Watt's the Deal... with the latest set of tariffs from the Trump Administration? On the heels of what folks are calling Liberation Day, I felt obligated to give you my hot take on what these tariffs mean for the renewables market here in the United States.
Here's the reality of tariffs: They undoubtedly drive prices up. We've seen this in the past and are already seeing it now with increased pricing on steel and aluminum. Even if it's made in the U.S., the price is going up with more demand for this scarce product. I've already seen it just in the last few weeks on projects we're building today, and that's just the start.
We will still import roughly 80% of the panels we consume here in the us. Likewise, most of the battery capacity we use for projects is manufactured in China, which has an even steeper tariff. So if you’re buying batteries this year, hopefully you already bought them, they're stateside, and cleared through customs.
Market Uncertainty
Ambiguity around the evolving nature of tariff policies generally makes markets volatile. Investors don't like uncertainty. and they certainly don't like volatility. While that volatile market may impact the broader capital markets, I don't see this impacting the renewable space. An event like this generally leads to a flight to quality, and US infrastructure is as high quality as it gets.
If you're an infrastructure investor here in the US, you are invested in renewables, retaliatory measures are on the table, but that wouldn't necessarily impact our domestic renewables market too much. Once again, almost everything we manufacture for solar, energy storage, and renewables in the U.S., we consume here. However, that’s not the case for oil and gas equipment, especially Liquid Natural Gas (LNG), which is a big priority for this administration. So, it'll be interesting to watch how retaliatory tariffs affect LNG exports over the coming months.
Inflation and Slower Growth
As I mentioned earlier, these tariffs will have an economic impact. They’ll likely stoke inflation and slow economic growth, which could reduce overall demand for energy.
But that insatiable demand from data centers, the electrification of everything, and AI are likely to offset any drag on renewable energy demand--or more specifically--the need for kilowatt-hours on the grid.
While the full impact of the tariffs will unfold over time, the initial indicators suggest that there’s a potential for increased operational costs, market volatility, and strained international trade relationships.
So, Watt’s the Deal with all that? Power prices are going up!
.svg)
