The impact of Trump's victory on energy storage

What is Trump's attitude towards the new energy industry? What impact will his election have on China's energy storage industry? Let's find out.

We focus on the position of President-elect Trump on energy policy.

Trump's energy policy clearly focuses on supporting and expanding traditional energy sources.

During his term in office, he has revoked a number of environmental protection regulations, such as measures to limit carbon dioxide emissions from power plants and vehicles, which is seen as a major setback to global climate efforts.

During the campaign, Trump made it clear that he would expand oil and gas drilling in the Arctic, which could not only exacerbate damage to the polar ecology, but also lead to a further rise in global greenhouse gas emissions.

In addition, Trump has proposed a series of policy measures to promote the development of fossil fuels, including tax incentives for oil and gas drilling, to promote the exploitation and consumption of traditional energy sources through economic means.

In addition, he plans to cancel the existing $7,500 tax credit for electric vehicles, which may slow the development of the electric vehicle market and hinder the popularization of clean energy transportation.

Trump also considers revoking the tax incentives for green energy in the Inflation Reduction Act and plans to reduce or eliminate fuel efficiency standards. If implemented, these policies may significantly hinder the energy transition in the United States and around the world, posing a challenge to combating climate change.

In the short term, there is a high degree of uncertainty about future support policies for new energy sources during the period of power transition between the Democratic Party and the Republican Party, so some US energy storage projects may choose to “rush to install” to obtain existing subsidies.

In the long term, under Republican leadership, the US energy transition may slow down, which will have an impact on energy storage deployment.

In addition, potential increases in trade tariffs may affect the supply chain of the US energy storage industry and push up costs.

Trump's election may have an impact on the speed of market development, but considering the strong demand in the US energy storage market and global trends, the overall growth trend of the energy storage market may not be fundamentally changed by a single policy

Will the IRA be repealed?

In terms of energy policy direction, the victory of Trump and the Republican Party may place more emphasis on the development of traditional energy sources such as oil, natural gas and coal, and may not support new technologies such as energy storage as strongly as the Democratic Party.

Trump is a staunch supporter of traditional energy sources, as fully reflected in the “American First Energy Plan” proposed during his term. The core objective of this plan is to make the United States self-sufficient in energy and reduce its dependence on external energy sources.

The Biden administration's 2022 Inflation Reduction Act (IRA) provides for investment tax credits (ITC) and production tax credits (PTC) under the framework of the IRA, which provide high subsidies for new energy sources such as wind power, photovoltaics, and energy storage.

However, Trump called the Inflation Reduction Act a “scam” and a “new green scam” and said he would try to repeal it or recover unspent funds. Trump and the Republican Party's advocacy emphasizes fuel economy and market-based mechanisms, opposes strong regulation that increases the burden on energy companies, or delays the expected retirement of coal-fired power plants in 2027.

Nevertheless, some in the industry believe that US federal government support for clean energy technology is relatively solid, as the vast majority of IRA-related capital commitments and efforts are located in Republican-leaning or swing states such as Georgia, Michigan, North Carolina, Ohio, and Tennessee.

New tariff hike on energy storage batteries?

In September, the Biden-Harris administration raised tariffs on electric vehicles and electric vehicle batteries imported from China, the world's leading manufacturer. It is expected that by 2026, the import tax rate on batteries dedicated to energy storage applications will rise from the current 7.5% to 25%.

Trump won the election, and Trump's “America First” agenda relies heavily on tariffs to protect workers from “unfair foreign competition” and support domestic manufacturing. He has called for universal penalties on foreign goods, including tariffs of at least 60% on imports from China.

On September 20, the U.S. Department of Energy (DOE) announced that it would allocate more than 3 billion U.S. dollars (about 21.2 billion yuan) to 25 battery projects in 14 states to promote the production of local batteries in the United States. The total amount of government subsidies for key U.S. mineral and battery supply chains has reached 35 billion U.S. dollars (about 250 billion yuan).

Trump, who places more emphasis on the development of traditional energy sources, may not be as supportive of energy storage batteries. However, it is worth paying attention to whether the Trump 2.0 period will adopt a more aggressive tariff policy to promote the development of the local energy storage supply chain in the United States.

In this regard, Fluence Energy Inc. President of the Americas John Zahurancik has said that he hopes to take a “balanced approach” to tariffs, claiming that “the US energy storage battery supply chain will still take several years to build, and a sudden tariff shock will harm US project owners and consumers more than foreign manufacturers.”