprocal tariffs that result in an overall effective tariff rate of 30 per cent through 2030

Based on these two scenarios, WoodMac predicts that most types of power generation technologies will experience cost increases of between 6 per cent to 11 per cent.

As can be seen in the graph below, however, utility-scale battery storage is the exception, with potential cost increases ranging from 12 per cent all the way up to more than 50 per cent.

The issue, of course, is that nearly all the battery cells used in US utility-scale storage projects currently come from China – the country that Donald Trump has focused the majority of his tariff-induced ire upon.

This combination of reliance and tariffs, and the country’s inability to meet demand anytime soon, could wreak havoc. And US-based Powin, the provider of the batteries for Australia’s most powerful battery storage project, the Waratah Super battery, has already said that Trump’s tariffs may force it out of business.

“While US battery cell manufacturing capacity is expanding, it is not expanding at a pace nearly fast enough to meet even a small fraction of battery projects in the US,” said WoodMac’s Seiple.

“In 2025 we estimate there is sufficient domestic manufacturing capacity to only meet about 6 per cent of demand and by 2030 domestic manufacturing could potentially meet 40 per cent of demand.”

Similarly, though to a much lesser degree, tariffs, and the uncertainty around more tariffs, will also lead to increases in the United States’ solar market – making it the highest cost solar market in the world.

“The tariffs that have been in place on solar modules along with an inefficient transmission policy that exacerbates interconnection costs have made construction costs for solar higher in the US than in most other markets,” said Seiple. 

“An increase in tariff levels will only worsen this premium US energy consumers need to pay to access renewable energy.”

In Wood Mackenzie’s ‘Trade Tensions’ scenario, the cost of a utility-scale solar facility in the US would be 54 per cent more expensive than one in Europe and 85 per cent more expensive than in China.

“Our analysis shows that the current trade policies are creating significant challenges for the US power industry,” Seiple concluded.

“While the full impact remains uncertain, it’s clear that industry participants need to prepare for increased costs and potential disruptions to their supply chains.”