June 13, 2025: Trade tariffs turmoil in the US could lead to at least a 50% hike for energy storage costs, according to new analysis published by Wood Mackenzie on June 2.
Recent tariff policies are set to increase the cost of power generation technologies, with energy storage seeing the biggest hike due to its dependence on Chinese imports, according to the report — ‘All aboard the tariff coaster: implications for the US power industry’.
Wood Mackenzie used its power and renewables supply chain cost hub tariff calculator to estimate the impact tariffs would have on the cost of power sector capital projects.
Tariff impacts were assessed using various inputs, including project and equipment cost breakdowns, as well as US import data.
The analysis looked at two scenarios:
Trade tensions — which states by the end of 2026 the US effective tariff rate settles at 10% with a 34% tariff on China;
Trade war — the US maintains an aggressive tariff policy and implements reciprocal tariffs that result in an overall effective tariff rate of 30% through 2030.
Based on these scenarios, Wood Mackenzie estimates most types of technologies will experience cost increases of 6% to 11%, with utility scale storage the exception.
And with nearly all battery cells used in US utility-scale storage projects in 2024 coming from China, Wood Mackenzie said the combination of high tariffs on China and US dependence on imports from that country could see cost increases “anywhere from 12% to more than 50% for utility scale storage projects, depending on the tariff scenario”.
“In a business with five-to-10-year planning cycles, not knowing what a project will cost next year or the year after is disruptive and causes massive uncertainty for US power industry participants,” said Chris Seiple, vice chairman of power and renewables at Wood Mackenzie.
“As a result, we could see potential delays in project development and rising power purchase agreement prices. We will definitely see impacts on power sector capital projects. The severity depends on what scenarios play out.”
Seiple said the US manufacturing market will not be able to meet this demand soon. “While US battery cell manufacturing capacity is expanding, it is not expanding at a pace nearly fast enough to meet even a small fraction of battery projects in the US.
“In 2025 we estimate there is sufficient domestic manufacturing capacity to only meet about 6% of demand and by 2030 domestic manufacturing could potentially meet 40% of demand.”
