US solar energy growth to slow as Washington priorities shift
June 9 (Reuters) - New U.S. solar energy installations are expected to fall over the next five years as the industry grapples with a shift in federal policy that favors fossil fuels, tariffs and other challenges, according to a report published on Monday by a top solar trade group.
New solar capacity will be more than 10% lower in 2030 than in 2025, according to a forecast by the Solar Energy Industries Association and energy research firm Wood Mackenzie.
The outlook includes the expected effects of new federal tariffs on a range of imported materials that are important to solar projects, including steel and aluminum. But it does not include potential cuts to clean energy tax credits being considered in a Republican budget bill in Congress - another major threat to the industry if passed into law.
Tax credits for clean energy projects and factories contained in former U.S. President Joe Biden's 2022 Inflation Reduction Act have buttressed industry growth in the last three years.
But the bill that passed the House last month could upend what has been a boom in the sector, SEIA warned. Solar accounted for 69% of new electricity generation during the latest quarter.
The industry installed 10.8 gigawatts of capacity in the first quarter of this year, a decline of 7% from a year ago but still near historical highs, the report said. At the same time, eight new or expanded solar factories opened during the quarter in states including Texas and Ohio.
"Those are all positive signs, generally," SEIA President Abigail Ross Hopper said in an interview. "Look at all of this that could be. And the Congress is threatening all of this development."
Trump campaigned on a promise to repeal the IRA tax credits, calling them expensive, unnecessary and harmful to business. His administration has sought to bolster domestic production of fossil fuels as part of its energy dominance agenda, which excludes renewables like solar and wind.
The U.S. solar industry is on track to install 48.6 GW this year, but that will decline to 43.5 GW in 2030, the report said.
Demand from corporate buyers for utility-scale projects is fueling industry momentum, the report said, though concerns about federal policy will constrain development.
Residential installations fell 13% during the first quarter to 1.1 GW. The sector has struggled lately with high interest rates, tariffs and less favorable state policies. But that segment of the market is expected to grow between 2025 and 2030 due to rising electricity rates that make it a more compelling offering to consumers.
The utility sector accounted for 9 GW of installations in the first quarter. Texas, Florida, Ohio, Indiana, and California accounted for 65% of new capacity.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
27 minutes ago
- Reuters
Sunnova Energy files for Chapter 11 bankruptcy protection
June 9 (Reuters) - Sunnova Energy (NOVA.N), opens new tab said on Sunday it had filed for Chapter 11 bankruptcy protection in the United States, as the residential solar panel installer grapples with a massive debt pile and sluggish demand. Sunnova, which is restructuring its debt, had warned in March that it may not be able to continue as a going concern. The company listed its estimated assets and liabilities in the range of $10 billion to $50 billion, according to a court filing. Sunnova said last week it would lay off about 55% of its workforce, or 718 employees, in a bid to cut spending. President Donald Trump's administration, which is pushing to maximize oil and gas production, last month canceled a partial loan guarantee of $2.92 billion that was awarded to Sunnova by the Biden administration. The filing comes at a time when the U.S. residential solar energy industry is under immense pressure from higher interest rates, a reduction in incentives in the top market, California, as well as the threat of a subsidy elimination for green energy. Companies that put solar panels on U.S. homes said last month a Republican budget bill that has advanced in Congress could deal a massive blow to the industry by eliminating a generous subsidy for homeowners that had buttressed the industry's growth.
