Trump’s Tariffs and New State Regulation Could Increase Power Costs in Texas

The low costs of developing renewable energy infrastructure have allowed Texas to lead the nation in its deployment of clean energy. But soon the cost of doing business with new tariffs and rules might stall the industry’s ability to churn out the cheap power that’s contributed to Texas’ economic growth in recent years, according to developers and experts.  

“There’s a lot of concern,” said Doug Lewin, a Texas energy consultant. “I think that that concern is across just about every generation technology, whether it be gas turbines, wind turbines, solar panels, batteries, all of that stuff has global supply chains and large tariffs on that stuff will almost certainly cause power prices to go up.”

The threats set to affect renewable energy players in Texas don’t come solely from the tariffs imposed by President Donald Trump that disrupted much of the U.S. economy, but also from rules being decided in the state legislature. 

Proposed bills this session aim to burden developers of renewable energy projects by imposing new fees and regulatory requirements that wouldn’t be required of natural gas plants. 

One proposed bill would let municipalities and counties ban battery storage facilities located 500 yards from residential developments. Another bill seeks to allow coastal communities the right to ban offshore wind turbines if they violate “pre-established community values” related to shipping routes, tourism and recreational or commercial fishing. 

While it’s still early in the legislative session, there’s worry that new policies coupled with new costs from tariffs could spell trouble for Texas’ renewable energy boom as the state races to bring more power online. 

On Tariffs

A slew of tariffs will impact the renewable energy industry across various sectors, from imports on transmission and distribution equipment to lithium-ion batteries.

Trump signed executive orders imposing 25 percent tariffs on products from Mexico and Canada, as well as 10 percent duties on Canadian energy in the first weeks of his presidency. Tariffs on most goods from both Mexico and Canada have been pushed back until April 2, after Trump signed executive orders authorizing the pause Thursday. There’s also a 10 percent tariff on all imports from China. 

The president also signed two proclamations ending all existing exemptions for tariffs on steel and aluminum and raised the tariff rate on aluminum from 10 percent to 25 percent. Those changes are scheduled to take effect March 12.

Renewable energy developers are no strangers to tariffs. During Trump’s first term in 2018, the U.S. announced 30 percent tariffs on imported solar panels, which came mostly from China. In May 2024, President Joe Biden put new tariffs on electric vehicles and batteries and solar cells imported from China. 

The 2025 Sustainable Energy in America Factbook, published by BloombergNEF and the Business Council for Sustainable Energy (BCSE), reports that the U.S. renewable energy market has absorbed the uncertainty around tariffs and delivered record-setting volumes of new capacity. But policy headwinds could affect investments and deployment. 

The sector was able to keep itself afloat in 2024 with strong demand from utilities and corporate buyers, making the technology one of the cheapest sources of new bulk generation even without tax credits, BloombergNEF and BCSE reported. 

Throughout the last few years, there’s been an uptick in onshoring U.S. manufacturing for components of renewable energy plants, like solar cells and wind turbines. One of Trump’s first acts from the Oval Office in this term was signing an executive order pausing funding for programs under the Inflation Reduction Act and a bipartisan infrastructure law. 

Those two bills, signed by Biden, invested hundreds of billions of dollars into wind and solar projects, electric vehicles and other low-carbon energy technologies. BloombergNEF estimates that $8 billion went into bringing clean-tech manufacturing online in the U.S. in 2024 across supply chain segments for the hydrogen electrolyzer, wind, solar and battery sectors.

Tax credits through the IRA have been spared, for now, because changing them would require an act of Congress. Political uncertainty surrounding IRA incentives, the lack of experience of many manufacturers and inexpensive imports threaten the U.S. factory pipeline for clean-tech manufacturing, according to BloombergNEF and the BSCE. 

If Congress decides to leave parts of the tax code from the Inflation Reduction Act in place, Lewin said, tariffs could be an accelerant to the onshore production the renewable industries have seen. 

U.S. manufacturing has helped reduce dependency on imports, Mona Tierney-Lloyd, head of regulatory and institutional affairs at Enel North America, said on a panel hosted by Texas Advanced Energy Business Alliance last month. However, most of the materials and machinery are still mostly produced abroad, primarily in China. More than 70 percent of U.S. imports of batteries come from China. 

In 2024, more than 80 percent of solar panels were imported from Cambodia, Malaysia, Thailand and Vietnam. In November, the U.S. Department of Commerce set preliminary duties on crystalline solar cell imports from the four Southeast Asian countries, with tariffs ranging from 21 percent to as high as 271 percent, depending on the country and manufacturing company. 

In 2023, the Commerce Department found that certain Chinese producers shipped their solar products through Cambodia, Malaysia, Thailand and Vietnam for minor processing in an attempt to avoid paying antidumping and countervailing duties. 

