In the months leading up to the 2024 presidential election, there has been worry and uncertainty about how a change in administration could impact the solar and storage industry. Could the Inflation Reduction Act (IRA) be repealed if Trump is elected? What tariff increases or new tariffs could be on the horizon with a Harris or Trump administration?
These questions – along with the preliminary anti-dumping determinations expected in late November/early December for the Southeast Asian AD/CVD case and the final guidance on domestic content – have many buyers holding off from making solar module and battery purchases. Is now the right time to buy if more significant changes may be around the corner in 2025? Here are key factors to consider amidst the market uncertainties and tools available to help you mitigate risk.
Full repeal of the Inflation Reduction Act is unlikely
While Trump has promised to roll back the Inflation Reduction Act, significant changes to the IRA are not likely to happen overnight. Back in 2022, the IRA was passed using the budget reconciliation process, in which bills with a simple majority in the Senate are able to avoid a filibuster. Experts note that this same budget reconciliation process could be used to repeal the IRA. Republicans calling for this repeal would first need to win the presidency and have voting majorities in the House and Senate. However, many Republican-leaning states have greatly benefited from the IRA and the growth of domestic content manufacturing, meaning universal support for repeal amongst Republicans is waning.
An August 2024 report from nonprofit organization E2 using publicly available data showed that nearly 60% of announced clean energy projects are in Republican congressional districts. Additionally, the ramp-up of domestic content, such as Qcells’ factory expansion in Georgia, has continued to bring new jobs and economic growth to red states and swing states.
Conservative members of Congress are taking notice of these trends in their districts and hearing from constituents concerned about significant changes to tax credits. 18 House Republicans recently sent a letter to Speaker of the House of Representatives Mike Johnson regarding efforts to repeal or change the IRA. This letter noted the negative impact a repeal of the IRA would have on their constituents and how it would “undermine private investments and stop development that is already ongoing.”
With all this in mind, experts believe a full repeal of the IRA seems unlikely, but reform or changes to implementation could occur. The momentum and projects already in flight and utilizing IRA benefits would be challenging to stop entirely, particularly if House Republicans continue to see program benefits in action within their communities. It seems unlikely from a legal perspective that solar or storage projects that have commenced construction and have already qualified for tax credits would be at risk of retroactively applied changes to the IRA or attempts to claw back funds already spent. If you can buy soon and commence construction on your solar or storage project (either through starting physical construction or with five percent or more costs incurred), you may avoid some of the unknowns that could be coming depending on the election results.
Domestic content manufacturing-focused incentives, with bipartisan support, appear likely to survive potential changes to the IRA. However, a change in administration could bring revised guidance regarding IRA implementation, including changes to domestic content qualification requirements. With anti-China sentiment continuing to be a political focal point and legislation introduced recently to stop companies with connections to “foreign entities of concern” from receiving tax incentives, there could be new nuances to navigate regarding domestic content eligibility. Staying on top of domestic content product pricing and availability trends and understanding what does and does not qualify – particularly if requirements change – will be a top priority in 2025.
New tariff risks around the corner?
While changes to or the unlikely full repeal of the IRA will take some time to shake out, tariffs are the biggest area of immediate concern for solar and storage developers and IPPs after the election.
Early in his presidency, Biden expanded solar tariffs established by Trump but also offered a two-year moratorium period to alleviate some duties as U.S. manufacturing continued to ramp up. This year, the Biden administration raised tariffs on Chinese imports and removed the Section 201 bifacial solar tariff exemption. Additionally, a Section 301 tariff increase on Chinese imports was announced, which includes a rate increase for non-EV batteries from 7.5% to 25% in 2026. A Harris administration would likely continue with similar tariff strategies in the immediate future.
Under a Trump administration, tariff hikes could be substantially higher, with a proposed 60% or higher tariff on Chinese imports and an across-the-board 10% tariff on all imports. Additionally, Trump could remove existing solar tariff exemptions shortly after taking office. Countries such as Indonesia are exempt from Section 201 solar tariffs and are currently an attractive, low-risk option for module buyers. If these exemptions are removed, there are no international tariff-free module options available.
There is also a real possibility that ocean freight increases materially in the near term. The market already saw this happen a few months back as consumers and businesses raced to get imports before announced commencement dates for new tariffs. Combine these potential freight increases and new tariffs with existing Auxin duties, new AD/CVD duties, and the general market uncertainty discussed above, and there’s a high likelihood that prices could increase throughout the market.
Actions to take now
Keeping tabs on what international and domestic product options are available will continue to be critical as supply chain dynamics become more complex and shift depending on election results. Raw materials are at an all-time low, and many are already being sold below cost, which means prices can only go up. With median module prices seeming to level out after increasing 10% from April’s low to the Q2 high in June 2024, now appears to be a good time to buy solar ahead of potential political changes (and price increases) in early 2025.
In addition to domestically manufactured products that would be free of tariff risks, other options are currently available to help you mitigate risk with your solar procurement. Some suppliers in countries currently safe from tariffs have agreed to take on risks from future policy changes to help reduce uncertainty regarding purchases in the near term. Other manufacturers are able to offer refundable deposits or have available inventory already imported and available for sale. Not all of these options will be available long-term, particularly as we gain clarity on the election outcome, so it is wise to take advantage as soon as possible.
On the energy storage side of the market, the 2026 Section 301 tariff increase is already around the corner. Companies looking for delivery in 2025 or Q1 2026 are deep into the buying process to avoid the jump to the 25% tariff rate. Some buyers chose to purchase with longer than typical lead times to stay ahead of the curve.
With the energy storage supply chain still heavily reliant on China, buying and clearing customs before January 1, 2026 or finding non-Chinese products is crucial. While U.S. manufacturing is continuing to ramp up, supply will be limited, particularly as new utility-scale storage installations rise. If you haven’t started adapting your BESS development and procurement strategy with these factors in mind, now is the time to do so.
While no one knows what’s to come, you can have the tools and support in place today to help you feel confident in your decisions now and down the road. Our solar software, energy storage offering, and expert team is here to help you navigate the market and any potential future changes so you can make optimal decisions for your projects.
Within Anza, you can easily view risk rating scores related to UFLPA, China AD/CVD, SEA AD/CVD, and counterparty risk to objectively assess risks related to available solar module options. Take a closer look into the supply chain information provided by manufacturers and filter available options based on cell manufacturing location, traceability, and non-Chinese poly or wafers. We even make it easy to see what products are exempt from Section 201 tariffs or have these tariffs already factored into displayed pricing. With up-to-date information directly from manufacturers, you can feel confident that you have the latest pricing, availability, and trade risk information as you develop projects or buy modules and energy storage systems.
If your risk mitigation strategy focuses on domestic content or finding module inventory already in the U.S., our data can help you stay ahead of the competition and know when new options become available. Filter within the Anza platform for U.S. cells or assembly and see options available within a few clicks. You can access the latest market intelligence and keep an eye on how median pricing for domestic content shifts as new players enter the market to find the best option for your project.
Our deep market knowledge can help you proactively approach trade risk management. We can support your contract negotiations using our extensive supplier relationships so you can find the best price and contract terms, such as the unique terms available in light of the trade risk uncertainty. Talk with our team today to find out more about how we can help you mitigate risk and find the best deal.
