What future for solar in Trump’s energy policy? – pv magazine France

According to pv magazine USA

US President Donald Trump’s administration has expressed support for an “all at once” approach to energy policy in the United States. So far, the administration has announced several actions to support oil and natural gas, and reduced incentives for clean energy. Although the administration has boosted fossil fuels and dealt several major blows to the adoption of electric vehicles, wind power and energy efficiency, solar falls somewhere in the middle.

Under an executive order titled “Unlocking American Energy,” the administration eased restrictions on drilling and exploration for rare minerals. She also sought to end the “electric vehicle mandate” by rolling back state emissions exemptions that limited the sale of gasoline-powered cars and considering eliminating “unfair subsidies and other market distortions.” imposed by the government” which favor electric vehicles to the detriment of other technologies. There is no federal mandate for the adoption of electric vehicles in the United States.

The executive order also called for a reduction in appliance energy efficiency standards, citing consumer choice and market competition as motivations for this action. In another executive action, Trump ordered a pause on the sale of leases for offshore wind energy in federal waters, as well as a pause on approvals, permits and loans for offshore and onshore wind projects.

The power of solar…

Solar energy appears neither to be Trump’s focus nor the focus of his crackdowns. Regardless of administration, solar has seen continued growth for decades. During his first term, the industry grew 128%, according to the Solar Energy Industries Association (SEIA). Solar is now the dominant source of new electricity generation capacity added to the grid in the United States. According to the Energy Information Administration (EIA), more than 64% of new capacity added to the grid during the first three quarters of 2024 was solar, followed by natural gas.

“Solar, now a $55 billion industry, adds more capacity to the U.S. grid than any other energy source amid the biggest surge in electricity demand since World War II said Abigail Ross Hopper, SEIA President and CEO. Globally, investments in clean energy are expected to surpass those in fossil fuels for the first time in 2025, according to S&P Global. S&P estimates that investments in renewable energy generation, green hydrogen and carbon capture and storage will reach 625 billion euros in 2025, marking the first time that these investments exceed projected spending in oil and gas. upstream gas. “Solar PV is expected to account for half of all clean technology investments and two-thirds of installed megawatts,” said Edurne Zoco, executive director of clean energy technology at S&P Global Commodity Insights.

…but clouds hover over photovoltaics

Despite the optimism around solar as a pillar of tomorrow’s energy mix, several risks emerge for Trump’s second term. The administration withdrew from the Paris Agreement, a legally binding international treaty on combating climate change. Combined with the easing of restrictions on fossil fuel production, this action could disrupt the comparative valuation between fossil fuels and solar energy, prompting banks and lenders to review their investments in the energy transition.

Additionally, significant uncertainty surrounds the Inflation Reduction Act (IRA) of 2022, the largest climate and energy spending package ever passed by the United States. The “Unleash American Energy” executive action included an immediate halt to grants, loans and other financial mechanisms under the IRA and the Infrastructure Investment and Jobs Act. Anticipating this measure, the Biden administration has already released tens of billions of dollars in loans in recent months, including 21 billion euros for public services, and experts say these funds are legally committed and that it is little likely that they will be revoked. This suspension of new financing through loans and grants could slow the growth of the sector.

Law firm Baker Tilly said it “remains unclear” whether the pause covers all potential funding, such as direct payment provisions under the IRA, or whether it only applies to grants. , loans and contracts administered at the federal level.

Another risk for the solar industry in general is the application of customs duties. It is still unclear which products will be taxed and at what rate. The United States has a long, bipartisan history of imposing tariffs on solar imports. Tariffs are widely expected to increase the cost of goods, placing an additional hurdle in front of the solar industry as it must compete with other energy sources. A potential benefit of the tariffs is to create a more level playing field for U.S. solar manufacturers against low-cost global suppliers.

Perhaps the most serious risk for the industry is the possible abolition of the Investment Tax Credit (ITC) under the IRA. Solar and energy storage projects of all sizes receive a tax credit of 30% of the system installation cost. Bonuses are awarded for projects using components made in the United States or located in low-income communities or economically affected by the energy transition.

Uncertainty over the future of these tax credits has clouded the industry’s outlook, slowing investment. Industry analysts say an outright elimination of the ITC is unlikely, but that a gradual reduction in the next two years, rather than the mid-2030s, has some political support. Roth Capital Partners indicated that ITC reductions could occur under the administration’s budget reconciliation legislation, which could take place in the fourth quarter of 2025. Until then, the clouds of uncertainty could continue to slow down solar investments for a while. However, as a technology that today offers a cost of electricity production (LCOE) 56% cheaper than the fossil fuel average, solar now has a market position strong enough to withstand political turbulence.