Tariffs could reduce PV, BESS installations by 10% in US and EU

July 23, 2025
Facebook
Twitter
LinkedIn
Reddit
Email
Shipping containers on a boat.
“The speed of the energy transition would likely not be drastically altered, at least in the European Union, by introducing tariffs,” the report said. Image: Rinson Chory, via Unsplash.

A rise in global tariffs could impact solar PV and battery energy storage system (BESS) installations in the US and EU by up to 10% by 2035.

A scenario-based analysis by business consultancy firm McKinsey said that escalating global tensions between the US, EU and China could decrease solar PV installations in the US by 9% and 7% in the EU. BESS installations in Europe could suffer a decline up to 10% if trade tensions worsen.

This article requires Premium SubscriptionBasic (FREE) Subscription

Try Premium for just $1

  • Full premium access for the first month at only $1
  • Converts to an annual rate after 30 days unless cancelled
  • Cancel anytime during the trial period

Premium Benefits

  • Expert industry analysis and interviews
  • Digital access to PV Tech Power journal
  • Exclusive event discounts

Or get the full Premium subscription right away

Or continue reading this article for free

The report’s high-impact scenario assumes 60% tariffs on all Chinese imports to the US and 20% from other countries, and a 47.7% tariff rate on Chinese solar modules and batteries entering the EU. It does not take into account other factors, most notably the slashes to renewable energy subsidies announced in the US earlier this month.

However, McKinsey said that under any tariff scenario, solar PV installations in the US and EU “could increase more than twofold,” thanks to dramatic price reductions in the technology over 2022-23.

Under its least severe tariff scenario, which assumes a situation “similar to late 2024”, the EU will reach 750GW of installed PV capacity by 2035. In the same global scenario, McKinsey forecasts 553GW of solar capacity in the US.

The “No real disruption” version of events, wherein the US imposes 20% tariffs on Chinese goods, 25% on Mexican and Canadian goods and an average 52% tariff on solar modules from Southeast Asia (via AD/CVD provisions), US installations drop to 512GW while EU figures stay up at 750GW.

McKinsey expects BESS installations in the EU, particularly, to increase more than fivefold over the next decade, largely due to the technology’s globally diverse supply chain. While China currently dominates both the solar and BESS supply chains, raw materials for batteries, “such as lithium and cobalt, are accessible across Latin America, Africa, and Australia (lithium in Chile and Argentina, cobalt in the Democratic Republic of Congo and Australia)”, the analysis said.

“Our scenarios suggest that the speed of the energy transition would likely not be drastically altered, at least in the European Union, by introducing tariffs,” the article continued. “Tariffs add uncertainty to the clean energy landscape. In the broadest sense, our scenario analysis indicates that adoption of clean-energy technologies will likely take longer and cost more the longer tariffs last and the higher they are.”

Global tensions

The momentum of the global transition to renewable energy has taken hits in recent times. Donald Trump’s election brought anti-renewables sentiment into the White House, and his government’s moves against the industry goes against the grain of most of the rich world.

A 2024 report from consultancy DNV warned that geopolitical shocks could be headwinds for the global energy transition. Even as renewables’ share in power generation continues to reach record levels and grow faster than any other energy technologies, financial shocks and the threat of military conflict threaten momentum.

 The report said economic shocks can shake investor confidence and turn public and political opinion away from renewables, even as many argue that renewables represent greater security and long-term savings.

It also said that trade tensions would put greater stress on supply chains, as big picture politics moves broadly away from globalism and liberalism towards greater protectionist and nationalist tendencies. Specifically, the report said “Diversifying from China too rapidly risks a sharp increase in supply chain and production costs, a duplication of innovation effort, and a slower transition.”

25 November 2025
Warsaw, Poland
Large Scale Solar Central and Eastern Europe continues to be the place to leverage a network that has been made over more than 10 years, to build critical partnerships to develop solar projects throughout the region.
10 March 2026
Frankfurt, Germany
The conference will gather the key stakeholders from PV manufacturing, equipment/materials, policy-making and strategy, capital equipment investment and all interested downstream channels and third-party entities. The goal is simple: to map out PV manufacturing out to 2030 and beyond.
16 June 2026
Napa, USA
PV Tech has been running PV ModuleTech Conferences since 2017. PV ModuleTech USA, on 16-17 June 2026, will be our fifth PV ModulelTech conference dedicated to the U.S. utility scale solar sector. The event will gather the key stakeholders from solar developers, solar asset owners and investors, PV manufacturing, policy-making and and all interested downstream channels and third-party entities. The goal is simple: to map out the PV module supply channels to the U.S. out to 2027 and beyond.

Read Next

October 29, 2025
The European Bank for Reconstruction and Development (EBRD) has provided US$142 million in financing for the construction of a 1GW solar and 1.3GWh BESS portfolio in Uzbekistan.
October 29, 2025
NextEra Energy Resources added 3GW of new renewable energy generation and storage capacity to its portfolio in the third quarter of 2025.
October 29, 2025
US solar manufacturer Corning has brought online its wafer production at its Michigan plant, during the third quarter of 2025.
Premium
October 28, 2025
BESS are 'the new player that everyone is talking about,' in Europe’s power purchase agreement (PPA) space, according to LevelTen.
October 28, 2025
GoldenPeaks Capital secures EUR114 million (US$132 million) financing package for two solar PV Portfolio in Poland.
October 28, 2025
Chinese solar inverter producer GoodWe has launched a new “low noise, low weight” string inverter for the European corporate & industrial solar market.

Subscribe to Newsletter

Upcoming Events

Upcoming Webinars
November 12, 2025
10am PST / 1pm EST
Solar Media Events
November 25, 2025
Warsaw, Poland
Solar Media Events
December 2, 2025
Málaga, Spain
Solar Media Events
February 3, 2026
London, UK
Solar Media Events
March 10, 2026
Frankfurt, Germany