According to a new report, the rate policy of the US will increase the costs of power generation by no less than 11%. The recent changes are expected to become the most difficult market for energy storage, with the costs rise to 50%, due to the dependence on Chinese import, according to “All on board the tariff cord: implications for the American power industry”, “” ” Published by Wood Mackenzie.
The United States are already one of the most expensive markets in the world to build on solar energy on you due to rates, but it can be even more expensive. As the rates create uncertainty in the American energy market, the development activity is likely to slow down, according to the report.
“In a company with five to 10-year-old planning cycles, not knowing what a project will cost next year or the following year, disturbing and causes enormous uncertainty for participants in the American power industry,” said Chris Seiple, vice-chairman of Power and Renewables at Wood Mackenzie. “As a result, we could see potential delays in the project development and the rising prices of the electricity purchase agreement. We will certainly see the impact on capital projects of the energy sector. The seriousness depends on which scenarios take place.”
The P&R Supply Chain Cost Hub rate calculator from Wood Mackenzie was used to estimate that the impact rates would have on the capital projects of the energy sector. Tarief effects are assessed with the help of various inputs, including project and equipment costs, as well as American import data.
The analysis looked at two scenarios:
- Trade stresses: At the end of 2026, the American effective rate percentage shows 10% with a rate of 34% on China.
- Trade war: The US maintains an aggressive rate policy and implements mutual rates that result in a generally effective rate percentage from 30% to 2030.
Based on these scenarios, Wood Mackenzie estimates that most types of technologies will experience cost increases from 6% to 11%, whereby storage on utility scale is the exception.
The construction costs change rates (%)
Energy storage: In 2024 almost all battery cells used in storage projects in the field of utility scale came from China. With the combination of high rates for China and the American dependence on input from China, the P&R Supply Chain Cost Hub estimates from Wood Mackenzie can be the cost increases from 12% to more than 50% for storage projects on utility scale, depending on the rate scenario.
The American production market will not be able to meet this demand quickly.
“Although the production capacity of the American battery cells is spreading, it is not expanding quickly enough to meet even a small part of the battery projects in the US,” said Seiple. “In 2025 we will estimate that there is sufficient domestic production capacity to only meet around 6% of demand and by 2030, domestic production could possibly meet 40% of demand.”
Rates the US worldwide make the best costs for solar energy
Another effect of the rates will be to significantly increase the costs of the US, the solar market, according to the report.
“The rates that are present on solar modules, together with an inefficient transmission policy that worsens the interconnection costs, have made the construction costs for solar energy higher in the US than in most other markets,” Seiple said. “An increase in tariff levels will only aggravate these premium American energy consumers to pay to access renewable energy.”
In the trade tension scenario of Wood Mackenzie, the costs of a solar facility on Nuts scale in the United States will be 54% more expensive than in Europe and 85% more expensive than a new solar installation built in China.
“Our analysis shows that current trade policy creates considerable challenges for the American power industry,” said Seiple. “Although the full impact remains uncertain, it is clear that participants in the industry must prepare for increased costs and possible disruptions for their supply chains.”
Tags: market data, rates, Wood Mackenzie