Reuters
35 minutes ago
- Reuters
US aluminium tariffs threaten scrap clash with European Union
LONDON, June 9 (Reuters) - U.S. President Donald Trump's move to double tariffs on aluminium imports heightens the risk of a full-blown scrap war with the European Union. Although they are supposed to be blanket tariffs with no exceptions or exemptions, there is one significant gap in the tariff wall. Aluminium scrap is explicitly excluded on the grounds it constitutes a key raw material for U.S. manufacturers. The Trump administration's decision to lift aluminium tariffs to 25% effective the start of March has already caused U.S. imports of recyclable material to rise. This week's doubling of the tariff rate to 50% could turn the import flow into a flood. The European Union, which is mulling export duties on aluminium recyclables to stop what it terms "scrap leakage", is coming under pressure to move sooner rather than later. The U.S. Midwest aluminium premium has rocketed to a record $1,325 per metric ton after Wednesday's doubling-down on import tariffs. That's the price U.S. buyers will pay over and above the international price traded on the London Metal Exchange (LME), currently $2,430 per ton for cash metal. What once reflected the cost of transport to get metal to the U.S. Midwest manufacturing hub is now a tariff premium, capturing the fracture of the global aluminium pricing structure. U.S. consumers of aluminium goods will ultimately foot the bill but mid-stream processors are likely to do well. Fabricators converting raw metal to semi-finished goods such as can sheet were the prime beneficiaries of the first Trump administration's 10% tariffs, according to a report by consultancy Harbor Aluminum commissioned by the Beer Institute. Mid-stream processors passed on the tariff, even if the raw material was domestically sourced scrap, Harbor found. The new tariffs will incentivise fabricators not only to maximise their domestic purchases of scrap but to tap overseas markets, where U.S. buyers can now outbid just about anyone else for available material. U.S. imports of aluminium recyclable materials jumped to over 80,000 tons in March, the highest monthly volume since 2022. There were sharp increases in supply from Canada and Mexico, the two largest and nearest suppliers to the U.S. market. However, the tariff differential has started to draw material out of Europe, according to the European Aluminium association. Exports from EU countries to the United States spiked in the first quarter of the year, it said. They are only going to accelerate as the transatlantic price gap widens after this week's doubling of tariffs. The EU is facing a "full-blown scrap crisis", according to the association. Director General Paul Voss called on the European Commission to immediately impose a corresponding duty on scrap exports to the United States. The Commission has already identified high aluminium scrap exports as a key hurdle in its ambition to meet the bloc's "Circular Economy" targets. A March "Action Plan", opens new tab for both the aluminium and steel sectors promised a decision by the third quarter of this year on suitable trade measures, including reciprocal export tariffs on countries "that apply unfair subsidies" to their recycling industries. There's now a sense of urgency that some sort of defensive trade barrier will be required to stem export flows. Aluminium scrap is a highly globalised marketplace but that looks set to change as Europe figures out how to stop the loss of raw material to the United States. Caught in the middle of this tug-of-war is China, the world's largest aluminium scrap buyer. The country has imported 1.8 million tons in each of the last two years and although it sources much of its material from Asia, it is a significant buyer of both U.S. and European end-of-life scrap. Beijing last year relaxed the purity rules on imports of both copper and aluminium scrap to encourage greater domestic recycling. This is particularly important for China's aluminium sector, where production of primary metal is now close to the government's mandated capacity cap, meaning supply growth will have to come from recycling. Chinese buyers are facing the twin challenge of export restrictions in Europe and competition with U.S. players in their own Asian supply chain. The scrap wars have only just begun. The opinions expressed here are those of the author, a columnist for Reuters. Enjoying this column? Check out Reuters Open Interest (ROI), your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis of everything from swap rates to soybeans. Markets are moving faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, opens new tab and X, opens new tab.
