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Clean Energy Associates says it has identified five looming risks to the U.S. battery energy storage industry as analysts predict significant policy changes under the incoming administration of U.S. President Donald Trump. Donald Trump is set to be inaugurated as US president today, and analysts predict his administration will make sweeping changes to the clean energy landscape. A report from Clean Energy Associates (CEA) highlights five potential risks to the battery energy storage industry, including risks to electric vehicle batteries, grid-scale storage, and home battery energy storage. 1) Application of anti-dumping and countervailing duties In December 2024, a new anti-dumping/countervailing duty (AD/CVD) petition was filed against imports of a critical battery material, anode active material (AAM), from China. Anodes made from Chinese AAM and batteries would be subject to duties, which on average in recent orders have exceeded 100% of the cost of imported goods. About 74% of antidumping and countervailing duty requests result in the imposition of new duties on importers. According to the CEA, there is a high probability of this outcome occurring, with a moderate impact on the market. It expects the action to take place as early as February 16, 2025. 2) UFLPA battery arrests The incoming president nominated Marco Rubio as Secretary of State, which CEA says carries a high risk of harsher and more far-reaching enforcement of the Uyghur Forced Labor Prevention Act (UFLPA). Importers of batteries on the UFLPA list face a rebuttable presumption that the product is tainted by a supply chain that involved forced labor. It can be very difficult to prove the absence of forced labor under the rebuttable presumption, meaning that most suppliers on the UFLPA list would not be able to bring products into the United States. This outcome, which would require action by the president, is considered highly likely to occur and is a high-impact risk, CEA said. Enforcement of the UFLPA to battery suppliers could begin as early as February 2025, according to the report. 3) Section 301 60% tariff Based on campaign promises, the Trump administration is expected to raise Section 301 tariffs to 60% on multiple products from China. A 60% tariff would force Korean and Japanese suppliers to purchase batteries from Chinese suppliers and generally increase prices, CEA said. CEA said the outcome is likely to have a moderate to high impact on the market as early as March 2025. 4) Tariffs in the Section 232 battery supply chain Reuters reported that Trump’s transition team has suggested adding tariffs on EV battery and supply chain tariffs under Section 232. CEA said the proposed tariff levels are unknown but could include battery energy storage systems. CEA sees this as a moderate likelihood of occurring, with a moderate to high market risk, occurring in the first quarter of 2026 or later. 5) Erosion of the Section 48 investment tax credit The CEA considers a complete repeal of the Section 48E investment tax credit (ITC) unlikely; however, there is a distinct possibility that it could be phased out as early as 2027, rather than in the mid-2030s. This reduction in tax credits would likely occur as part of the bill reconciliation process. Eliminating individual tax credits would require action by both the president and Congress. According to the CEA, there is a moderate to high risk of this happening, with a very negative impact on the market starting in the second quarter of 2025. |
