The recent wave of tariffs introduced by the Trump administration could have far-reaching consequences for the global renewable energy sector, particularly in the United States. According to the latest report from international consultancy Wood Mackenzie, “Horizons – May 2025,” escalating trade tensions may significantly disrupt supply chains, increase project costs, and delay the energy transition just as the sector reaches a critical phase of expansion.

The report outlines how uncertainty over trade policy, combined with higher import costs for key components, may slow deployment of clean energy technologies and put emissions reduction targets at risk.

A new setback for clean energy

Wood Mackenzie presents three global trade scenarios: a best-case trade truce with low tariffs, a mid-range trade tensions case with 10% duties, and a worst-case trade war scenario where tariffs exceed 30%. In this last scenario, the impact on renewable energy is described as “significant and far-reaching.”

The most affected segments include:

• Battery storage: The U.S. market, which is heavily dependent on Chinese technology, could see installation costs rise by up to 40%. Tariffs on cells, inverters and critical materials would undermine the economics of grid-scale storage—an essential component for decarbonizing electricity systems.

• Solar energy: The cost of solar panels is projected to increase by up to 20%. The reduced availability of competitively priced, advanced technology would leave the U.S. lagging behind other nations that can access lower-cost supply chains.

• Grid infrastructure: Equipment such as substations, distribution lines, and turbines would also face major cost increases, pushing up investment needs and potentially driving electricity prices higher.

Delayed investments and contracts at risk

Across all three scenarios, Wood Mackenzie expects a slowdown in renewable project development. In a high-uncertainty tariff environment, many developers may delay investment decisions, and renegotiations or even cancellations of power purchase agreements (PPAs) are likely.

“The electricity business runs on 5- to 10-year planning cycles. Not knowing what a project will cost next year is extremely disruptive,” the report states.

A threat to U.S. leadership and competitiveness

New trade policies could solidify the U.S. as a high-cost market for renewable energy deployment. Rising costs and uncertainty would make project financing more difficult and slow down technology adoption, particularly in areas such as battery storage, green hydrogen, offshore wind, and solar panel manufacturing.

Efforts to reshore manufacturing also face serious limitations. “The U.S. lacks sufficient domestic capacity for many energy components, and remains highly reliant on imports for clean tech supply chains,” the report warns.

What about the global outlook?

Globally, the effects are mixed. Some countries may benefit from redirected trade flows, but weaker global demand and reduced investment appetite could delay clean energy infrastructure development. Meanwhile, international cooperation on climate action could erode as countries prioritize energy security and economic growth over emissions targets.

Call for resilience and strategic adaptation

Wood Mackenzie advises renewable energy developers, utilities, and manufacturers to mitigate risks by diversifying their supply chains, securing alternative sourcing contracts, and adopting more flexible, forward-looking investment strategies.

“The environment for clean energy is becoming more complex and uncertain. Agility, foresight, and adaptability will be essential for the sector to continue moving forward—even in a more fragmented world,” the report concludes.