Reuters
an hour ago
- Reuters
The path to cheap power will be very expensive
LONDON, June 9 - Europe's ambition to develop cheap, clean energy has recently received a harsh reality check, as power failures and a string of cancelled renewables projects made it clear that the road to inexpensive power will carry a very high price tag. European investments in renewable energy have risen sharply over the past decade as governments have begun implementing policies to reduce greenhouse gas emissions – an effort that sped up after Russia's invasion of Ukraine created an energy price shock. The share of renewables in the EU's power sector rose to 47% in 2024 from 34% in 2019, with a record 168 gigawatts (GW) of solar and 44 GW of wind power capacities installed between 2022 and 2024 alone, according to EU data. In Britain, renewable generation exceeded 50% for the first time in 2024, data showed. But investment in grid infrastructure, including pylons, cables, transformers and battery storage technology, has barely kept up with the rapid change in the power generation mix. Between 40% and 55% of low-voltage lines will exceed the age of 40 by 2030, while their length increased only by 0.8% between 2021 and 2022, according to a European Commission report. The Commission last week issued guidance for developing electricity networks in which it estimated the bloc will require 730 billion euro of investments in power distribution and another 477 billion euro in transmission grid developments by 2040. The underinvestment in grid infrastructure has created strain in many systems, a risk that was laid bare on April 28, with the catastrophic blackout in the Iberian Peninsula. Regulators are still investigating exactly what triggered the collapse of the power systems in Spain and Portugal. But what is known for sure is that the outage was preceded by the disconnection of two solar farms in southern Spain. The Spanish system is heavily reliant on renewables, but the issue was not the energy source itself. Rather, the problem was that the grid system had not been updated to account for the fact that solar-powered plants, unlike those using fossil fuels, do not generate inertia – the kinetic energy created by the rotation of spinning generators – which can help stabilize a grid in the event of power disturbances. To overcome this challenge, operators would need to invest in technologies such as synchronous condensers or batteries that kick in within milliseconds in the event of an outage to offer backup. The Iberian debacle puts a spotlight on the fact that more investment is needed in the mundane, but vital, elements of grid infrastructure. Another reality check for Europe has been the realization that offshore wind – once heralded as a potential renewables game changer – simply has lousy economics today. Danish offshore wind giant Orsted on May 7 cancelled a major project off the eastern coast of Britain, Hornsey 4, dealing a blow to the country's ambitions to develop 50 GW of clean power capacity by 2050. The recent rise in material costs forced the cancellation, according to Orsted, which had already sunk 5.5 billion Danish crowns ($840.5 million) into the project. And then on May 16, the Dutch government postponed tenders for two offshore wind farms with a total capacity of 2 GW due to a lack of interest from potential bidders. Several companies said they saw no viable business case for the projects, which offered developers no government subsidies. These two cases suggest that capital-intensive projects like offshore wind simply won't make economic sense without more ambitious government policy initiatives. The challenge is not unique to Europe. While worldwide investment in clean technology has risen, the headline figures mask a less rosy picture. The International Energy Agency (IEA) said in a report published on June 5 that global investment in power grids reached a record $390 billion in 2024 and is set to surpass $400 billion in 2025, 20% higher than a decade ago. But spending on power grid upgrades has not kept up. In 2016, about 60 cents were invested in grids for every dollar spent on new generation capacity. That ratio has dropped to less than 40 cents as the costs of renewables has declined, according to the IEA. This imbalance is unsustainable as ageing Western power systems – especially those in Europe – will increasingly experience problems unless trillions are spent in grid upgrades. The investment shortfall partly reflects a fundamental time horizon mismatch. Governments face public pressure every time energy bills – or taxes – rise, so they will struggle to convey to voters the long-term benefits of spending billions in tax dollars to support building modern, low-carbon power systems. But energy companies and utilities seeking to invest in renewables and grids will need long-term policy certainty, and given the challenging economics for many renewables projects, they will often also require generous subsidies. To be sure, the long-term costs of inaction to mitigate climate change will be far higher, and the EU is already spending over 100 billion euros annually on fossil fuels subsidies. But long-term thinking is not an easy sell for politicians in a time of growing populism, nationalism and polarization. Ultimately, if European governments want their populations to have cheap, green energy, they will need to accept the reality that getting there will be more expensive and more government-driven than previously advertised. Enjoying this column? Check out Reuters Open Interest (ROI), opens new tab, your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis. Markets are moving faster than ever. ROI, opens new tab can help you keep up. Follow ROI on LinkedIn, opens new tab and X., opens new tab
