From pv magazine 03/25

The second Trump administration is taking a tough approach to policy reform, not least with energy. The US president has voiced support for an “all the above approach” while sloganeering “drill baby, drill” and calling for the end of the “EV [electric vehicle] mandate.”

Trump is clear about his penchant for fossil fuels and distaste for wind energy and EVs. But where is he on solar?

The president’s Unleashing American Energy executive order loosened restrictions on oil and rare earth mineral extraction. The new administration has also attempted to remove state emissions waivers that limit sales of conventional vehicles and considered the elimination of “unfair subsidies and other ill-conceived, government-imposed market distortions” that favor EVs. There is no federal mandate for EVs. The order also calls for looser energy efficiency requirements for appliances, citing product competition and consumer choice.

In a separate order, Trump paused offshore wind energy lease sales in federal waters and stayed approvals, permits, and loans for wind power.

Industry growth

The solar industry grew 128% during Trump’s first term, from 2016 to 2020, according to trade body the Solar Energy Industries Association (SEIA). It was the largest source of electricity generation capacity added to the US grid in 2024. The US Energy Information Administration (EIA) reports solar made up more than 64% of the new US grid-tied generation capacity added from January to September 2024, ahead of natural gas.

“Solar, now a $60 billion industry, is adding more new capacity to the US grid than any other fuel source amid the largest increase in electricity demand since World War II,” said SEIA President and CEO Abigail Ross Hopper.

Market intelligence provider S&P Global Commodity Insights expects clean energy investment to surpass fossil fuel expenditure for the first time this year with $670 billion worth of renewables generation and green hydrogen – plus fossil fuel enabling carbon capture and storage.

“Solar PV is expected to represent half of all cleantech investments and two-thirds of installed megawatts,” said Edurne Zoco, executive director for clean energy technology at S&P.

Clouding over

Despite such optimism, the Trump administration has raised barriers to solar. The president again withdrew the nation from the Paris Climate Agreement. That and friendlier fossil fuel extraction regulation could affect the PV business case versus oil and gas, and give banks and investors pause.

The Unleashing American Energy executive action halted grants, loans, and otheMichr financial support from the the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act.

The US Treasury, and market intelligence provider Rhodium Group, estimate more than $380 billion of private investment has been announced since the IRA was passed. Those investments included $114 billion for solar, $77 billion for battery manufacturing, and $66 billion for energy storage projects. The Department of the Treasury said it expects the investment to support 1.5 million jobs over the next decade, based on analysis by the Labor Energy Partnership.

The freeze to all federal IRA disbursements ordered by the executive order caused a whirlwind of uncertainty, as it remains unclear which aspects of IRA funding will be halted. Major manufacturers have since announced cancellations or pauses to major factory investment, including India’s Premier Energies, which halted 1 GW United States solar cell manufacturing plans; Kore Power, which has planned a lithium-ion battery gigafactory in Arizona; and Freyr Battery, which plans a $2.6 billion investment in a Georgia battery factory that would create an estimated 720 new jobs.

Accounting and advisory firm Baker Tilly said it “remains unclear” whether the pause covers all prospective funding, such as IRA direct pay provisions, or if it applies solely to grants, loans, and contracts administered at federal level.

At the time of writing, debate over federal disbursement was ongoing. US District Judge Loren AliKhan placed a restraining order on the disbursement freeze, ordering the US executive not to “pause, freeze, impede, block, cancel, or terminate” money that Congress had already allocated to states. Federal Judge John McConnell Jr. ordered the Trump administration to “immediately restore withheld funds, including those federal funds appropriated in the Inflation Reduction Act and the Infrastructure Improvement and Jobs Act.”

White House representatives said they had made “good-faith, diligent efforts to comply” with the order to resume federal funding. Justice McConnell said the administration, however, had “continued to improperly freeze federal funds and refused to resume disbursement of appropriated federal funds.” It remains to be seen whether the White House is operating in contempt of federal court orders.

It also remains unclear what will happen to the IRA and other federal clean energy funds. The administration’s disbursement order called for a 90-day stay, from its enactment on Jan. 20, to review all processes, policies, and programs related to grants, loans, contracts, and other financial payment. Agencies must assess whether such support aligns with the administration’s newly established energy goals, according to the order.

