President Trump’s tariffs are likely to raise the costs of building renewable energy projects in the United States, analysts say, adding to the challenges of an already struggling industry.
Generating equipment, like wind turbines, is often made with parts from many suppliers around the globe, and assembled in the United States. Tariffs are likely to increase the cost of each imported part.
“A turbine consists of thousands of subcomponents,” said Endri Lico, an analyst at Wood Mackenzie, a consulting firm.
Mr. Lico estimated that in 2023, the United States imported about $1.7 billion of wind-related components, mainly from Europe, Mexico, Vietnam and India.
While the details of Mr. Trump’s tariffs remain to be seen, Mr. Lico estimated a 25 percent tariff on imported goods could drive up the cost of land-based wind turbines by 10 percent and increase the cost of building renewable energy facilities by 7 percent increase.
That in turn could lead to higher prices for the electricity that they produce. Higher costs could discourage development of new power sources at a time when demand for electricity is expected to rise to feed data centers and power electric vehicles.
Even before the prospect of tariffs, analysts had dialed back their expectations of renewable energy growth because of the Trump administration’s skepticism.
States on the East Coast were counting on offshore wind to achieve clean energy goals in the coming years. But analysts now say that only a handful of these multibillion-dollar projects are likely to be built in the coming years.
The share prices of Vestas Wind Systems, the Denmark-based turbine maker, and Orsted, the Danish offshore wind developer, which both have offshore wind projects in the United States, have fallen sharply over the last year, although both companies’ shares rose on Wednesday.
Mr. Lico said that turbine makers like Vestas and GE Vernova, its main rival in the United States, have factories in different locations and may be able to shift their sourcing of components to mitigate the affects of any tariffs.
Imports of land-based wind equipment have fallen sharply in recent years as manufacturing in the United States picked up steam, stimulated by the Biden administration’s Inflation Reduction Act.