Market development of battery storage systems, commercial storage systems and large-scale storage systems in the USA under the administration of Donald Trump – Creative image: Xpert.Digital
Energy transition in reverse: What the change of government means for battery storage
Challenges and perspectives: The battery storage market in the USA under Donald Trump
The battery storage market in the US faces an uncertain future following the change of administration under Donald Trump. While the industry received significant support under the Biden administration, spurred by comprehensive funding programs such as the Inflation Reduction Act (IRA) and the Infrastructure Investment and Jobs Act, the picture is now quite different. Trump's energy policy agenda suggests that renewable energies and related technologies like battery storage could face major challenges.
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Potential negative impacts on the battery storage market
1. Stop funding for renewable energies
Donald Trump, through an executive order entitled "Unleashing American Energy," has halted numerous payments under the IRA and the Infrastructure Investment and Jobs Act. This affects billions of dollars in investments in renewable energy and battery storage projects. Companies that rely on this funding could be forced to halt or postpone planned projects. Start-ups and small and medium-sized enterprises (SMEs) would be particularly hard hit, as they are often not competitive without government support.
2. Uncertainty about the future of the Inflation Reduction Act
The Inflation Reduction Act (IRA) was the largest climate protection law in US history and was intended to secure investments in renewable energy and battery technologies for years to come. However, Trump's energy policy reversal has created significant uncertainty for investors and companies. Without clear political support, there is a risk of abandoning long-term growth forecasts and a general reluctance to invest in this sector.
3. Focus on fossil fuels
During his first term, Trump made it clear that he favors fossil fuels. His policies aim to expand the production of oil, natural gas, and coal. Measures such as tax breaks for the oil and gas industry could divert capital away from renewable energies and battery storage. Furthermore, regulations that have restricted the fossil fuel sector could be relaxed or eliminated entirely, thereby reducing the competitiveness of renewable energies.
4. Investments and projects at risk
Several states had relied on substantial subsidies for the expansion of renewable energy and energy storage systems. Now, projects worth millions or even billions of dollars are at risk. California, New York, and Texas, which have invested heavily in renewable energy in recent years, are particularly affected. Local governments and companies must now find alternative financing options to implement planned projects.
5. Slowdown in market growth
Before the change of government, strong growth was forecast for the US battery storage market. Capacity was expected to reach 6.4 GW by 2024 and even 143 GW by 2030. These figures may now be revised due to a lack of new investments and increasing uncertainty. The market could develop more slowly than originally anticipated, potentially causing the US to fall behind countries like China or the EU in this technology sector.
Positive factors that could still support growth
Despite the challenges, there are some factors that could continue to favor the growth of the battery storage market:
1. Already approved projects
Many loans and investments approved under the Biden administration cannot be easily reversed. Large utilities and projects already underway could therefore continue to benefit from these funds, even if no new subsidies are granted.
2. Federal Initiatives
Several states are pursuing ambitious climate goals independently of federal policy. California, for example, plans to reach a battery storage capacity of 16,400 MW by the end of 2024. Other states, such as New York and Massachusetts, are also relying on their own programs to promote the expansion of renewable energies. These initiatives could help to partially offset the negative effects of national policies.
3. Economic advantages of battery storage
Regardless of political decisions, the economic advantages of battery storage are becoming increasingly clear. The costs of solar panels and battery storage are steadily decreasing, and businesses and private households are recognizing the long-term savings potential. Many households are already investing in solar storage solutions to become less dependent on rising energy prices.
4. Support from both parties
Although Trump is critical of renewable energies, there has been bipartisan support for some measures in this area under his administration in the past. Some Republican politicians continue to favor technologies like battery storage, especially if they create economic benefits and new jobs in the US.
5. Advances in storage technology
Technological development in the field of battery storage is progressing rapidly. New lithium iron phosphate (LFP) batteries and alternative storage solutions such as redox flow batteries or hydrogen storage could reduce dependence on political support. More efficient and affordable storage technologies could ensure that the market grows even without heavy subsidies.
A market in transition
The battery storage market in the US is facing a transformation. While the Trump administration is expected to pursue policies that tend to hinder renewable energy, there are nevertheless positive developments that could at least partially sustain market growth. How states, companies, and investors react to the new situation will be particularly crucial.
A slowdown in growth is likely in the short term, but in the long term, economic and technological developments could ensure that battery storage continues to play a key role in the energy transition. The coming years will show whether the US battery storage market can hold its own despite political hurdles or whether it loses ground in international comparison.
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