President Donald Trump has been vocal in attacking wind and solar power, but one of his biggest assaults on renewables could come through another technology: grid batteries.
The administration’s threatened repeal of Inflation Reduction Act tax credits — paired with tariffs — could crimp one of the largest growth industries in the energy sector in the past five years, analysts say. The outcome could influence whether the U.S. is dominated more by renewables in a decade or by gas, nuclear and other resources.
“There’s a ton of uncertainty,” Allison Feeney, a research analyst at Wood Mackenzie, said about the future of grid batteries. “There’s definitely a strong concern that the Trump administration is going to hamper growth.”
That concern has been heightened this month because of warnings from battery analysts, congressional deliberations over the future of IRA incentives, Trump’s shifting rhetoric on tariffs and a Department of Energy hit list that proposes cutting a $500 million energy storage program.
According to Wood Mackenzie, installations of grid batteries could slump 30 percent over a decade if IRA tax credits are reversed and tariffs on China remain at current levels.
Grid batteries, which are dominated by lithium-ion technology, offer backup to renewables when the sun isn’t shining or the wind isn’t blowing. They also work in conjunction with coal and gas to provide power during electricity demand spikes.
While many battery projects now operate independently on the grid, they continue to be linked with renewables’ growth trajectory.
“Storage is most effective in areas with high renewable penetration due to the resulting wholesale price volatility,” said Feeney.
The IRA was a “game changer” for grid batteries by offering both investment tax credits for deployment and manufacturing incentives aimed at breaking China’s dominance in producing the technology, Feeney said. In a report last week, the American Clean Power Association and Wood Mackenzie reported that 12.3 gigawatts of energy storage came online last year, a 156 percent increase from 2022, the year the IRA was signed.
If IRA credits were to go away, there would be “a lot of projects where the economics are not going to work out as originally planned,” said Jason Burwen, vice president of policy and strategy at battery developer GridStor. “That increases the likelihood they are delayed or canceled.”
Burwen wrote an essay last week on growing headwinds for the grid storage industry, including tariffs that go beyond China. Mexico provides approximately 20 percent of imports for high-voltage equipment, which is needed for the grid upgrades important for easing an interconnection backlog for storage projects.
“The tariff costs of batteries have gone up in a short amount of time,” he said in an interview. “You’re looking at a cost escalation of uncertain timing and uncertain magnitude. … It makes it very tough to plan out. These projects are planned years in advance.”
Another industry analyst given anonymity to speak freely said it’s not out of the question that Trump could ratchet up fees closer to 100 percent on China, which would make the economics of many battery projects impossible. Trump talked during the campaign of 60 percent tariffs or higher, and 100 percent tariffs have happened before, including on Chinese electric vehicles under former President Joe Biden.
It’s not so much that existing battery projects are threatened, since tax incentives are still in place, analysts say. But if IRA credits were to be taken away, it could create a plunge in deployment in roughly two years.
Local considerations
It remains unclear how far Congress is willing to go to curtail IRA credits, but the prospect of government funding cuts has rattled some battery makers.
Freyr Battery, now known as T1 Energy, canceled plans last month to build a $2.6 billion plant in Georgia to manufacture batteries for storing renewable electricity. That followed a move from Kore Power to scrap plans for a $1 billion lithium-ion factory in Arizona to make batteries for both the grid and electric vehicles.
Both plants sought government incentives. Kore, for instance, had received a conditional loan from DOE.
Several battery experts said they were closely watching the fate of an IRA tax credit not tied to manufacturing — 48 E for its place in the tax code — since it has been a major driver of deployment.
As for DOE funding, a pullback would hit research and development of new battery technologies, said Feeney.
“That could delay the advancement of novel energy technologies that could help the grid in the longer term,” she said.
Burwen’s essay points to other growing challenges outside of Trump’s reach, including grid operator proposals that could allow gas projects to jump ahead of storage in the queue for connecting to the grid. In Texas and California, grid storage is the number one technology in backlogs seeking to connect.
A 2023 Federal Energy Regulatory Commission order to streamline the interconnection process has helped, but “it was already far too little compared to the scope of the challenge by the time it was published,” Burwen wrote.
Another brewing barrier is pushback on battery projects at the local level. According to data from research firm Voltility, city and county moratoriums on battery storage more than doubled from 2023 to 2024. Part of that is traditional not-in-my-backyard sentiment, but some is a response to battery fires at storage facilities.
The most recent example is the fire that broke out in California in January at Vistra Energy’s Moss Landing, one of the largest grid battery facilities in the world. The blaze spurred California regulators to increase safety standards for energy storage facilities and inspired a bill to restrict siting for battery projects.
In other states, policy is helping boost the industry, said Feeney. She noted proposals under consideration in Virginia and Illinois to boost energy storage targets. States like Michigan have implemented targets specifically for storage in the past two years.
State commitments are a “primary policy driver for batteries, particularly as U.S. tax credits for storage and renewable power appear at risk,” research firm ClearView Energy Partners wrote in a February note.
Trump, gas and AI
Trump has not weighed in on grid storage in the same way he has on renewables, other than to criticize China’s dominance in manufacturing batteries. Some of the president’s policies are in line with the industry’s growth, including a plan this month to use the Cold War-era Defense Production Act to increase production of critical minerals used in batteries.
Similarly, Energy Secretary Chris Wright has spoken favorably of storage, saying at an Advanced Research Projects Agency-Energy summit this month that technology advances could be a breakthrough for renewables.
The efforts of the storage industry are “aligned with the president’s vision for unleashing American energy dominance,” said Noah Roberts, vice president of energy storage at the American Clean Power Association, noting that the technology was the second most deployed U.S. resource on the grid last year.
The White House did not respond to a request for comment. In a statement, DOE said it” remains committed to strengthening and modernizing the nation’s grid to ensure reliability, resilience, and efficiency. The Department’s work remains ongoing, supporting a dependable grid, strengthening the domestic supply chain.”
Industry prospects this year remain bright, with the U.S. Energy Information Administration projecting that 81 percent of U.S. grid installations will be from solar and storage.
Feeney said that the effect of tariffs won’t be felt until 2026, considering the time it takes to build projects. The drop in storage installation will probably be similar whether Trump sticks to his current 25 percent tariffs on Chinese imports or ratchets it up to as much as 60 percent, she said. That’s because Chinese manufacturers can afford to further lower their prices to account for the tariff increase, she said.
According to research firm BloombergNEF, any sky-high China tariffs might not reduce imports either.
“Even at a 60% rate, China-made batteries handily outcompete relatively scarce US-made alternatives” because of lower costs, BloombergNEF said in a February note.
Some industry watchers note that grid storage grew during Trump’s first term with help from the 2018 FERC Order 841, which aimed to remove barriers for the technology in electricity markets.
According to Feeney, the ongoing jump in electricity demand because of artificial intelligence should help counter some of the headwinds against renewables and storage, since it can take years to build a chief alternative: gas plants. Gas currently is expensive, and more pipelines need to be built for distribution, she said.
“For the next few years, battery storage is the largest, fastest source of dispatchable capacity added to the power system. If federal policies stop that, there’s not enough gas or other dispatchable resources ready to be built, and it will constrain economic expansion and send electricity prices higher,” Burwen said.
