A combination of substantial policy shifts under president-elect Donald Trump and macroeconomic issues puts the US renewable power sector on uncertain footing to begin 2025.
Analysts expect the federal tax credits that have bolstered new renewable generation during its substantial growth over the past decade will survive in some fashion, although Trump campaigned on repealing the Inflation Reduction Act (IRA). He also has promised 60pc tariffs on goods imported from China, a major player in the solar and battery storage supply chains.
The ultimate effects may vary by project type and what the new administration is able to accomplish.
Chinese solar products already face 50pc tariffs, which could temper any effects on the industry from Trump's protectionist trade policies, said Tom Harper, a partner at consultant Baringa specializing in power and renewables. But the new administration could make it more difficult to claim IRA incentives and could roll back federal power plant emissions rules, creating an environment that could slow the adoption of renewables.
Utilities may become more cautious in using renewables because of higher costs, while others, such as companies with sustainability goals, might be able to weather the change, according to Harper.
"There might be some very price insensitive corporate [power purchase agreement] buyers out there who are looking at a $45/MWh solar [contract] and now it's going to be $50/MWh after the tariff, and they'll be fine," he said.
In addition, the US renewables industry is still weathering headwinds from supply chain constraints, increased borrowing rates and inflation, which have hampered new projects. For example, the PJM Interconnection — which spans 13 mostly Mid-Atlantic states and the District of Columbia — had approved more than 37,000MW of generation at the end of third quarter 2024, with only 2,400MW of that partially in service. Developers have blamed the delays on financing challenges, long lead times for obtaining equipment and local opposition to projects.
Global problems, local solutions
Changes to state procurement strategies could help. Maryland state delegate Lorig Charkoudian (D) next year will propose new state-run solar, wind and hydropower solicitations that would first target projects that have already cleared PJM's reviews. Her approach would echo programs in New Jersey and Illinois, and ultimately reduce utilities' reliance on renewable energy certificates (REC) procured elsewhere.
"The idea is to give a path for these projects, so presumably they can be built within a few years," Charkoudian said.
Utilities would use the new procurements for the bulk of their RECs, covering remaining demand by buying legacy Maryland solar credits and other PJM RECs on the secondary market.
But a quick fix for Maryland's broader renewable energy objectives is unlikely after utilities used the alternative compliance payment (ACP) for two-thirds of their 2023 REC requirements. The fee for each megawatt-hour by which utilities miss their compliance targets serves as a de facto ceiling on REC prices. Maryland's ACP is low compared to neighboring states, where the qualifying REC pool overlaps, meaning that credits eligible in the state can fetch a higher price elsewhere. While lawmakers could raise the ACP to mitigate those issues, those costs would ultimately fall on utility customers.
"As best as I can tell, the options are raise the ACP or adjust how we do it," Charkoudian said. "We're really concerned about ratepayer impacts, and so I don't think there's a real appetite to raise the ACP."
In other states, the policy landscape is less certain. Pennsylvania governor Josh Shapiro (D) has no clear path for his proposed hike to the state's alternative energy mandate, should he choose to revisit it, after Republicans retained their state Senate majority in November. New Jersey state senator Bob Smith (D) has been working for two years to enshrine in law governor Phil Murphy's (D) goal of 100pc clean electricity, but the proposal failed to escape committee in 2024 after dying in 2023 over opposition to its support for offshore wind.
Is the answer blowing in the wind?
Offshore wind is a slightly different matter.
Trump has been critical of the industry and federal regulators control much of the project permitting in the US. Moreover, as a burgeoning sector with higher costs, it could be more sensitive to the loss of the investment tax credit (ITC). Based on current expenses, Baringa's analysis suggests that losing the ITC could increase project costs by "at least" $30/MWh and push offshore wind REC prices in some cases near $150/MWh. That would be a "difficult cost for states to swallow", according to Harper.
"We've seen a few offshore wind developers already say, 'Hey, we're not going to spend a dime more until we know what's going on,'" Harper said.
Despite the challenging landscape, Charkoudian expects Maryland will move forward in areas it can control, such as expanding the onshore transmission, that will make offshore wind viable, whether it's now or "eight years from now".
