Navigating Policy Shifts: Business Strategies for Solar and Storage Under Trump

The inauguration of a new administration signals a paradigm shift in energy policy, with significant repercussions for the solar and storage industries. Under the Trump administration, policies are expected to prioritize fossil fuels, potentially rolling back incentives for renewable energy and imposing tariffs on critical materials. These actions may disrupt industry growth, yet they also present opportunities for resilience through state-level policies, market momentum, and domestic manufacturing. The solar and storage sectors must adapt by embracing innovation, diversifying supply chains, and engaging in policy advocacy to navigate this changing landscape.

The Inflation Reduction Act’s Potential Repeal and Its Impact

The Inflation Reduction Act (IRA) has catalyzed renewable energy growth, allocating $369 billion in tax credits and grants, spurring nearly 340 projects, $130 billion in investments, and over 110,000 jobs in 2023 (E2 Research). Its potential repeal threatens to cut solar and storage capacity additions by 15%, undermining investor confidence and halting key projects. Approximately 60% of IRA-supported initiatives are in Republican districts, highlighting bipartisan benefits. A repeal risks slowing renewable adoption, jeopardizing local economies, and eroding U.S. competitiveness in the global clean energy market. Stability in policy is essential to secure ongoing investments and bolster U.S. leadership in energy innovation. Former EPA Administrator Gina McCarthy emphasized (Cipher, Nov., 2024), “Any attempt to repeal the IRA is a fool’s errand. The economic benefits are undeniable.” Maintaining the IRA ensures economic growth, job creation, and progress toward climate goals while safeguarding U.S. independence in energy and manufacturing.

Given the substantial economic benefits and bipartisan support, particularly in Republican districts benefiting from IRA-backed projects, the likelihood of a full repeal remains low, as it would undermine local economies, deter investments, and diminish U.S. competitiveness in the global clean energy market.

Policy Changes on the Horizon

The Trump administration's policy shifts toward fossil fuel expansion and deregulation pose significant challenges for the renewable energy sector. Increased offshore drilling and relaxed methane standards signal a reversion to traditional energy priorities (Yale Daily News, Dec 2, 2024), potentially sidelining renewable initiatives. Proposed tariffs of up to 60% on Chinese solar panels and battery materials could exacerbate supply chain pressures, driving up costs by 20–30% and reducing profitability for solar and storage developers (Reuters, Dec 5, 2024). These cost increases are particularly burdensome for smaller players with limited margins, potentially stalling growth in the sector.

Regulatory rollbacks, including weakened EPA mandates and challenges to state-specific renewable energy standards, create further uncertainty. Federal inaction or hostility toward clean energy may undermine progress in states like California and Texas, where ambitious carbon reduction and renewable energy goals drive deployment. For companies, this shifting landscape demands proactive strategies: diversifying supply chains, engaging in policy advocacy, and capitalizing on supportive state policies to offset federal retrenchment.

Challenges for the Solar Industry

The imposition of tariffs could increase costs for solar panels and components by 20–30%, disproportionately affecting small and mid-sized developers. Meanwhile, uncertainty over the IRA may deter investors and delay projects. Despite these challenges, state-level policies in places like California and Texas provide a lifeline. California’s 100% carbon-free electricity mandate and Texas’ cost-driven renewable growth demonstrate that local markets can drive substantial progress, even amid federal policy shifts.

Implications for Energy Storage

The energy storage sector faces similar challenges, including tariff increases that could significantly raise costs. A full repeal of IRA tax credits could reduce energy storage capacity additions by 15% by 2035 (BloombergNEF, E2 Research). Moreover, geopolitical risks from Chinese manufacturers relocating operations could further complicate supply chains. However, the global decline in battery production costs and strong state-level energy policies offer a counterbalance, ensuring a baseline level of adoption.

Market Resilience and Mitigation Strategies

The solar and energy storage industries have demonstrated significant resilience, bolstered by proactive state-level policies and robust market fundamentals. Massachusetts, for instance, has set a target of achieving 1,000 megawatt-hours (MWh) of energy storage by December 31, 2025, with reports indicating 569 MWh already installed and an additional 8,806 MWh in development as of February 2024. (Massachusetts Government) Similarly, Illinois has proposed legislation aiming for an 8.5 gigawatt (GW) energy storage procurement target by 2050, a move projected to enhance grid reliability and generate substantial economic benefits. (Renewable Energy World)

These state-driven initiatives are complemented by favorable market dynamics. The declining costs of battery technologies have made energy storage solutions more accessible, while the increasing demand for offtake agreements from utilities and corporations underscores a sustained commitment to renewable energy adoption. This confluence of factors contributes to the long-term stability and growth of the sector.

Moreover, the bipartisan recognition of the economic advantages associated with clean energy investments—such as job creation, local economic development, and enhanced grid resilience—diminishes the likelihood of a full repeal of supportive federal policies like the IRA. This broad-based support provides a solid foundation for continued progress in the renewable energy landscape, even amid potential federal policy shifts.

Emerging Opportunities in Solar and Storage

Challenges like import tariffs and shifting policies are paving the way for new opportunities. While tariffs on solar panels and battery materials increase costs, they’re also driving a push for domestic manufacturing. This shift is opening doors for startups to innovate with cutting-edge technologies like solid-state batteries, flow batteries, and thermal storage.

At the same time, state-driven programs are stepping in to fill gaps left by federal uncertainty. States are offering funding, pilot projects, and other incentives to accelerate clean energy adoption. This creates a perfect environment for companies to test new ideas, from advanced grid storage systems to decentralized energy solutions. Microgrids, in particular, are gaining popularity in rural and disaster-prone areas, providing local communities with reliable, resilient power.

On top of that, fresh business models are making renewable energy more accessible. Take Battery-as-a-Service (BaaS)—it’s a subscription-based approach that lowers upfront costs for consumers while creating steady revenue for providers. Portable, modular storage systems are also a game-changer, especially for rural areas where traditional infrastructure doesn’t reach. These kinds of solutions align perfectly with state energy goals, showing that innovation isn’t just about technology—it’s about meeting real-world needs.

Startups have a unique role to play here. Beyond-lithium technologies like sodium-ion batteries and compressed air systems offer exciting alternatives to today’s dominant options, helping to reduce costs and diversify supply chains. There’s also growing interest in giving EV batteries a second life, repurposing them for stationary storage.

The shift toward more decentralized and user-focused energy systems is reshaping the entire industry.

The takeaway? This is a moment of incredible opportunity. By staying adaptable and bold, solar and storage companies can turn today’s challenges into stepping stones for lasting impact.

Strategic Recommendations for Solar and Storage Companies

Adapting to a changing policy environment requires a multi-pronged strategy:

1. Accelerate R&D. Invest in cutting-edge technologies like AI-driven energy management, solid-state batteries, and advanced recycling methods.

2. Optimize Supply Chains. Prioritize localized manufacturing and integrate circular practices to reduce dependency on imports.

3. Go AI-First. Leverage AI to enhance grid integration, predict maintenance issues, and optimize energy systems.

4. Target Underserved Markets. Expand into rural and off-grid areas with modular solar microgrids.

5. Expand Funding. Innovate financing models, such as pay-as-you-save programs, to attract new customers and secure capital.

A Path Forward

The Trump administration’s policies challenge the solar and storage sectors but also spur innovation and resilience. State-level initiatives, combined with cutting-edge technologies and adaptable business models, offer pathways to progress. Startups hold the key to driving this evolution, leveraging market dynamics to deliver next-gen solutions that address real-world needs. By turning obstacles into opportunities, the industry can continue leading the shift to a sustainable, decentralized energy future.