It is looking likely that over half of the clean tech factories that were scheduled to come online this year will be delayed or cancelled, according to a new set of predictions from BloombergNEF. These include solar, battery, wind turbine, and electrolyzer manufacturing projects whose construction had been spurred by Inflation Reduction Act’s incentives.
Antoine Vagneur-Jones, head of trade and supply chains at BNEF and one of the report’s authors, says the delays he and his team are seeing are “rampant.” And that’s before even factoring in the potential consequences of the additional tariffs on China announced by President Donald Trump — and of the delayed but still planned-for tariffs on Canada and Mexico.
“A lot of factories that are supposed to be coming online this year or next year are either going to get canceled, they’ll be put on hold, or they’ll be delayed to next year, or even beyond prediction,” he told Latitude Media.
A lack of manufacturing experience and continued issues with overcapacity are among the reasons behind the delays. Overcapacity in particular is persisting across battery, solar and wind manufacturing, according to the report, with global factory capacity averaging “more than double global 2025 demand across the value chain.” As a consequence, Vagneur-Jones said, prices are “extremely low.”
And the “massive amount of political uncertainty” around the attitude the new administration will take towards clean energy incentives and the energy transition in general is making developers waver, he added.
The 45X manufacturing tax credits amount to about “57% of the $185 billion of U.S. subsidies available for clean-tech factories through 2032,” according to the report. BNEF analysts believe that 45X’s political risk is lower than that of other tax credits, given that “Republican districts host a majority of benefiting factories, and the accompanying guidance issued by the Internal Revenue Service provides strong grounds for legal appeal,” the report said. But nothing is certain in the context of Trump’s attack on the IRA; other subsidies that impact manufacturers and their downstream customers, such as DOE’s low-interest loans and grants, are much more likely to be cut.
The market’s fallout is already beginning. Just last week, the battery cell developer KORE Power confirmed it is canceling a $1 billion lithium-ion battery plant in Arizona, which would have been “the first lithium-ion battery manufacturing facility wholly owned by a U.S. company,” according to a 2021 statement by the Arizona Commerce Authority. The cancellation is particularly high-profile given that the company received an $850 million LPO loan to build the facility in June 2023.
Other delays include Meyer Burger’s halting of a solar cell plant in Colorado, and Albermarle’s pausing of a lithium refinery in North Carolina.
An ‘additional difficulty’
Trump’s new tariffs could create an “additional difficulty” for projects and developers, according to Vagneur-Jones. While he initially planned to impose 25% tariffs on Mexico and Canada beginning today, both of those were delayed by a month after final hour negotiations with the countries’ leaders.
However, an additional 10% tariff on China took effect this morning; China has already responded with countermeasures that include new export controls on more than two dozen metals and other technologies. These include tellurium, used in the manufacturing of solar cells.
“Tariffs sound like they’re good for domestic manufacturing, but if you’re putting a tariff on every component coming into the country, when a lot of equipment going into factories comes from Mexico or China, that’s not very good news,” he said. “This is just going to make manufacturing in the U.S. more expensive.”
Exporters not facing tariffs, such as Germany, South Korea, or Japan, are more likely to immediately benefit from the move than U.S. manufacturers, he added.
At the same time, as much as they make building manufacturing more difficult and expensive, tariffs also end up highlighting the need for a solid local supply chain. They “reinforce the long term case for doing so, because people will want to hedge their bets and… build locally as a way of being sure that they will able to sell and imports will be disadvantaged,” Vagneur-Jones said. “It’s a double edged thing.”