The preliminary rates follow a trade case brought by The American Alliance for Solar Manufacturing Trade Committee, over concerns that imported solar cells from the four countries are harming the domestic solar market. Most of the listed companies have Chinese headquarters. The final rate determination from the Commerce Department is scheduled for April 2025. 

“America’s solar manufacturing industry is on the cusp of tremendous growth that will create jobs and change the trajectory of our clean energy transition for decades to come,” stated Tim Brightbill, lead counsel to the American Alliance for Solar Manufacturing Trade Committee, in April 2024. “However, this manufacturing renaissance is being threatened by China’s industrial policy, which has led to massive subsidization in China and Southeast Asia.” 

In anticipation of further tariffs, some manufacturers are already shifting their supply chain and using solar panel cells produced outside of Malaysia, Vietnam, Cambodia and Thailand, according to BloombergNEF and the BSCE. 

Wood Mackenzie, an energy consulting firm, suggests that with the current supply chain set up, the tariffs against China, Mexico and Canada could increase U.S. onshore wind turbine costs by 7 percent and overall project costs by 5 percent.  

The wind industry is heavily dependent on imports. In 2023, U.S. imports 0f wind turbine components like blades, drivetrains and electrical systems were valued at $1.7 billion, according to Wood Mackenzie, with 41 percent coming from Mexico, Canada and China. 

In addressing the administration’s tariffs in February, Jason Grumet, CEO of American Clean Power Association, said that the concern is that the increasing costs of energy production will put upward pressure on consumer energy costs and hamper the renewable industries abilities to unleash energy abundance. 

“While the fuel relied upon by wind and solar energy—complemented by battery storage—is free, some parts for these machines that harness these renewable resources are manufactured in Canada and Mexico. As we have made significant progress manufacturing these components in the United States, the benefits of [the United States-Mexico-Canada Agreement] have been a positive factor in lowering American energy costs.”

It’s too early to tell how the tariffs will affect energy prices in Texas, Tierney-Lloyd said. 

When Pablo Vegas, CEO of the Electric Reliability Council of Texas, was asked about which federal policies could weaken the state’s energy resources at a Public Utility Commission of Texas meeting on Feb. 13, he mentioned that Environmental Protection Agency rules could limit Texas’ gas and coal fleet in the future. 

He noted restrictions on building new natural gas plants that don’t have mitigating factors like carbon capture. “That’s some of the federal policy that’s out there,” Vegas said in response, adding that tariffs could come into play as well. 

Tariffs would impact supply chains of components that go into electric infrastructure for both traditional thermal generation and renewable generation that come from outside the U.S., Vegas said. The tariffs would also impact electric power exchanges moving between the U.S., Mexico and Canada, he added.   

The ERCOT CEO warned that tariff policies could slow the development of power resources across the state or make them more expensive. Either way, tariffs would implicate the state’s power reserves down the line, Vegas said. 

Texas Gov. Greg Abbott said the state believes in an “all-of-the-above” energy approach, a stance that is lauded by industry professionals across energy sectors hoping to build out as much infrastructure and power generation as possible without much regulatory interference.

But some state bills whose authors hope they will reach the governor’s desk at the end of the legislative session butt into that “all-of-the-above” approach, critics say. 

Of most concern to those in wind and solar is Senate Bill 819. The proposed legislation—a re-file of a bill from last session that advanced through the Senate—would require wind and solar projects to obtain a permit from the Public Utility Commission no other energy source, coal, gas, or nuclear, has to get. 

Lewin, the Texas energy consultant, said SB 819 would introduce a very restrictive permitting regime to energy sources that on some days in recent weeks have met nearly 75 percent of power demand. 

“That would certainly slow down, if not really just grind to a halt, renewable development in the state,” Lewin said. 

The bill’s author, Sen. Lois Kolkhorst, a Republican, told KXAN Austin reporters that SB 819 was about protecting the environment and landowners. She said that the intermittent nature of the power generators makes them unreliable. 

 “It is a protection for landowners,” Kolkhorst said. “It is the right thing to do for Texas.”

The proposed bill would also require solar and wind projects to commission an environmental impact review from the Texas Parks & Wildlife Department, pay extra fees and abide by new setbacks from property lines. 

Cyrus Reed, the conservation director of the Sierra Club’s Lone Star Chapter, said the environmental group is concerned about the bill, as it imposes two new regulatory burdens on renewable generation. 

While SB819 has support from wealthy landowners who are opposed to wind and solar development in rural Texas, Reed said, the bill doesn’t have universal support in the Senate, as some lawmakers are concerned the bill would take away property rights from landowners looking to lease their private real estate to renewable energy developers for cash. 

The bill does introduce good elements that the state should adopt, Reed said, including notifying the public about energy developments plans and conservation measures. 

“There’s some best practices that are needed, and probably some regulation, but the bill goes very, very far,” Reed said.