Those energy goals were outlined in Section 2 of the “Unleashing American Energy” document. They include expanding energy exploration on federal land and water, prioritizing the production of rare earth metals, allowing federal override of state energy goals, eliminating what the order described as the “electric vehicle mandate,” and promoting “consumer choice” in appliances and vehicles, among other aims.

Budget reconciliation

While solar energy is not directly in the crosshairs of that executive order, uncertainty persists about the fate of core IRA funding such as the 30% investment tax credit for eligible projects, the production tax credit, and additional tax-credit “adders” such as the 10% energy community credit. Much of the uncertainty could be resolved under the federal budget reconciliation process in late 2025.

An industry note from Roth Capital Partners suggested all IRA funds may end five years earlier than expected, in 2027, rather than ramping down from 2032. The note suggested a Republican-majority Congress could take a “sledgehammer” approach, crushing the foundational industrial policy.

The IRA was specifically crafted to be resilient to a Republican government, however, which has a razor-thin Congress majority. Roughly 80% of IRA funds are going to projects in Republican controlled districts, leading to thousands of jobs and billions in investment and making the funds “stickier” for a Congress whose constituents it aims to benefit.

In August 2024, some 18 members of the US House of Representatives requested Congress retain IRA funds. “A full repeal would create a worst-case scenario where we would have spent billions of taxpayer dollars and received next to nothing in return,” said a letter to House Speaker Mike Johnson.

Now, at least eight more Republican House members have voiced support for retaining IRA tax credits, citing job growth. Several Republican House members have provided official testimony to the Ways and Means Committee.

“I ask that you proceed with caution when looking to address provisions of the IRA that have incentivized the onshoring of the future of automotive jobs, which brought billions of dollars in US investments and thousands of jobs created right here,” said Michigan Representative John James. “The bulk of the IRA is damaging policy, we must not neglect the sector-wide energy tax provisions that manufacturers and job creators in my district rely on. We stand to lose too many American jobs.”

Iowa Representative Mariannette Miller-Meeks highlighted five tax credits she described as “driving transformative investments in American energy.” She recommended retaining clean fuel production credit 45Z, advanced manufacturing production credit 45X, carbon oxide sequestration credit 45Q, and the 45Y and 48E clean energy production and investment tax credits.

Such Republican support for clean energy tax credits could bode well for the most critical funds within the IRA.

Increasing tariffs

Amid possible cuts to IRA funding, the Trump administration has also enforced several new tariffs that are expected to increase solar costs and slow the energy transition. Imported solar energy resources, including polysilicon, wafers, and cells from China are now subject to 60% tariffs under Section 301 of the Trade Act of 1974.

Tariffs of 10% on “energy resources” from Mexico and Canada, which were paused and under review as of mid-February, encompass solar-grade polysilicon, solar cells, and wafers but do not include finished solar modules.

A 25% tariff has also been placed on imported steel and aluminum from most global providers. Aluminum is used in solar panel framing and represents roughly 14% of a finished panel’s cost, as well as being used in rooftop solar racking. Steel is used in ground-mounted solar support structures.

PV dominance

Despite all the regulatory clouds cast over solar by the new administration, optimism remains. BloombergNEF expects the levelized cost of electricity (LCOE) from fixed-axis, utility-scale solar projects to decline 2% year over year to $35/MWh. It forecasts that the LCOE will continue to decline to $25/MWh by 2035. Battery energy storage costs are also forecast to decline, with their LCOE expected to fall around 11% from $104/MWh in 2024 to $93/MWh in 2025. Ten years later, BloombergNEF expects battery energy storage to cost $53/MWh, nearly half what it is today.

BloombergNEF has also reported global investment in clean energy technology hit a record $2.1 trillion in 2024. That represented 11% growth from 2023 and is more than double the figure recorded in 2020.

“New solar plants, even without subsidies, are within touching distance of new US gas plants,” a report from the analyst stated. “This opens up the likelihood that solar will become even more compelling in the coming years, especially if the US starts exporting liquified natural gas and exposes its protected gas market to global price competition.”

Matthias Kimmel, head of energy economics at BloombergNEF, summed up by noting that the “trend in cost reductions is so strong that nobody, not even President Trump, will be able to halt it.”

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