The pain points of Trump 2.0 for US solar

Early warning signs of trouble ahead emerged shortly after Trump’s victory was confirmed when the share price of several US solar companies tumbled on the back of what his second term as president may portend for the industry.

Trump has called climate change a “hoax” and a “scam” and has called for increases in trade tariffs and a more protectionist, “America First” foreign policy.

But the president-elect has spoken favourably, albeit unspecifically, of his support of solar and campaigned with a heavy emphasis on economic growth, which many Red states in particular have seen on the back of huge investments into clean energy spurred on by the Inflation Reduction Act (IRA).

“There is no denying that another Trump presidency will stall national efforts to tackle the climate crisis and protect the environment, but most US state, local, and private sector leaders are committed to charging ahead. And you can count on a chorus of world leaders confirming that they won’t turn their back on climate and nature goals,” said Dan Lashof, US director at the World Resources Institute today.

“Donald Trump heading back to the White House won’t be a death knell to the clean energy transition that has rapidly picked up pace these last four years,” Lashof said. “Both Republican-led and Democratic-led states are seeing the benefits of wind, solar, and battery manufacturing and deployment thanks to the billions of dollars of investments unleashed by the Bipartisan Infrastructure Law and the Inflation Reduction Act. Governors and representatives in Congress on both sides of the aisle have come to recognise that clean energy is a huge moneymaker and a job creator. President Trump will face a bipartisan wall of opposition if he attempts to rip away clean energy incentives now.”

The picture will undoubtedly become clearer between now and January as the president-elect’s transition team gets to work and fleshes out his policy agenda.

But as the dust begins to settle on a seismic shift in US politics, PV Tech takes a look through the haze at some of the key questions facing the US solar industry as it anticipates a second Trump presidency.

A hostile environment

“Drill, baby, drill” became one of Trump’s adopted slogans on the campaign trail, and his support for an increase in domestically sourced fossil fuels remains undimmed.

The “Project 2025” manifesto, a deeply conservative political initiative which would consolidate presidential power and deliver sweeping public spending cuts, describes “The Biden Administration’s assault on the energy sector…forcing the economy to build out and rely on unreliable renewables.”

According to data from the Global Infrastructure Investor Association, the IRA (Biden’s chief energy sector policy) has stimulated around US$115 billion in investment and created around 90,000 jobs, many of those in Republican-led states.

Trump himself has disavowed involvement in Project 2025, though the project’s president, Kevin Roberts, referred to this as a “political tactical decision”.

There is also speculation that Trump could withdraw the US from the Paris Agreement, the international agreement on climate change action signed in 2016 – again. He removed the US from the deal in 2020, abandoning the collective effort to keep global warming to below 1.5 degrees Celsius degrees above pre-industrial levels this century.

Should these things happen, progress in the US’ clean energy transition would inevitably be slowed.

Jon Powers, president of climate investment firm CleanCapital and a former chief adviser in the Obama administration, said: “The election may be over, but the work to address the climate crisis just became a target. As an industry, renewable energy organisations, stakeholders and proponents will need to aggressively educate the incoming administration about the status of the clean energy revolution and the progress that has been made over the past four years. 

“With the continued implementation of the Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Bill (BIL), the clean energy industry will need to continue lobbying against political headwinds and fighting misinformation. Additionally, it will be up to us to hold Congress accountable to ensure clean energy programs continue to receive the funding promised and to defend critical legislation like the IRA. Without it, we will be sent down a path that will lead to an energy crisis on top of the climate crisis.

Will the IRA survive?

Trump has vowed to gut the IRA, the Biden administration’s US$369 billion package of tax incentives for renewable energy deployment and manufacturing. While it never explicitly mentions solar, Trump’s Agenda47 policy platform says: “President Trump will immediately stop all Joe Biden policies that distort energy markets, limit consumer choice, and drive-up costs on consumers, including insane wind subsidies.”

Since the bill was announced, solar module manufacturing capacity in the US has almost quadrupled to over 30GW from around 8GW in 2021. Whilst this boom has not reverberated further up the supply chain for cells or wafers, the US is markedly less reliant on China for its end supply of solar modules.

The US also added 32GW of new solar PV capacity in 2023, compared with just over 20GW in 2021.

The short answer for most observers and analysts is that the IRA will not be entirely repealed, in part due to bipartisan support for the impact that the bill has had across the country.

In August a group of 18 Republican Congress members warned against repealing IRA tax benefits, saying that the bill’s credits were “making our country more energy independent and Americans more energy secure.” Republican-led states have also been the primary recipients of many IRA investments. Georgia, Texas and Ohio have all become home to major solar manufacturing operations from some of the industry’s key players. US states have a lot of clout in determining their individual policies, and many would likely not support a complete repeal of the IRA.

Alfred Johnson, CEO of clean energy finance platform Crux said the IRA’s tax credits were “creating millions of construction, manufacturing, and mining jobs across the country. This powerful industrial policy is already cultivating resilience to our energy infrastructure and domestic supply chains for minerals and manufactured components.

“Repealing the credits would raise the cost of energy for consumers and businesses, hurt workers, and increase taxes on companies. Those outcomes are unlikely to be attractive to the Administration and Republicans in Congress.”

China and tariffs

“On Day One, President Trump will rescind every one of Joe Biden’s industry-killing, jobs-killing, pro-China and anti-American electricity regulations,” says a statement on Trump’s official website. “The winner of Joe Biden’s war on energy is Communist China.”

China overwhelmingly dominates the global solar supply chain, and Chinese manufacturers can currently produce more than twice the global annual demand. However, the US sources almost none of its solar products directly from China thanks to a series of tariffs which have been in place for years.

There are portions of the US solar industry which are pushing for further trade restrictions, particularly from Southeast Asia where the Department of Commerce (DOC) has previously found multiple Chinese-owned companies guilty of circumventing antidumping and countervailing (AD/CVD) tariffs which regulate fair competition and counteract foreign government subsidies for an industry. A new petition is seeking to impose AD/CVD tariffs on solar cells from those countries, too.

However, much of the solar industry opposes tariffs for their attendant component price increases and supply strains.

In the debate between carrot and stick (IRA incentives or trade defence) that has racked the US solar industry recently, Trump falls firmly on the tariff side. The president-elect has said he would levy at least 10% tariffs on all imports to the US and as much as 60% on Chinese imports.

Despite the swelling of US solar module manufacturing capacity in the last two years, those factories still overwhelmingly rely on imported solar cells and wafers. Tariff hikes would make those imports far more expensive and potentially have knock-on effects for solar project financing and deployments as costs are passed down the value chain.

President of the Solar Energy Industries Association, Abigail Ross Hopper, said: “Domestic solar manufacturing has grown four-fold under pro-business federal clean energy policies, and soon, we will have enough American-made solar panels to meet our demand for solar deployment. Nearly 9 in 10 Americans support these policies, which are uplifting communities in states like Ohio, Texas, Georgia, and South Carolina with thousands of jobs and billions of dollars of investments.

“SEIA looks forward to working with the new administration and members of Congress to build on the progress of the last four years. Together we can secure a future of clean energy abundance and prosperity.”

Departments, agencies, institutions

If the ultra-conservative Project 2025 agenda is to be believed, then the days of the Department of Energy in its current guise are numbered. The document, which references outgoing president Joe Biden’s “extreme ‘green’ policies”, proposes recasting the DOE as the Department of Energy Security and Advanced Science (DESAS). DESAS would have a much slimmed-down remit from the current DOE, with a few specific areas of focus such as energy security, supporting cutting-edge “fundamental, advanced” science and developing new nuclear weapons.

Such a refocusing would likely mean scrapping or significantly scaling back the DOE’s loan programmes office, which has been an important source of financial support for large-scale energy infrastructure projects in the US.

Also under threat would be the DOE’s Office of Energy Efficiency and Renewable Energy (EERE), within which sits the Solar Energy Technologies Office and which supports research into net-zero technologies. In the Project 2025 world, all the DOE’s applied energy programmes, such as those run through EERE, should be “eliminated”, with the exception of those undertaking “basic science” for new energy technologies. A similar fate is envisaged for the Grid Deployment Office, which is working on relieving congestion in the US grid.

Trump has publicly distanced himself from Project 2025 and some of its more extreme recommendations. But before he was beaten by Biden in the 2020 election, Trump’s first administration had already signalled its intent to target some of the DOE’s activities, lodging, for example, budget requests calling for EERE’s funding to be cut by US$2 billion. Meanwhile, Trump’s presidential policy platform Agenda47 echoes many of the ideas of Project 2025 and sets out a list of measures a Trump administration would pursue to roll back what are described as Biden’s “kamikaze” climate regulations.

Given the president-elect’s apparent determination to reverse many of the Biden administration’s climate-friendly energy policies and the state institutions that support them, it would be difficult to envisage the DOE of 2028 looking like it does in 2024.

Market demand

Though clouds gather in the distance, the significant corporate demand which underpins the US solar market could sustain its momentum.

Large corporates such Meta, Amazon, Google, Walmart and McDonald’s have invested heavily in renewables PPAs and vPPAs. In an interview with PV Tech Premium last month, CEO of EDP Renewables North America Sandhya Ganapathy said corporations represent the “biggest bucket” of demand for renewables in the US, partly because they have decarbonisation commitments and partly because renewables represent the cheapest and most financially reliable way to meet growing electricity demand.

The fact that the US market is underpinned by corporate demand, rather than governmental targets that shape the European energy market, could insulate it from a lot of the potential acrimony coming from the new commander-in-chief.

Data centre demand is expected to grow massively in the coming years – according to Goldman Sachs it will increase 160% by 2030, largely as a result of artificial intelligence. Deals already signed between Meta, Google, Amazon and a number of the US’ biggest solar developers have shown the potential that big tech has to finance major solar developments across the US.

Added to the growing market demand for solar and other renewables is the momentum behind clean energy deployment that has gathered pace since Trump last held office and which, given America’s devolved power structures, is likely to continue regardless of his regaining the presidency.

As WRI’s Dan Lashof concludes: “While President Trump may retreat, leaders from states, cities, businesses and elsewhere will eagerly step into the breach to take forward ambitious climate action. Thanks to the generous tax incentives and investments from the Inflation Reduction Act and Bipartisan Infrastructure Law, subnational actors have more resources than ever to cut emissions, expand clean energy and electric transportation and address environmental injustices. 

“One can only hope that Donald Trump will put conspiracy theories to the side and take the decisive action to address the climate crisis that the American people deserve. But I won’t hold my breath, and neither will the global community nor U.S. state and local leaders. We are moving forward.”